The Vietnam unit is expected to become the second largest factory of Top Glove.
Malaysia's Top Glove will open its first Vietnam factory next year as the world's largest glove maker boosts production to meet a surge in demand for hygienic gloves, Nikkei reported.
With the RM100-million ($24.5 million) investment, the local unit is expected to become the second largest factory of the Malaysian company.
According to Top Glove, the plant will be built on an industrial plot in Vietnam, on a total area of over 20 acres. It is projected to be operational by the second quarter of 2020, with 40 production lines and a capacity of up to four billion pieces a year.
In an interview with Japan’s Nikkei Asian Review, Top Glove executive chairman and founder Lim Wee Chai said that the decision to open a factory in Vietnam was not an attempt to reduce its reliance on China amid protracted trade tensions between Washington and Beijing.
"We plan to build at least one to two new factories every year and also remain open to merger and acquisition and joint venture opportunities in related businesses," Lim told Nikkei in an interview, adding that the manufacturer allocates almost US$100 million each year toward factory expansions and automation upgrades.
Last December, Top Glove announced the establishment of its subsidiary Top Glove Vietnam Company Ltd., headquartered in Binh Duong province, to manufacture vinyl gloves and other products. Top Glove Vietnam has a registered chartered capital of VND136.7 billion ($5.94 million).
By December next year Top Glove expects to have 872 separate product lines, up from 648 product lines this year, with total production capacity rising to 83.3 billion gloves, compared to 63 billion gloves in 2018, and 49 billion gloves the year before.
Top Glove, which has a market capitalization of just over US$3 billion, reported US$105.7 million profit last year on the back of US$1 billion in revenue.
Top Glove now operates 40 factories in Asia, including 35 in Malaysia, four in Thailand and one in China. It has 648 glove production lines in total, with a capacity of 60.5 billion pieces a year. Top Glove has over 2,000 customers worldwide and exports to more than 195 countries.
Lim, 61, who founded Top Glove in 1991 with a single product line, said the decision to open a factory in Vietnam was not an attempt to reduce its reliance on China amid protracted trade tensions between Washington and Beijing.
"China's sales of gloves are expected to be diverted to operations in Malaysia, impacting sales here positively," Lim said. "However, this impact is minimal. War of any kind is never good in the long term and we hope this trade war can be resolved soon."
Lim said he expects global demand for gloves to continue rising by around 10% a year. The Vietnam plant is expected to commence production of polyvinyl chloride gloves production mid-2020, with an estimated capacity of four billion gloves a year.
Top Glove’s expansion to Vietnam instead of China was said to be its strategy to tap into the potential vinyl glove market in the country as well as leverage the cheaper cost of production compared to China.
