This is why Asian investors love Hungary, but it is bad news for us

The company called Kumho Tire, which is the second largest tyre manufacturing concern in South Korea and the 9th largest tyre manufacturer in the world, is going to expand in Hungary. People have mixed feelings about the matter.

Tyre manufacturers in Hungary

Hungarian FM Péter Szijjártó announced the construction of a new factory. Despite that, there is no information about the location or the amount of money to be invested. G7.hu writes that the South Korean company, owned by a Chinese parent company, is the 9th largest tyre manufacturer in the world. With the new Korean investment, six major global companies will be produced in Hungary. Furthermore, these companies together account for 2 percent of the country’s GDP. According to gumi.hu, Hungary is already an important destination for investors in the tyre industry.

• The Michelin group has been operating in Hungary since 1996. They are manufacturing tyres, but they also have four sites where they do logistics.
• The Korean Hankook Tire has a factory in Dunaújváros. The factory opened in 2007 and there are currently 3300 employees working there.
• Bridgestone Tatabánya Termelő Ltd. also started manufacturing in 2007. It has around 1300 employees in its factory in Komárom-Esztergom county.
• The Indian Apollo Tyres has been operating six factories in Hungary since 2017. These factories produce over six million tyres per year.

Car industry investments

As mfor.hu reported, the Hungarian government has made a lot of announcements about companies in the car industry coming to Hungary. Márton Nagy, the Minister of Economic Development, reasons that EU funds are currently unpredictable in Hungary. Thus, the country needs a more stable capital for development. Not too long ago, in June, FM Péter Szijjártó announced that the Chinese electronic car manufacturer BYD is making a big investment in Hungary. According to the plans, the Chinese investor wanted to establish a factory in Fót. However, this HUF 10 billion (EUR 26.2 million) investment will not be realised. The mayor of the town does not want such environment-polluting investors in the town.

Problems with tyre investors

The European market is now the most important for the Korean tyre manufacturer, which is already doubling its sales on the continent this year. Their priority is to cut logistics and labour costs. Although, their Korean workers have already protested against outsourcing production. Hungary appeals to cheap guest workers, therefore it could be a good location. In Hankook’s Hungarian factory, there were many Ukrainian and Mongolian guest workers even before the COVID-19 pandemic.

The tyre industry is facing environmental concerns as well. Hankook, a strategic partner of the Hungarian government, is notorious for sabotaging worker’s representation. Accidents are also a regular occurrence in rubber factories. The Hungarian Rubber Industry Association reports hundreds of accidents in the rubber and plastic industry every year.