Asian innovators crossing into Latin America
Top Glove (Malaysia)
MERU, Malaysia -- It is mid-June and the clock has struck midnight, but the lights in Top Glove's marketing department still burn and Joanna Ng is at her desk. Ng is on the line with someone in Sao Paulo, Brazil, which is 11 hours behind Malaysia. She is not getting the latest World Cup updates but rather finalizing a rubber glove order.
Brazil is an important market for Top Glove, where Ng is a general manager. The world's largest rubber glove maker has been winning deals for the past 20 years and currently commands a nearly 35% share of the Brazilian market, where its latex powdered gloves are big in the health care industry.
Top Glove goes all out to meet each country's stringent standards. For Brazil-bound consignments, it prints its name and a serial number on the cuff of each glove as per regulation.
Malaysia's rubber industry has a lot to thank Brazil for. Rubber was one of the natural materials that in the early 1900s set Malaysia on a path toward industrialization, and the first rubber seed of the hevea brasiliensis species originated in Brazil.
Today, Top Glove exports value-added rubber products in a big way to Brazil and other Latin American countries.
Although the U.S. and Europe account for 62% of global medical glove usage, these two markets make up only 11% of the world's population. There's a lot of growth in the remaining 89%, where health care standards are rapidly improving.
"Brazil's current consumption is about 10.5 gloves per capita, compared to the U.S.'s 150 gloves," managing director Lee Kim Meow said. "Assuming that Brazil's demand goes up to half that of the U.S., there is at least a sevenfold growth potential."
Established in 1991 by Lim Wee Chai and his wife, Top Glove holds 25% of the world's rubber glove market. It exports to more than 190 countries. It has 27 factories, most of them here, near the port city of Klang, which is about an hour's drive from Kuala Lumpur. Counting output at a few manufacturing facilities in Thailand and China, Top Glove churns out 42 billion gloves a year.
Growing at a compound annual growth rate of 28%, Top Glove's turnover has swelled almost seventeenfold since its inception, to 2.3 billion ringgit ($721 million) in 2013.
Guided by the motto, "to earn two health dollars and invest one efficient dollar," the company is known to snap up rival companies. The latest acquisitions, in 2012, were GMP Medicare and Agro Pratama Sejahtera, an Indonesia rubber plantation company. Top Glove is also expanding its existing facilities to boost capacity to 44 billion pieces by the end of 2014.
Malaysian rubber glove makers account for about 55% of the world market. They compete ruthlessly against one another as well as with foreign rivals. They also constantly grapple with volatile raw material costs and foreign exchange swings.
To mitigate business risks, Top Glove has ventured into rubber planting. It has a 307 sq. km plantation in Sumatra. When the trees mature, they should meet 40% of Top Glove' latex requirements.
Top Glove has a far-flung sales network. When one region is in an economic downturn, there are others to pick up some slack. Currently, Europe accounts for 31% of the company's revenue and North America makes up 26%. Asia and Latin America pitch in 16% apiece. The Middle East comes in at 7%. No single customer contributes more than 4% of revenue.
The company is also trying to achieve a balanced ratio of natural and synthetic, or nitrile, rubber gloves. The glove maker plans to increase the production of nitrile gloves, which fetch higher prices, from the current 25% to 35% this year.
Hygiene and health care standards are advancing in developing countries, while populations are aging at an accelerated pace in advanced economies. Top Glove may be selling largely to Europe and North America now, but it is a matter of time before the pendulum swings to emerging regions like Latin America.
Bem vindo de volta, hevea brasiliensis.
SAO PAULO -- Sandals made of used tires are becoming popular here. The sandals come from Vietnam. Kind of.
The company that makes them is called Gooc -- a Vietnamese word meaning root. It was founded by Thai Quang Nghia. The 56-year-old immigrant is still president of Gooc, and a photograph displayed in his office tells the story of his career.
It is of a tanker owned by Petrobras, Brazil's state-run oil giant. In October 1978, Nghia was adrift at sea with 67 others on a small boat. He had chosen to leave his homeland even though he hailed from a wealthy Saigon family in the rice-wholesaling business.
After the Vietnam War ended in 1975 and the country turned to socialism, his family felt a sense of crisis. Its members decided they would be better off living away. So Thai Quang Nghia, then 20, went aboard that boat.
The vessel was rescued by the Petrobras tanker. He would then spend several months in Singapore, before moving on to Brazil in February 1979. He did not speak Portuguese, had no family and little money. Although monthly living allowances of $50 from the U.N. would come his way, he lived a tough life.
Nghia learned Portuguese from a handmade dictionary and eventually found a job at a bank. He was frugal and saved enough money to enter the prestigious University of Sao Paulo in 1983. He studied math.
A turning point came in June 1986. Nghia had lent some money to a friend who ran a bag factory, but his friend was struggling to make a go of it and repaid him with nylon-made rucksacks instead of money.
Suddenly it was his job to peddle bags. Day after day, he walked miles selling the things. He found he was good at it and dropped out of the university. Six months later, he started his company to operate a bag factory. His business philosophy was to quickly respond to clients' requests and make sure to always meet deadlines. It was a recipe for expansion, and the client list grew.
The business took off after its bags were included in the 1998 catalog of Avon, the big women's cosmetics company. Gooc began making sandals at Avon's request. Now bags and sandals are the company's two major lines.
Another turning point came in 2004. That is when Nghia's company began marketing sandals made of used tires. Similar sandals are common in Vietnam, where they are known as Ho Chi Minh sandals.
Ho Chi Minh sandals were worn in rural areas by Vietnamese fighting the Americans. Nghia thought the sandals would also sell well in Brazil. Once he heard that Brazil disposes of 70 million tires a year, he sprang into action to make old tires into fashionable footwear. In 2008, the company generated sales of $30 million.
In 2011, fire destroyed the company's factory. Sales are still recovering and in 2014 are expected to be $6 million. Nghia hopes to get back to peak sales in three to four years.
So far, the company has sold 18 million pairs of sandals. Nghia wants to sell 100 million pairs before he dies. Another goal is to have 30 export markets in 10 years. Part of what drives him is the desire to create jobs so as to repay the country that took him in.
SINGAPORE -- Hyflux, a global leader in water treatment, is entering Latin America to counter slowdowns in other parts of the world hit by political instability and changing market circumstances.
The pioneering Singaporean company is partnering with Banco Interacciones, Mexico's leading public sector infrastructure bank, in Mexico's expanding water treatment market. Mexico's public sector has some 200 water treatment projects in the pipeline over the next five years, with values ranging from $10 million to $150 million.
A wholly owned subsidiary, Hyflux International, signed a memorandum of understanding with Interacciones to bring technical expertise.
Hyflux's specialties include desalination, recycling as well as wastewater and potable water treatment. Its strategy is to focus on fast-growing markets where there is need for advanced wastewater treatment, reuse and desalination. It looks to win deals in markets that have subsidized water infrastructure development programs.
Water resources are distributed unevenly in Mexico because of the country's varied geography and climates. The country's greatest population growth is occurring in areas where water is scarce. Hyflux has built its water system know-how on projects connecting Malaysia and Singapore. It has also taken on projects in China and other Asian countries.
Said Olivia Lum, executive chairman and group CEO of Hyflux, "There are tremendous opportunities to leverage our technologies and expertise to provide alternative, sustainable water and environmental solutions to meet the water and wastewater needs of a growing population and infrastructure investments."