Malaysian rubber glove manufacturer Top Glove is seeking to expand its market share in China through new merger and acquisition (M&A) and joint venture (JV) opportunities.
In an interview, executive chairman Lim Wee Chai said the company, which accounts for 13% of Malaysia’s total rubber product exports to China, aims to acquire existing glove factories where they can put in additional machinery in order to compete more efficiently. He also added that the company is open for M&A or JV possibilities with distribution companies in China.
In May, the company acquired two plants in Malaysia to expand its access to China. “Our target is to capture 30% of China’s market share, which we would be achieving with our two acquisitions as exports from these two factories contribute an additional 15% of Malaysia’s total rubber products exports to China,” Lim said.
More than 95% of Top Glove’s rubber gloves are exported, with an export network covering 195 countries. The company, which has 29 factories and 499 production lines around the world, has an annual production capacity of 48 billion pieces.
Another reason Lim cited for Top Glove to seek M&A chances is that the sole factory Top Glove has in China produces polyvinyl chloride gloves, which is being phased out for environmental and health reasons.
“As customers become more environmentally aware, expanding in China will be much more challenging. However, we will continue to run more production lines in our current factory,” Lim said, adding that the group is also setting up marketing distribution companies under its subsidiaries in China to sell natural rubber gloves in the country.
For Lim, China offers companies attractive business and investment opportunities being the fastest-growing major economy in the world. He sees potential in China as glove usage per capita is still low for the country.
He also noted that demand for gloves has increased in recent years as China’s healthcare system was reformed and standards were improved.Healthcare spending in the country is also on the rise as its population becomes increasingly affluent, aware and willing to invest in their health.