With the volatility of both latex prices and currencies, will the profit and growth of the glove industry be sustainable, and the targeted world market share by Top Glove achievable?
In the last one year, players in the rubber glove industry were surprised by the sharp and sudden increase in the latex prices which was at its all-time high of RM10.99/kg early this year. Coupled with the unfavourable currency movements, we were hard hit. However, just like any other problems in life, after you've encountered it once, you become wiser and are more prepared in overcoming it in the future.
We have come to accept that we are in an era of intensified economic cycles and strong volatility due to uncertain global economic situation, the unpredictable weather condition and rampant natural disasters. Therefore, we have to evolve our business model and re-strategise accordingly. We have learned that while being big, it is important to remain agile by having a diversified product mix and having flexible facilities that could respond to different market demands quickly. Once the volatility is factored in, profit and growth should become sustainable. After all, demand is still robust, as glove is a necessity in the healthcare sector.
We expect to see a 30% improvement in our profit in the coming financial year due to the lower latex prices and stronger US dollar.
Given our strong and positive net cash position, this would now be an excellent opportunity to gain market share. During such tough times, the cash-rich would have the ability to hold on. We would also have the financial capability to acquire other companies. Top Glove is still expanding organically and with a potential merger and acquisition (M&A) it is likely we could achieve the targeted world market share of 30%
How did you start your company from such a small size, to what it has become today? How much capital did you spend when you first started your rubber glove business? Who is your mentor?
My mentors are some of the successful Malaysian and international business entrepreneurs.
In 1991, foreseeing a larger emphasis on healthcare, I channelled my glove manufacturing skills into entrepreneurship. My wife and I saved very hard to come up with RM180,000 to start our business.
We had to earn the trust of customers, suppliers, bankers, staff and business associates. Not many companies were willing to order from us but I was not defeated in spite of numerous rejections. Eventually, our quality, cost efficiency and competitive pricing spoke for themselves and we established our presence worldwide. It was the sheer passion for what I enjoyed doing and what I believed in that gave me the strength and determination to keep working at expanding the business.
As we progressed and grew our business, research and development initiatives were undertaken to ensure we kept up with the stringent requirements and demands from our customers and to achieve continuous quality and efficiency. We believe in quality products, always keeping our cost low and being efficient. These are arguably some of the most important criteria for a good company to stay fit regardless of the economic situation.
Having the foresight to expand capacity was also another important factor to our success. It enabled the company to capture the growth in the rubber glove industry. Top Glove's focus on being an original equipment manufacturer since the early days allowed greater economies of scale which translated to more competitive pricing. By mid-2004 we became the world's largest rubber glove manufacturer. Today, we export to approximately 1,000 customers in over 185 countries through our sales and marketing offices in Malaysia, the United States and Germany.
Looking at the achievements of Top Glove today, no doubt your employees are the best assets in making this huge success a reality. How do you motivate your staff in delivering results for the company?
Yes, you're right. Our employees are our greatest assets. Many have stayed on with the company since the early days and have grown together with the company. The long-serving management team provides continuity and stability to the business and enables the development of forward-looking strategies. These strategic initiatives are in turn executed by a highly skilled and dedicated workforce.
We recognise that each employee has different needs and different motivating factors. Therefore we try to cover all bases. At the most basic level, we ensure that our employees' contributions do not go unnoticed. We reward them accordingly based on their performance through a competitive remuneration package, promotion, bonus as well as employees shares and option scheme. We also have monthly recognition for staff that have demonstrated the desired behaviour and delivered the best results in their respective areas. We also invest in the development of our people through regular training. At Top Glove, there is no limit to a person's growth. He or she has every opportunity to become a GM, MD or even a chairman.
When employees have a strong sense of belonging, they voluntarily go the distance to deliver the results. Therefore, at Top Glove, we encourage open communication and feedback from employees at all levels. We are like a big family that shares and learns from each other. Besides that, we are also committed to their health and safety. We monitor their body mass index (BMI) and strongly discourage smoking. In fact, it is a policy that we do not hire smokers. Top Glove has also employed two corporate nutritionists to design the company's cafeteria menu and counsel our employees on suitable diets for individuals. In addition, Top Glove offers its employees subsidised sports facilities to encourage them to exercise.
Besides rubber gloves , what do you or Top Glove plan to venture into and how can Malaysia be ahead or remain competitive in the making of rubber products?
Top Glove will focus on doing what it is good at. We currently have 20 glove factories in Malaysia, Thailand and China manufacturing more than 10 types of rubber gloves which include, among others, examination, surgical, household, cleanroom and industrial gloves. In addition we have moved upstream several years back to set up two latex concentrate factories for better quality control and to ensure more consistent supply.
In the long run, we plan to further integrate upstream into rubber plantation to minimise the fluctuation of rubber price impact on our earnings; as well as to balance our upstream and downstream activities and investment performance. Top Glove's demand from its rubber glove production is big enough to justify having its own plantation to supply its own latex needs. This project is for the long term. We have to start today; or else we would not ever have rubber plantations. These plans were already in the pipeline regardless of the current challenges.
In order for Malaysia to remain competitive in the making of rubber products, the rubber products industry would need to diversify further, emphasising on high value-added and high technology rubber products.
The Government also ought to step up production of rubber to ensure that the local producers can continue to secure latex at a competitive price. In addition, to provide support in the form of technical assistance in research and development, and in promoting our products in the international market through tradeshows and educational campaigns on the benefits of rubber-based products.
What is the one advice you would give to entrepreneurs who are struggling to build their business? What are some of the guiding points you would ask them to be mindful of?
Success is a journey and not a destination. It does not come easy at all. Hardwork is one of the most important elements. There is no short cut around hardwork. But hardwork alone is not sufficient, we also need to work smart and have good teamwork.
We must also commit to our dream and be persistent in the face of challenges. Never give up for if you give up the first time you fail, you will only end in failure. Just keep looking ahead, stay calm and be focused, continue doing what you are best at until you succeed. In time, excellent results will be yours. Always think positive and stay fit physically and mentally.
The important thing is profitability, there is no point being large but losing money. We are guided by the investment direction of “earn two healthy dollars and spend one efficient dollar”. What it means is that we should only spend RM1 for every RM2 earned and ensure that we earn it in a healthy manner. It is important that every company has a business direction. And always plan ahead to capture the growth in the market by setting medium and long-term targets.
Underlying all these, the entrepreneur needs to be principled and never compromise his integrity be honest and transparent.
I read that you are very health conscious. Are you a vegetarian, and what does your diet consist of? What sort of exercise do you still do?
Health is very important. We need to have a healthy body and a healthy mind in order to perform at our best and make the best decisions. I try to ensure that I eat healthily, work out often and have enough rest. Only by taking care of myself am I able to do well and compete in the intense global market. My wife and son are vegetarians but I am not. I just prefer to eat more vegetables. Exercising is part of my work schedule.
I exercise four days a week, which consist of two days of badminton and two days of evening golf. At times I will also go for a round of table tennis.
Are you a moderate or a liberal person? What are some of the life principles that you truly hold on to?
I don't think there is one word that can adequately describe a person. I can be moderate in my views on some matters and liberal on others. In my life, I have always adhered to a few simple guiding principles:
i) To always add positive values to my family, my company and the community
ii) To earn money ethically, compete in a healthy manner and to take care of society
iii) To always think positive, stay healthy and be honest
What do you want from life?
I am very driven to succeed. And success means staying healthy and doing well in all aspects of my life, including my family and my company and being able to contribute to the society.
You are one of Malaysia's most well liked corporate figures because of your humility and honest ways. Is this due to your humble background or was it something you learnt on your own through religion or a mentor?
Thank you for the compliment. To me, respect has got to be earned. It is not given nor can it be demanded. My humble background, education, Buddhist teachings and some life philosophies played a big part in how I live my life. Since young, I was also taught by my father to have zi ai or self-respect and self-discipline. We need to be mindful not to do anything to harm ourselves and we need to always take good care of ourselves. Therefore, I do not believe in behaving unethically for short-term gain but which in the long run may burn myself and destroy my self-worth. Likewise, being humble and respectful of others is also respecting myself.
As you approach the second half of your life, what is it that you hope to achieve for yourself and your company?
I have always enjoyed working and keeping myself busy. I aim to stay healthy and live until 100 years old and it is my target to remain active till then. I hope Top Glove will be even bigger and stronger by the time I hand over the reins.
