Kuam Kan Hon is a Malaysian businessman and founder of Hartalega, the biggest manufacturer of nitrile gloves in the world.
He owns roughly 50% of the company and has a net worth amounting to $2.3 billion as these lines are written.
Here’s how he did it.
Kuam Kan Hon was born in Kuala Lumpur in 1947.
He was the son of a luxury home builder.
We know little about Kuam’s childhood or private life. He rarely gives interviews and when he does, it’s always about business.
All we know is that Kuam began working at an early age.
He quit high school in 1969 to work in the construction company of his father.
At the time, the Malaysian economy was booming, and demand for luxury real estate was high.
He worked for his dad for 9 years with the intention to launch his own real estate company one day.
At the end of the 70s though, the economy wasn’t as good as it was a decade earlier.
So Kuam let the real estate dream go.
Instead, he opened a woven badges and labels factory in 1978 called Timol Weaving.
The business did well, but profits weren’t extraordinary.
Two years later, AIDS was discovered and no one really knew how it was transmitted. As a result, healthcare workers began putting on rubber gloves to protect themselves.
When a friend pointed out to Kuam that glove demand was going to spike, Kuam decided to shift his badges business. He taught himself how to make rubber gloves and began with just one production line.
About his early days, he declared that “success is a journey, not a destination.”
The glove business did well and Kuam rapidly expanded.
In 1981, he decided to let Timol go and set up another company specialized in rubber gloves. He called it Hartalega, meaning “relief assets”.
Kuam was involved in the day-to-day operations from the very beginning. Passionate about engineering, he was rarely in his office and spent his days with his workers, always trying to innovate processes.
This dedication encouraged him to create an important engineering department that built the entire engineering process by itself. All innovations were made in-house.
Their production technology is the most efficient in the industry, which enables them to produce more gloves faster and cheaper than their competitors, with higher margins.
In 2002, Hartalega, started investing in R&D because of two problems.
First, they needed to find a substitute for rubber. Rubber contains protein that some people are allergic to. Many patients and doctors could not be touched with rubber gloves.
While nitrile was a good replacement solution, nitrile gloves were thick because they were designed for industrial purposes only. Doctors and nurses would not be able to use their fingers properly.
So their second problem was to invent a thin nitrile glove.
They knew the task would be arduous as it was rumored to be impossible.
Furthermore, the manufacturing process would be completely different so they’d have to come up with new engineering processes and production lines.
They began working and three years later, their efforts were rewarded. Hartalega invented the first lightweight nitrile glove, weighing 4.7 grams only instead of 6!
The thin nitrile glove sounded the death knell of latex. In 2005, latex gloves occupied 95% of the market share. Nitril gloves ate their share and grew at a pace of 20% per year.
Hartalega kept on growing organically.
In 2008, Hartalega went public. 4 million shares were reserved for employees exclusively. The company raised enough money to expand by 80% that year and planned a 50% expansion in 2009.
Puzzled, investors wondered where Hartalega was going to sell their gloves as the glove industry grew much slower than the company.
“We’re taking the shares of the rubber gloves market”, simply answered Kuam.
A bit of luck helped him do so as in 2010, the price of rubber went up. This naturally directed users towards Hartalega’s products as H1N1 threatened the world.
Hartalega kept on innovating and in 2011, produced yet a lighter glove weighing 3.2 grams.
In 2012, Kuam decided to take a step back from Hartalega. He stepped down from the role of CEO while remaining chairman and ceded the seat to his son.
The company grew exponentially since then.
In 2013, Hartalega had 6 plants, including workers quarters, a research and development centre, a sports complex, and even a learning center. These facilities produced 13.6 billion gloves per year.
Projecting strong growth, the company spent $580 million that year to build a manufacturing plant with 72 production lines ready to operate by 2021. They planned to produce an additional 28.5 billion gloves a year, then to get the total number of gloves to 44 billion once the remaining plants would be finished.
In 2017, Hartalega’s competitor began to differentiate making condoms, car parts, and contact lenses.
Investors pressured the company to do the same but Kuam simply refused.
He explained that Hartalega’s success in the glove industry was due to their willingness to focus. They were leaders in gloves because gloves were all they did.
Furthermore, they still saw opportunities in the industry and did not feel the need to diversify.
Kuam respected his promises. Hartalega launched the first non-leaching antimicrobial glove that same year.
This new product contains an in-built antimicrobial technology that kills microorganisms and prevents the spread of infections.
Rather practical in a hospital!
By 2018, nitrile gloves occupied 60% of the glove market and Hartalega had doubled in size compared to 2015.
Finally, 2020 was the year the company beat all the records.
The pandemic skyrocketed the demand for nitrile gloves to 120 billion per year.
Hartalega produced 1/3 of them, and their pre-tax profit for 2020 amounted to…$500 million.
As a result, the shares peaked in July 2020 and Kuam’s fortune quadrupled. The shares have since tumbled back to 5.7 MYR, a pre-pandemic price.
Hartalega relentlessly focuses on innovation and engineering. Factories are automated as much as possible to improve productivity and decrease costs.
They also installed a biomass energy plant in 2007 to produce energy and decrease reliance on gas. The plant functions with empty fruit bunch fibers as fuel, a cheap, abundant, and useless commodity in Malaysia.
Hartalega is a family business. Kuam has his three sons working in Hartalega, and two of his nephew.
One of them is a mechanical engineer and has an MBA.
The other, an accountant, is executive director and oversees the sales, finance, and marketing department.
The third one is the CEO.
The glove business, while being a bit boring, is a fantastic industry.
Without pandemics, demand for gloves grew by 8-10% per year, so with the pandemics (H1N1, Covid, etc), it’s growing at a pace unseen before.
Meanwhile, Hartalega, despite being the giant that it is, is still growing at 20% per year. Since they IPOed in 2008, they never lost money.
In fact, their sole worry is not being able to supply enough gloves fast enough.
The company plans on manufacturing 95 billion gloves per year by 2027, roughly twice what they produce now.
They’re also moving into tech with the creation of a connected smart factory. They already have a few Internet of Things technologies operating at this moment.
When asked for business advice, Kuam explained that there are no best practices or “checklist” to build a company. It’s a matter of solving problems as they are coming.
While Kuam did not give any further details, he said that there had been a lot of failures at Hartalega.
“In running a business, there are many variables. Targets are always moving, so we need to make quick and accurate decisions. This is why those who pay more attention to details will hit the target first and win,’’ he once declared.
As they seek to expand outside of Malaysia, Hartalega is currently building a blueprint that analyzes the best business practices in their line of work.
The company may be 33 years old, it feels like they are just starting.
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Picture Credits: The Star