Nairobi-listed company Sameer Africa has inked a lucrative franchise deal with a “leading Chinese tyre manufacturer”, which will see the company supply cheaper tyres to Sameer, as it seeks to boost sales after it last year ended ties with ex-partner Bridgestone Corporation.
Sameer’s contract with Japanese tyre manufacturer, Bridgestone, which included manufacturing, distribution of tyres and technical support, terminated last year leaving the company with the task of finding another strategic partner.
“We have already concluded a licensing agreement with a leading Chinese tyre manufacturer,” said chairman of Sameer, Erastus Mwongera.
He added that specifications will be given for the manufacture of Summit tyres from China, which would be made under Sameer’s direct supervision and introduced later in the year.
Following the end of its contract with Sameer, Bridgestone got a new distributor for its brands in the Kenyan market, giving Sameer a stiff competition against a brand it once had exclusive rights to.
Mwongera is however optimistic it would continue doing well in the Kenyan tyre market with the Summit tyre brand.
The deal is seen as strategic, as the Kenyan tyre market now offers competitive pricing with cheaper Asian imports growing exponentially (currently stands at 50 percent of the tyre market).
Sameer, which posted a net income of $4.6 million for the year ending December 2013, is also discussing the possibility of getting technical expertise in tyre manufacturing from another company, just as it intends to produce new tyre sizes and upgrade production facility.