YHI sees good growth via American tie-up
YHI International's joint venture with an American wheel distributor will have the two-fold aim of immediately securing a distribution network in the US, and getting that lucrative market to absorb an upcoming surge in production capacity.
Richard Tay: "The US market is an important market because of the size and the profit margins.'
Last week, the mainboard-listed company revealed at its half-year results announcement that it will be moving into the North American market after entering into an MOU with Pan Mar Corporation DBA Konig Motoring Accessories (PMC). Under the memorandum of understanding, a US tie-up called Konig American Corporation (KAC) will be formed, with wholly owned subsidiary YHI Manufacturing holding 51 per cent and PMC the remainder.
PMC is a 70-year-old company which distributes middle to high-end automotive wheels under brands such as Konig, Privat and Maxxim. It has a 2 per cent market share in the US, with a distribution network that includes chain stores and wholesale, Internet and export operations.
YHI has been supplying to PMC for six years, accounting for 6,000-7,000 pieces of the US distributor's monthly sales of 16,000-17,000 units.
From October, YHI will take over KAC as a subsidiary operation and slowly replace PMC's other existing supply sources.
'The US market is an important market because of the size and the profit margins,' said YHI group managing director Richard Tay. 'We believe we can grow this market faster than other areas.'
YHI distributes and manufactures tyres and alloy wheels in Asean, China, Taiwan, Hong Kong, Australia and New Zealand. As a manufacturer of alloy rims, YHI has two factories in Taoyuan, Taiwan, and Shanghai, China, rolling out 1.2 million pieces a year. Two more plants coming up in Sepang, Malaysia, later this year, and in Suzhou, China, early next year, will boost the output initially by about 720,000 pieces a year. Part of this extra capacity will be absorbed up by KAC, especially the Suzhou plant which makes the large wheel sizes with chromed finishes favoured by US buyers.
YHI makes wheels under its own Advanti brand. It also provides wheel design and development services as a contract manufacturer for other companies. Under this original design manufacturer or ODM role, the company assumes responsibility for the entire supply chain.
'The joint venture was set up for the distribution of the Konig brand of alloy wheels in the aftermarket segment in the US,' explained Mr Tay. He said the wheels sold range from 15 to 24 inches in size and he is aiming for 20 per cent annual growth.
'We are targeting the middle to premium range of the market. Our strength is in design and good quality wheel production. We will use that to differentiate ourselves from the competition,' he said, referring to the many low-end Chinese rim manufacturers who have entered the American market.
《The Business Times》