Glove maker Supermax Corp Bhd is set to “grow strongly” next year as it expands distribution of its own brand manufacturing (OBM) products in India, China and Japan, said executive chairman and group managing director Datuk Seri Stanley Thai.
Asia only makes up 6% of its total exports currently, Thai told StarBiz on the sidelines of the International Rubber Glove Conference and Exhibition recently.
The group is looking to increase the penetration of its gloves in the region as other glove manufacturers paint a rosy picture for glove demand in emerging markets, with growth seen as high as 100% in some countries.
Japan, the world’s third largest economy, would be a key market for Supermax, Thai said.
“Over the past 14 years, we have established a strong distribution network in the Western Hemisphere, but not in Asia,” he added.
Supermax has a sizeable distribution centre in Chicago and it is the largest and most popular glove brand in Brazil, where its market share stands at 35% to 40%, according to Thai.
“We have a good product, which we market well, and consistent quality. We have spent a lot of money on advertising and promotion.
“In the US, Supermax has been voted the top 2 most popular brand in the dental industry and laboratory market. We are neck and neck with the other American brands and are able to compete with them without having to undercut prices,” he said.
The group plans to set up its European headquarters in London next year to oversee all its marketing and distribution activities in the UK and Ireland, as well as manage its European investments.
Some 70% of its production is OBM, in contrast to other domestic glove producers which supply mostly to the original equipment manufacturing market, or OEM.
Thai had previously said profit margins for nitrile gloves, which enjoy a premium to gloves made of latex or natural rubber, were headed to single-digit territory amid aggressive capacity growth in the synthetic rubber glove segment.
“Those with high margins will be hard pressed, as Malaysia is not the only one increasing its glove capacity.
“OEM manufacturers will be the hardest squeezed in terms of pricing. Competition will only get more intense next year, especially for nitrile,” he said.
Supermax’s own capacity expansion would be driven by demand, Thai said. “We don’t depend heavily on the OEM market.”
RHB Research Institute said in a note last month that while Supermax’s earnings in the first half were dragged by losses resulting from a fire at its factory in Alor Gajah during the fourth quarter of last year, the affected plant was returning to normal operations.
The commissioning of new lines at its plants in Meru, Klang, with capacity coming on stream progressively since August, would also double Supermax’s nitrile production to 12.3 billion pieces of gloves per annum from 5.4 billion currently, shifting its production mix to 53% nitrile and 47% latex.