Sameer opts for China made tyre to keep market grip

What you need to know:

  • Group Managing Director Allan Walmsley said the firm’s brand had undergone turbulent times in the past year due to dumping from the Asian market and the conflict in South Sudan.
  • Negotiations with an unnamed investor, who is expected to pump in over Sh1 billion, have been going on for the past 18 months.

Influx of the market by cheap Chinese tyres has pushed a regional firm into producing a cheaper brand to gain competitive advantage.

Sameer Africa Tuesday announced a partnership with a Chinese company to produce and sell its price fighter brand Summit tyre regionally with the first shipment already distributed here.

Group Managing Director Allan Walmsley said the firm’s brand had undergone turbulent times in the past year due to dumping from the Asian market and the conflict in South Sudan.

“It has been an extremely difficult year for us with cheap imports from subsidised markets such as China flooding the market. Our strategy, however, is going to address this because we already have a manufacturer based in China to manufacture tyres from there. We test every consignment we receive to ensure quality is maintained,” he said.

The tyre maker said the new brand had recorded good uptake since the first shipment arrived.

The company also revealed a modernisation plan set to reduce its cost of production marginally and speed up output after sealing a deal with a technical and equity investor.

UNNAMED

Negotiations with an unnamed investor, who is expected to pump in over Sh1 billion, have been going on for the past 18 months.
Sameer Africa posted a Sh66 million loss in earnings for the year ended December 2014.

The group now plans to establish more distribution centres across the country as well as diversify into other markets, including Mauritius, Mozambique and Nigeria, to increase sales. According to Mr Walmsley, dumping of counterfeits reduced the firm’s earnings by 22 per cent last year.

The tyre producer based in Nairobi’s Industrial Area has a production capacity of 600,000 per day. It sources 95 per cent of natural rubber from Malaysia while the rest comes from Malawi and DR Congo.

The East African tyre market, estimated at about four million tyres a year, has had challenges just like in other regional markets, with factories in Zimbabwe, Mozambique, Nigeria and Tanzania going off track.