Rhodia grows with rising demand for high-tech tires

Following is the first in a series of articles on visits to promising foreign-invested companies in Korea, arranged by state-run foreign investment promotion agency Invest KOREA and participated by IK Supporters, an IK-sponsored team of international students who are interested in Korea’s foreign trade with multinational companies. – Ed.

Korean consumers know well the names of local tire makers ― Hankook, Kumho and Nexen. But few know they cannot make tires without the help of Rhodia, the world’s top manufacturer of silica.

 “No silica, no tire,” said Rhodia Silica Korea CEO Kim Jin-cheol, in an interview arranged by Invest KOREA, a state-run foreign investment promotion agency under the Korea Trade-Investment Promotion Agency. 

Kim told The Korea Herald that the global demand for high-performance, fuel-saving tires was rising sharply, and predicted that the Korean market would follow suit.

The Korean government began a “tire labeling system” in November 2011, assigning all tires one of five different grades, based on performance and fuel exhaust emission. The first-class tires are safer and more fuel-efficient than the rest.

Kim said first-class tires would enter the Korean market by 2016. French tire maker Michelin, which holds a global market share of about 17 percent, has already developed the top-tier tires. Korea’s largest tire maker Hankook Tire is testing its state-of-the-art tire model, he added. Kumho is likely to be working on a first-class tire as well, but probably with some financial difficulties, Kim added.

Silica, a chemical additive in automobile tires, is Rhodia Silica Korea’s flagship product. Rhodia S.A.’s silica holds about 65 percent of the world’s market share.

The Korean operation of Rhodia S.A., a subsidiary of global chemical and engineering plastic maker Solvay Group, has operated since 1975, supplying industrial chemicals to large local firms such as Samsung Electronics and Hyundai Motor.

Rhodia developed “highly dispersible silica” or HDS in 1993, and takes pride in being the world’s top expert in HDS.

The CEO said his company sold about 34,000 tons of silica last year. This year’s sales target is 50,000 tons and he remains optimistic about reaching that goal.

The production has temporarily decreased amid the global economic slowdown, with European orders declining. But the company is seeing a steady growth in production and sales since then, even after Rhodia’s Chinese factory opened in 2010.

The factory currently runs two manufacturing lines, one of which is in full operation and the other about 70 percent operation.

Meanwhile, Kim noted that the French headquarters of Rhodia S.A. would decide where its 10th and newest global factory would be built in Asia later this year, he said.

“We already built one in China in 2010, so the next station will be in Southeast Asia or Korea.”

Kim picked Thailand as the strongest competitor of Korea to locate Rhodia’s next silica factory. Thailand has secured multiple buyers, stationing multiple factories of big-name automakers and tire manufacturers, such as Bridgestone, Smitomo and globalized Chinese makers.

“Our strength is cost-saving logistics,” Kim said. “In Korea we have three big tire manufacturers to make a sufficient amount of orders.

“Besides, the Korean tire market is expanding at a faster pace than the Southeast Asian tire market, and this is what the headquarters are already aware of,” he added.

If Rhodia is to build a factory in Korea, it should be in Busan or Incheon. Rhodia Silica Korea’s currently operating factory is built in a construction-restricted area, and cannot be expanded, he said.

“Another strength of Korea is safe preservation of intellectual properties. Intellectual rights are not so much guaranteed in the Chinese factory,” he said.

Meanwhile, the Korean CEO expressed regret about Korea’s disappointing shipping conditions.

“A direct Incheon-Japan shipping route is unavailable, and we have to carry the products to Busan and ship them again,” he said.

For Kim, safety is the utmost priority in making tires in the first place.

“Imagine yourself speeding on the highway at more than 100 kilometers per hour. After a while you get off, take a look at your tires, and find chunks of rubber have fallen off from your heated tires.”

Adding silica while manufacturing tires, he said, makes them safer and more fuel-efficient. Silica-added tires takes about a 6-meter distance to completely halt, while others take about 10 meters.

Tire is not the only auto part where silica is added, he noted. Adding silica to the automobile frame reduces the weight by about 7-10 percent, depending on varying classes of Rhodia’s silica, and therefore requires less fuel.

Silica-added tires also display excellent rolling resistance on rainy days, he said.

He said that high-quality tires were a good investment for drivers.

“Tires are not cheap. But gas prices have gone up so much nowadays, and buying safe, brand-name tires saves you more, if you think about it.

“Four years ago, my wife paid an extra 180,000 won to change all her tires to Michelin. But since then she has saved about 10 percent of fuel costs, saving far more than what she spent to change the tires,” he said.

CEO Kim also underscored Rhodia’s strong partnerships with tire makers. Michelin always uses Rhodia’s silica when developing new tire models, he said.

“Michelin currently has no silica production skills and works with our engineers to develop new products.”

Kim pointed out that Korean tire makers also use Rhodia’s silica to develop new environment-friendly models.

Kim said that global demand for silica would grow, especially with the continued development of western China. Rough, dusty roads will turn into paved highways, filled with vehicles ― and tires.

Nowadays people refer to silica-added tires as “environment-friendly tires,” he noted, as they have reduced emissions of both fuel waste and carbon dioxide.
By Chung Joo-won (joowonc@heraldcorp.com)