Undesirable Result
When Kumho Tire is sold to China’s Doublestar, more than 800 technologies owned by Kumho Tire are highly likely to be transferred to China. Accordingly, there are growing concerns that the sale of Kumho Tire, one of the mainstays of the competitiveness in the domestic tire industry, will lead to core technology leaks.
According to industry sources on April 11, the number of patents held by Kumho Tire stood at 874 as of the end of last year. The company also has numerous patents in major countries, such as the U.S., Europe, Canada and Japan, as well as South Korea. It also holds a total of 50 global patents used in the global market.
Succeeding in developing aircraft tires in 1975, Kumho Tire is the only South Korean company that has the technology to produce aircraft tires, including F-16 fighter jet and T-50 supersonic trainer jet. This is why Kumho Tire is the only tire maker among 66 defense companies. The company succeeded in developing tires for electric vehicles in 2013 and the Sealant Tire, the nation's first self-sealing tire in which a sealant layer in the form of a gel responsively moves to the damaged area and fills in a tear, and the K-Silent Tire, which reduce resonance noise caused by friction created, in 2014. Kumho Tire also developed scented tires and the technology that reduces heat of tires by using cooling fins as well as high performance tires for racing cars. The company developed the experimental tire for F1 cars in 2007 for the first time in the domestic industry and had the vehicle test in September 2013. It had been the official tire supplier to the Masters of F3 for 15 years in a row until last year.
Although Kumho Tire was placed under a creditor-led workout program in 2010, the company has continuously invested in research and development (R&D). Its ratio of R&D investment to sales kept increasing from 2.8 percent in 2014 to 2.9 percent in 2015. The company also spent a 3.18 percent of its revenues on R&D activities last year, which is higher than Hankook Tire's 2.52 percent.
In May 2012, Chairman Park Sam-koo, a major shareholder of Kumho Tire, made private funds of 113 billion won (US$98.65 million) and spent 51.3 billion (US$44.78 million), about half of the funds, on establishing a new central R&D center is in Yongin due to the importance of steady R&D activities. The number of R&D employees grew from 474 in 2011 to 752 in 2016.
An official from the industry said, “The outflow of patents, one of various factors that Doublestar can achieve through the acquisition of Kumho Tire, can cause tremendous loss in the competitiveness of the tire industry. The technology leakage problem, like Hydis Technologies’ LCD technology and Ssangyong Motor’s technology by Shanghai Automotive Industry Corporation, can come to the fore again.”