Malaysian glove makers need more than factory efficiency to close China gap
KUALA LUMPUR: Malaysian glove makers may no longer be able to close their cost gap with Chinese rivals simply by making their factories more efficient, as China's largest manufacturers tighten their grip on the supply chain.
KUALA LUMPUR: Malaysian glove manufacturers may struggle to bridge their cost disadvantage against Chinese competitors beyond boosting factory efficiency, as China's largest producers tighten their grip on the supply chain. PublicInvest Bank Bhd highlighted that Chinese manufacturers' advantages now extend to upstream procurement and supply chain integration.
This includes takeover stakes in nitrile latex producers, which strengthens Chinese manufacturers' control over raw material costs and supply. PublicInvest warns that simply improving factory efficiency may not be enough to close the structural cost gap. The research firm points out that Intco Medical, a Chinese manufacturer, is increasingly setting the industry's pricing and operational efficiency benchmarks.
While recent price increases in China have allowed Malaysian manufacturers to raise prices, their cost disadvantage still puts them at risk. Malaysia's market share in glove production has plummeted from 54% in 2018 to 36% in 2025, while China's share nearly tripled to 23%. The country's export value for gloves also dropped 25% to US$3.3 billion.
The decline in Malaysia's production share underscores the need for domestic manufacturers to enhance cost competitiveness and product differentiation. Malaysia's reliance on natural rubber is diminishing as demand shifts towards synthetic nitrile gloves, increasing exposure to petrochemical costs and supply disruptions. Specialty products like cleanroom gloves, which command higher prices and margins, could provide another opportunity.
However, PublicInvest cautions that increasing specialty glove volume is necessary to significantly boost sales and earnings, and the firm remains cautious about this strategy's ability to deliver sustained margin expansion. PublicInvest downgraded the rubber glove sector to Underweight from Neutral following a recent share price rally, while maintaining unchanged earnings forecasts.
The firm also lowered ratings for Hartalega Holdings Bhd and Kossan Rubber Industries Bhd, while keeping Top Glove Corp Bhd at Underperform.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
