Pride of the town
Walking the streets of Changhua on the weekend one is very likely to see people wearing Maxxis T-shirts or baseball caps. They are all employees of CSRI. It is very common to find a family here where all three generations are working for CSRI. They have personally witnessed the company's gradual growth from a small contract manufacturing shop occupying a few square feet of space, through the purchase of land, expansion of the factory and finally to a major manufacturing complex occupying 20 hectares and operating around the clock. From an obscure company to one that ranks 13th in the world as a manufacturer of tires, not only is CSRI Changhua's most representative industry, it's Changhua's pride and joy as well.
Twenty-four years ago marked a turning point for CSRI. After company founder Luo Jye signed an agreement of technical cooperation with the Japanese Toyo Tire and Rubber Company, Ltd. and set up their first factory producing steel belted radial tires, he also set up New Pacific Industry Co., Ltd as a joint venture between CSRI and Toyo devoted to producing automotive anti-vibration rubber, and began to get a toe-hold in the Chinese market. Ten years later, with indirect investments, CSRI set up factories in Kunshan, Jiangsu Province, in Tianjin and in Haiyan, Xiamen. Yearly production capacity in the China factories has now reached more than 12 million units. Responding to market development needs, CSRI has set up factories in Thailand and Vietnam in a bid to win the leadership crown of the East Asian tire market.
In addition to bicycle and motorcycle tires and high-speed steel-belted tires for trucks and automobiles, CSRI products include tires and tracks for military vehicles, as well as winter tires. CSRI is also now actively developing fuel-efficient tires. In addition, to attract a young clientele, they have designed a popular artistic whitewall retro-style tire with recessed lettering. With some 20,000 different items being produced, the CSRI product range qualifies as the most comprehensive in the industry.
Of all the things about CSRI people enjoy talking about, the most outstanding is the fact that for the steady growth of overseas investments and the expansion of the company they have depended upon themselves with no outside assistance at all.
Wally Chen, the second son-in-law of founder Luo Jye, who has been the company's general manager for 13 years, says 70% of CSRI's investment capital has come from the enterprise's own funds and the rest from bank loans. They have never publicly increased capital. "To inject cash by issuing new stock would inflate the stock and dilute the earnings per share, and so affect the interests of tens of thousands of small investors. And corporate bonds carry an interest obligation, which is an additional cost."
This concept of moving ahead as the situation warrants, Chen calls the "kite theory." The initial capital investment period is like letting out the string to get the kite into the air. Once it's aloft and stabilized you don't let out any more string and the kite remains in the air. Occasionally a gust of wind might come along or the kite might flutter about a bit, then you make some small adjustments. If the overall environment is OK, or your technique improves as time goes on, the kite will fly higher the more string you give it--and the more it flies, the further it will go.
To expand in Europe and the US, Maxxis has to play to the interests of the local consumers and is sponsoring the NBA's Houston Rockets (far left) and German soccer team Hamburger SV (left).