There have been rumours for quite some time that Sumitomo Rubber Industries Ltd (SRI) is going to terminate the exclusive distribution of Falken Tyres’ agreement with Stamford Tyres. Meeting up with Yoshihiro Miyagawa, Managing Director, Sumitomo Rubber Asia (Tyre) Pte Ltd, and Conson Tiu Sia, Chief Executive Officer, Stamford Tyres Malaysia, who have just recently taken on their respective new positions provided a good opportunity, not only to clear the air, but to find out more about the goals, direction and strategies of both companies regarding Falken tyres.
“Our relationship with Stamford Tyres started in 1975, and has grown beyond the traditional vendor-distributor relationship in order to co-create value. SRI and Stamford Tyres set up a joint venture sales company in China in 2003. In 2009, Stamford Tyres was appointed as distributor of Falken tyres in South Africa and in Southern African countries. In September, 2010, SRI acquired a 1.8 per cent stake in Singapore-based Stamford Tyres Corporation. The amount of stock is not big, but it demonstrated SRI’s commitment to this long-term business relationship, and SRI attends the Annual General Meeting (AGM)”
Miyagawa continued that Stamford Tyres sold its minority stake in the China joint venture sales company to SRI in March 2012. Then, in August 2012, Sumitomo Rubber Asia teamed up again with Stamford Tyres to form another joint venture sales company, Falken Tyres India Private Limited (FTI) in order to distribute Falken tyres in India. SRI holds a 60 per cent stake, while Stamford Tyres holds the remaining 40 per cent.
“SRI and Stamford Tyres have been working hand-in-hand through both the good times and the tough as partners. The relationship has been constantly growing in strength for nearly 45 years,” he added.
Eyes for the ultra-high performance tyre segment
The Malaysian market, he stressed, is always important for Sumitomo, as Malaysia is amongst the top 3 countries in Southeast Asia that have the biggest car ownership besides Thailand and Indonesia. Apart from normal passenger car tyres, Miyagawa sees potential in ultra-high performance, 4X4 and SUV segments.
“The current trend is going big on rim size and the diameter of tyres. Unlike Japan, which is a stagnant market, Malaysia is still growing. There could be 150-200 brands in the Malaysian tyre market, and as much as 50 percent of the market is occupied by the non-branded tyres. As Falken has grown to become a flagship brand that focuses on ultra-high performance tyres, our target in Malaysia and this region is to further grow our presence in the ultra-high tyre performance segment, as well as in SUVs and 4x4s. To do that, we need to expand our network for better visibility and availability.”
What about the Original Equipment (OE) segment? Miyagawa replied that SRI has been OE supplier to a variety of major international automotive manufacturers such as Mercedes-Benz, Porsche, VW, Audi, Nissan, Subaru, Nissan, and many more in Japan and other overseas markets. “OE is important as it helps to build long term branding. Yes, we are interested in the segment, and we are currently looking into the OE tyre fitment for Japanese and national cars in the Malaysian market.”
Conson pointed out that besides Falken, SRI manufactures and sells tyres under the Dunlop brand name in many countries, including Japan, certain regions of Asia and South Africa.
“I would say it is the positioning. Dunlop is positioned as the OE brand while Falken is for the replacement market. It is only in recent years that SRI has started to venture into the OE segment in Europe and USA.”
Conson succeeded Cham Soon Kian as the new Chief Executive Officer, who moved to his new role as Chief Operating Officer, Stamford Tyres Group of Companies in September 2019.
“I had been working behind the scenes with Miyagawa before I officially came on board. Miyagawa has come out with best practices on wholesaling, which we had modified and adapted gradually. We both agreed that it is important to further expand our footprint in the local market.”
He admitted that the local tyre market is very competitive. The dumping of Chinese tyres to Southeast Asia, including Malaysia, has been going on for many years after the US imposed anti-dumping duties on Chinese tyres. In fact, he said, the market has not only been stormed by multiple tyre brands from China, but also from neighbouring countries such as Thailand, Indonesia, Vietnam, India, just to name a few. In addition to this, tyre sales have struggled as buying habits are changing.
“The industry has been badly affected by consumers believing that newly manufactured tyres are better in performance. Dealers ask for discounts on tyres that were produced 6 months ago, and it has also affected the tyre supply chain, as supplier have had to tighten their inventory control and hold as little inventory as possible. In addition, dealers are constantly expanding demands for same and next-day delivery. All these trends call for a transformation in business model.”
As a subsidiary of a Singapore based public listed company, Stamford Tyres Malaysia offers quality products, value added marketing and training for its dealers. Falken is produced by SRI, one of the top largest tyre manufacturers in the world. With 11 global tyre manufacturing facilities and significant investment in research and development (R&D), the company stresses that the Falken brand demonstrates SRI’s commitment in delivering quality products through continual innovation. This includes the capability of designing tyres that can perform best in Malaysian applications, road conditions and climate.
“We pride ourselves for being able to provide ‘made- in-Japan’ products at a competitive price, as made- in-Japan has become a byword for industrial quality and reliability,” said Conson.
“Unlike the parallel distributors that have focused solely on making profit, Stamford Tyres Malaysia invests in brand building and educating its business associates,” he added. “Our dealers benefit from our marketing activities such as signages, roadshows and promotional materials that help to increase Falken brand awareness. We also provide them with product knowledge and relevant soft skill training.”
Conson’s immediate focus is to increase brand visibility and availability in the domestic market by expanding its footprint, starting from the southern region up to the northern region of Peninsular Malaysia. “We are looking at developing more direct dealing, which we believe will give us better feedback on our products and branding. This also means that we are in the process of increasing our salesforce,” he explained.
As for new products, Conson said, the company does plan to introduce a new tyre pattern in the second quarter of next year. However, he continued, this would subject to the market situation.
“If the market is not promising, it is always more sensible to prolong the current product life cycle and market presence. Bringing a new product to market is fraught with unknowns and uncertainties, sales are low and costs are high during the early introduction stage. ”
As we ended the interview, Conson emphasised that Stamford Tyres are committed in building sustainable business relationships, not trading relationships, with its vendors as well as its dealers and resellers.
有关住友橡胶株式会社（SRI）即将终止与添福胶胎独家飞劲经销权的谣言，已经在坊间流传了好些时日，而且还传得沸沸扬扬。此时能够与新任住友橡胶亚洲（轮胎）私人有限公司董事经理宫川义宏（Yoshihiro Miyagawa）和马来西亚添福胶胎新任首席执行员Conson Tiu Sia碰面，真是个难能可贵的机会，不仅能一探谣言的虚实，还能从中了解更多这两家公司对飞劲轮胎的目标、方向及策略。