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Malaysian firms face threat as China dips its hand into glove market

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Hartalega Holdings Bhd chief executive cites capacity expansion plans announced by Chinese producers.

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Free Malaysia Today
Hartalega Holdings Bhd said its glove factory is operating only at 70% capacity utilising 60% of its workforce.

PETALING JAYA:
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 next year, from an estimated 16% currently, based on their announced capacity expansion plans, Kuan said today.

Malaysia’s market share is expected to shrink to 60% by next year from 67% currently, he added.

The Chinese companies have been meeting rising demand from the US and Europe amid production disruptions caused by a flare-up of the Covid-19 pandemic in Malaysia, the world’s largest rubber glove supplier.

Free Malaysia Today
Kuan Mun Leong.

“Like it or not, China is now a force to be reckoned with and is a competition we should recognise,” Kuan said in a virtual briefing after the company’s annual shareholders meeting.

“I don’t see Malaysia lose its leadership position in the near and medium term,” he said, adding that he’s unsure if the country can keep its dominance in the long-term.

Hartalega is currently operating only at 70% of its capacity utilising 60% of its workforce, Kuan said.

Operating at full capacity would require the company to test all its 9,000 workers for Covid-19 every two weeks, which he described as a major disruption.

Kuan also said he expects the average selling price of gloves to normalise by the first quarter of next year after having been on a downtrend since its peak in the second quarter of this year.

He added that the company will spend RM1.3 billion in capital expenditure over the next three years, mainly earmarked for automation, research and development and digitalisation.

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