Joh Wen on what lies ahead for MAXXIS Tyres SA
When asked to name the world’s leading tire brand in the adventure category, established international brands that have been around for centuries may come to mind. Surprisingly, this is not the case. The top spot is, in fact, occupied by Maxxis Tyres. Founded in Taiwan over 50 years ago as a bicycle tire manufacturer, the company quickly expanded its product range to include tires for cars, light trucks, ATVs, motorcycles, trailers, and more. Today, Maxxis distributes its products to over 164 countries, with operations spanning Asia, North America, South America, Europe, Africa, and Australia. The company employs more than 30,000 people and currently holds the tenth spot among the world’s top tire manufacturers. The journey of how Maxxis Tyres gained this impressive global market share and its future prospects in South African distribution make for an intriguing story. In an exclusive interview, Jon Wen, Managing Director of Maxxis SA, sheds light on these aspects.
Jon, thank you for taking the time out of your busy schedule to meet with us. Since the arrival of the Maxxis brand in South Africa in 2006, you’ve been at the helm of Maxxis Tyres SA. How has the brand evolved over the last 17 years?
By comparison, the South African market is relatively small; however, our strategy has mirrored that employed in other parts of the world – to become known and accepted as the ‘adventure tire brand of choice’ in the replacement tire market. Through a robust research and development (R&D) program, Maxxis chose to specialize in developing tires that are built for competition or, as we like to say, tires that are built to endure abuse. The ideal way to showcase our superior tire range was to put it to the test in extreme conditions by partnering with outdoor and motoring enthusiasts engaged in adrenaline-inducing sports and competitions.
South Africans are naturally inclined towards outdoor activities, making it the perfect environment for our tires to showcase their durability, especially in rugged and harsh terrains. We have participated in numerous off-road 4X4, motorcycle, and mountain bike events. Currently, we are focused on the Western Cape region, collaborating with the Western Cape Off Road Club, CSMX Enduro Racing Series, and the Wildebeest 4X4 Challenge Club.
Could you provide more insight into your product mix and the market segments you serve?
We primarily specialize in 4X4 tires, but we also have a strong presence in the quad/ATV, mountain bike, and off-road motorcycle markets. Our approach all along was to capture this particular market by allowing our tires to demonstrate their capabilities in the most demanding conditions. This strategy has worked well for us, propelling us to become the largest mountain bike and quad tire manufacturer in the world. Over 80 percent of high-end mountain bikes, off-road motorcycles, side-by-side (SXS) quads, and ATVs at the OEM level are fitted with Maxxis tires. No other tire company in the world covers such a wide range of segments while maintaining a top position in each discipline.
Furthermore, in the two-wheeler category, Maxxis is a preferred OEM tire supplier for KTM, Yamaha, and Kymco.
A massive achievement, and one few people know about, I would guess. Are you looking to launch any new products in the coming months?
Our R&D specialist has spent considerable time developing a range of new Enduro Motorcycle tires that are directly suited to South African conditions. The fourth quarter of this year will see us re-launching back into the market with brand new products, beginning with the testing phase, which will take place at a big race – Roof of Africa – in December. This will prepare us for next year’s racing season, where we intend becoming involved in a whole lot of different competition events, once more. These events are important for us, not only because they showcase the features of our tires, but because we are the only tire company that can show up at an event of this kind and able to provide a product that covers all four market segments of sports dedicated to passionate outdoor enthusiasts. I’m proud to say that in this niche market, Maxxis is outperforming its competitors in South Africa.
Do you carry any other brands, besides Maxxis?
We also stock CST Tyres, a more affordable premium brand of tires covering the same segment as Maxxis- Passenger car, Light truck, Motorcycle, ATV (Quad), Bicycle and Industrial tires. The CST brand is manufactured in our Cheng Shin factory in Xiamen China. Unfortunately, and despite CST’s reputation in the market as a premium brand, the newly imposed anti-dumping duty of 41.47 percent, will compel us to review our position, possibly also leading us to begin importing tires for the passenger and SUV markets from the various Maxxis plants around the world.
Speaking of anti-dumping duties, where do you stand on this issue?
Overall, I believe that anti-dumping duties were necessary. Over the last few years, as more products began flooding in from China, the local tire producers dropped their prices substantially, in an effort to compete. This created a serious problem for us, as well as other credible imports coming in from Europe, out-pricing us to the point where we hardly able to operate. There is little doubt that anti-dumping duties were required. They just came at the wrong time. With interest rates soaring, and disposable income shrinking, consumers cannot afford to spend on tires, so the fear is that these high duties could further contribute towards illicit trade, which to my mind, is an even bigger threat to both the industry and the consumer. Sadly, government has been aware of our cries to clamp down on illicit operators for many years, through the efforts of our representative body TIASA and of course, the SATMC. But they chose to deal with the anti-dumping duties first – we suspect – because this issue was much easier to resolve, and did not require major spend, resources, or manpower. All that being said, if the duties serve their intended purpose – to clean out the industry which is currently saturated and plagued by illicit operators – then the duties have done their job. Conversely, we believe that ITAC’s methods in arriving at the duties were flawed, to some extent. How can a brand like CST – an expensive, premium brand – deserve a duty of 41.47 percent to be placed on it? It does not make sense. We have asked ITAC to explain. Nonetheless, the decision has been rendered and will not change. As I see it, these duties will change the trading arena over the next five years. Whether this will be in a positive or negative way, remains to be seen. We will only begin to get a sense next year, once the old stock in the market has been used up.
Which plants in the world are you currently importing your product from?
The Maxxis range is imported from Taiwan and Thailand, and thankfully remains unaffected by the newly imposed anti-dumping duties. However, I feel for some of my competitors who import products solely from China. They have been the hardest-hit by this decision, as well as the consumer.
How are you distributing your products in South Africa?
We have a loyal band of distributors, strategically located around the country, who have supported us from the beginning. In addition, on August 1, we signed a distribution agreement with the Point S group as their preferential 4X4 tire supplier, a development both parties are excited about. The anti-dumping duties have led to dealers scrambling for tires they can sell. The 4X4 market in South Africa is extensive and it is important for retailers to carry a premium 4X4 brand in their stable. The tire trade at the moment is tough, cut-throat, and as mentioned earlier, dotted with unscrupulous operators who find loopholes to evade the duty and are thus able to sell their products at rock-bottom prices. This is not good for the industry, or for premium tire brands like ours, as it is difficult to compete.
Going back to the matter of illicit trade, what do you believe it will take for government to take action?
We have made government aware of these offenders. We know who they are. SARS now needs to get actively involved by way of audits, to sift them out. We believe they have started doing this, on some level, however, as mentioned earlier, lack of manpower and resources on the part of government, are unlikely to provide a swift solution. And let’s not forget that corruption is rife. For some of these offenders, bribing officials to buy their silence, has become common practice.
How would you sum up your short-term vision for Maxxis SA?
We will continue to focus on our business and on the strengths that have brought us this far, with the aim of proving the brand’s superior capabilities to the South African consumer.