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2b pieces a year - world's largest condom factory

Karex's executive director Goh Miah Kiat holding up condom packets produced in his factory. Goh comes from a family that has been in the rubber industry for four generations. The company is planning a public listing. (ST PHOTO: AZIZ HUSSIN)

Publication Date : 01-10-2012

 

The white, low-rise factory blocks in Karex's Pontian headquarters are so nondescript, one is unlikely to give them a second look while driving along the roads of this quiet seaside town.

But this 3.6ha compound, just an hour by car from Singapore, houses what is probably the world's largest condom factory. About 1,000 workers man production lines here, which churn out two billion condoms a year.

Its other factories in Klang and Hatyai, a Thai city near the Malaysian border, produce another one billion condoms, bringing Karex's total output to about three billion, or roughly 15 per cent of the world supply. That makes Karex the top condom maker in the world.

It produces condoms for top global brands, although it is contractually bound not to reveal their names. It also has its own house brand, Carex, which is sold in more than 30 countries.

"Sometimes we get strange looks when we go out for dinner and everyone is discussing condoms, but this has become so much a part of our lives that we don't think much about it," laughed executive director Goh Miah Kiat, whose grandfather founded the company.

Having been born into a family that has been in the rubber industry for four generations, Goh grew up used to the caustic smell of rubber.

Karex began manufacturing condoms in 1989, after first toying with the idea of making rubber gloves. But it only recently bobbed into the spotlight when it revealed plans for a public listing.

The company hopes the funds raised from that exercise will double its production capacity to six billion condoms a year, to meet the growing demand for condoms worldwide.

According to market research firm Global Industry Analysts, the global condom market is expected to be worth US$6 billion in 2015, with a worldwide supply of 27 billion condoms. That is up from the current supply of 20 billion condoms, valued at US$4.2 billion.

The demand for condoms worldwide has grown strongly over the years as more people accept its usage, said Goh.

"You can see how condoms are marketed differently now. In the past, packages showed sexy women in bikinis," he said.

"But now they are plain, like sweets, because condoms have become a lifestyle product."

The bulk of condom purchases worldwide, however, are not driven by consumers but by governments and non-governmental organisations, he said.

The humble piece of rubber is an important - and cost-effective - method of HIV/Aids prevention, particularly in developing countries. Most of these condoms are distributed free of charge.

In South Africa, for instance, which has the world's highest prevalence of HIV/Aids, the usage of condoms among the population has risen from 27.3 per cent in 2002 to 75.2 per cent in 2009, said Goh.

Contracts with governments and agencies make up about half of Karex's sales, and have greatly boosted the company's bottom line in recent years. Last year, Karex's revenue exceeded 200 million ringgit (US$64 million).

Malaysia will be hoping that Karex's IPO - which is being slated for next year - is a success.

The country is looking to cement condom manufacturing as one of the cornerstones of its rubber industry. It is already the largest rubber glove maker in the world, accounting for about 60 per cent of the global supply.

It also surpassed Thailand as the world's largest condom producer in 2009. Last year, Malaysia accounted for about a third of the world's condom export share, in terms of quantity.

According to the Malaysian Rubber Export Promotion Council (MREPC), Malaysia's annual capacity for condom production was 4.5 billion pieces last year. This is expected to increase to 4.8 billion this year.

"The global condom market is often described as recession-proof and is expected to grow at 8 per cent annually," said MREPC chief executive Teo Suat Cheng. "We expect export revenue from the condom industry in Malaysia to grow by 10 per cent to exceed 300 million ringgit in 2012."

 

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