MALAYSIA-based Top Glove, a leading maker and supplier of rubber gloves is expanding its capacity through creating a total of 22 glove factories across the country to achieve its goal of partaking 30% of the global market share by 2015. RJA has recently interviewed Top Glove’s Founder and Chairman, Tan Sri Lim Wee Chai regarding the current developments in the company.
PRA: Top Glove posted record quarterly results, what is this success attributed to?
Tan Sri Lim Wee Chai: We have a clear business direction, a good corporate culture and management practices as well as a highly efficient management team and good team work that contributed well to our company’s success.
In line with our business direction to produce consistently high quality gloves at efficient low cost, we have continuously improved our product quality and production efficiency. Research and development initiatives are undertaken to achieve continuous improvements in our product range to satisfy the ever-changing needs of our customers and market demand.
PRA: With four factories now in Thailand, what new investments are being made by Top Glove for the production of medical gloves in Thailand?
Tan Sri Lim Wee Chai: We aim to invest more in technology geared towards automating and computerising our production and packing operations, with the ultimate goal of reducing labour intensive manpower needs while raising the average production output per line. With the improvement in production efficiency to produce better quality gloves, this would improve our bottom line as well.
PRA: What about Vietnam and Indonesia – are there any investments being planned or considered for the production of medical gloves in these markets? Or is the company considering any M&As in these markets?
;
Tan Sri Lim Wee Chai: We recently acquired a company in Indonesia which owns 30,000 ha of plantation land. With the purchase, Top Glove will be involved in the upstream business of planting and processing our own rubber that will provide consistent raw material supply and also mitigate commodity price volatility on the group’s performance. As for M&A, we are open for any opportunity if available in those markets.
PRA: In your opinion, what are the strengths of Malaysian glove products in Thailand, Vietnam and Indonesia?
Tan Sri Lim Wee Chai: Malaysian glove products which contribute to the economy of scales benefit Malaysian manufacturers. Proactive and aggressive marketing plans are implemented to determine which markets to expand its presence. The product range is catered for both developed and emerging markets such as Thailand, Vietnam and Indonesia, unlike other competitors who focus more on developed markets. Top Glove’s ability to project and foresee future growth markets has enabled us to stay ahead of our competitors.
Tan Sri Lim Wee Chai: In your opinion, what are the weaknesses of Malaysian glove products in Thailand, Vietnam and Indonesia?
We lack some of the natural advantages enjoyed by the competition, namely, latex supply; Malaysia imports 90% of all latex used in glove production from these countries.
PRA: What are the major opportunities and barriers for Malaysian medical gloves in Thailand, Vietnam and Indonesia?
Tan Sri Lim Wee Chai: As for opportunities, the demand for both natural rubber and nitrile gloves will continue to grow as gloves are deemed basic necessities, especially in the healthcare industry. The global demand for both natural rubber and nitrile gloves projected at a rate of 8 to 10% per annum.
PRA: What types of marketing are most effective for Top Glove in countries like Thailand, Vietnam and Indonesia? Are these the trade shows, your branding, etc?
Tan Sri Lim Wee Chai: At trade shows you are given the avenue to showcase, demonstrate and educate on our latest products in ways not possible using other marketing channels.
We generate sales leads and meet many potential customers face-to-face making trade shows a good way to establish and reinforce relationships. We also get to observe the competition and improve the effectiveness and efficiency of our existing marketing efforts.
PRA: What is your estimate for the local market size in terms of rubber gloves consumption for Malaysia ? What about Thailand, Vietnam and Indonesia?
Tan Sri Lim Wee Chai: Based on available statistics, the average consumption of gloves per capita in each of these four countries is estimated at less than 10 pieces per annum; much lower than the average consumption in the developed economies which is estimated at more than 100 pieces per annum.
PRA: What challenges lie ahead for Top Glove, especially in Malaysia where the company has most of its factories and what steps is the company taking to mitigate these challenges?
Tan Sri Lim Wee Chai: We recently acquired a company in Indonesia which owns 30,000 ha of plantation land. With the purchase, Top Glove will be involved in the upstream business of planting and processing our own rubber that will provide consistent raw material supply and also mitigate commodity price volatility on the group’s performance. As for M&A, we are open for any opportunity if available in those markets.
We also aim to invest more in technology geared towards automating and computerising our production and packing operations, with the ultimate goal of reducing labour intensive manpower needs while raising the average production output per line. With the improvement in production efficiency to produce better quality gloves, this would improve our bottom line as well.
PRA: What is the future outlook for Top Glove as far as targeted output capacity, market share, entry into new markets, and entry into new types of gloves are concerned?
Top Glove’s goal is to achieve 30% of global market share by 2015. The plan to achieve this is by investing RM3 billion over the next 15 years, to further expand our production capacity with advanced and high technology production facilities as well as invest in R&D, upstream and downstream activities. 40 new factories will be built equipped with advanced technology equipment.
This significant investment has been recognised as an Entry Point Project (EPP) by the Performance Management and Delivery Unit (PEMANDU) under the Economic Transformation Programme (ETP) by the Malaysian Government. All EPPs will lead Malaysia towards achieving a high- income nation status with a per capita income of RM48,000 and create 3.3 million new jobs by 2020.
With the current capacity of 40 billion, Top Glove continues to expand its capacity with the planned addition of new production lines; and by the end of August 2013, the total Group’s capacity will have increased to produce 44.8 billion pieces of gloves and 510 production lines to meet the expected global demand of more than 154 billion pieces per annum.
Top Glove will put equal investment weight on emerging markets going forward to capture demand growth in these markets as the increase in healthcare standards in these countries will subsequently increase demand for medical gloves. (PRA)