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Malaysian glove industry is dead in the long run. China players have already vertically integrated their operations, and they control the whole supply chain. Meanwhile Malaysian glove players they still have to buy the raw material in the market. China players cost structure now is much lower and it is too late now to change anything but to get steamrolled by the Chinese players. This is the result of year in year out doing the same thing when times were good and not looking to consolidate thie operations.
After seeing Top Glove’s latest QR, I don’t think the China players can grab a big chunk of the market. They usually cut margins or even sell at a loss just to chase volume. That kind of move won’t last, it’s a ticking time bomb
World demand for glove is around 370-390B. Demand is still growing every year. China still unable to cope up with all the demand. As far as I know, China is supply part of the demand only.
Is this factual or wishful thinking from you all?
Lets factcheck:
1. China usually cut margins or even sell at a loss just to chase volume: According to Intco latest qtrly result, they made 224m yuan profit against 2.51b revenue. So unlikely for statement no. 1.
2. China still unable to cope with all demand: For now China's global supply is 28% and Intco has just expanded 5b supply in Indonesia. If we extrapolate to the future, China's % share will increase. So we shall see.
The expansion at overseas is hard to control operation cost. Some of the globe’s overseas are making lose. Even China is making small profit. It is impossible to exponentially building factory.
