Malaysian Glove Makers Face Challenge From China, Hartalega Says
(Bloomberg) -- China could emerge as a major force in the global rubber gloves market and threaten the dominance of Malaysian companies in the long term, said Kuan Mun Leong, CEO of Hartalega Holdings Bhd., one of Malaysia’s biggest glove producers.
Chinese glove makers are expected to contribute 23% of the total share of the world’s glove supply by 2022 from an estimated 16% currently based on their announced capacity expansion plans, the Hartalega CEO said on Tuesday. Malaysia’s market share is expected to shrink to 60% by 2022 from 67% currently, he added.
The Chinese companies have been meeting rising demand from the U.S and Europe amid production disruptions caused by a flare-up of the coronavirus pandemic in Malaysia, the world’s largest rubber glove supplier.
“Like it or not, China is now a force to reckon and is a competition we should recognize,” Kuan said in a virtual briefing after the company’s annual shareholders meeting. “I don’t see Malaysia will lose leadership position in the near-and-medium term,” the CEO said, adding he’s unsure if the country can keep its dominance in the long term.
Hartalega is currently operating only at 70% of its capacity utilizing 60% of its workforce, he said. Operating at full capacity would require the company to test all its 9,000 workers for Covid-19 every two weeks, which Kuan described as a major disruption.
- Hartalega sees the average selling price of gloves to normalize by the first quarter of next year after having been on a downtrend since its peak moving into second of the year, Kuan said.
- Company to spend 1.3 billion ringgit ($313.4 million) for capital expenditure over the next three years, mainly earmarked for automation, research and development and digitalization, he added.
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