THE “RUBBER GLOVE SYNDROME”

During mid 80’s, I’ve met up with a potential American investor looking at the possibility of setting up a examination rubber glove factory in Malaysia. These gloves are for consumption in the US markets. Apart from looking at the possibility of investing, he also managed to talk to a number of Malaysian investors who are eager to invest in new opportunities. After series of talks and negotiations, the American offered a deal to these Malaysian investors to produce and supply a minimum of 10 million pieces of gloves per month. He is expecting a total constant supply of about 50 million pieces a month. At least 10 local manufacturers were then frantically set up examination glove factories all over Malaysia with each producing an average of 10 million pieces monthly supplying to that particular American investor’s need – equivalent to a total production capacity of about 100 million pieces per month. In actual fact, that US trader only commands a market share of about 50 to 60 million pieces monthly.

By the time these 10 factories were in production, news that rubber gloves are the “new gold” spread throughout Malaysia and no sooner that dipped rubber glove factories started mushrooming and expanding supplying various types of dipped gloves especially for the US markets and the European markets. In less than 5 years, there was intense competition among the local small and medium scale glove manufacturers both in securing constant supply of latex as main raw material and particularly in trying to secure market orders from a few select US traders. As the competition became more and more intense, new players crept into the market resulting in excess production capacity. Price war then emerged as the prime tool for these manufacturers to outdo each other. As a result, the rubber glove industry has turned itself into “survival of the fittest” – product quality of some of theses manufacturers soon deteriorated and export price of rubber gloves dipped further. What was left was only a few survivors; some were bought over by larger corporations, both by local and foreign investors. Others died in doldrums.

The real situation as described above is what I personally called the “Rubber Glove Syndrome”. It is a common trait among Malaysian business community existed till today and forever.

The Rubber Glove Syndrome is basically termed as “the flocking of capital and assets by Malaysian businesses and investors in an uncertain market demand purely based on hearsay and artificial business environment.” In other words, most Malaysian businesses and investors are generally not business leaders but mere followers; they emulate what a select few has started and in so doing distorts market conditions and disrupts business viability.

We can see the same situation happen in the tiger prawn rearing industry, in oil palm sector, the chicken breeding industry, “kedai makan tom yam”, the cut flower industry, automotive parts manufacturing and hosts of other businesses. The same situation occurred repeatedly and will continue to occur. But then again, if a business opportunity knocks on the door, shall we just lay on the sideline watching others enjoying their Mercs, and BMW’s?

Now that the government is hype on transforming and modernizing the food production sector as outlined in the Third National Agriculture Policy and the 9th Malaysia Plan – the emergence new breeds of goat breeders, dragon fruit farmers, herbal growers and herbs formulation manufacturers, various multi-level business and so on and so forth. What’s becoming of them in a few years time? How many of them will survive? Only time will tell!

Whatever it is, the “Rubber Glove Syndrome” should be done away with!!!