A Watershed Year for Some
Recently, I read about Top Glove’s surge in sales and profit for the last financial year. Top Glove is a Malaysian rubber glove manufacturer who also specialises in face masks, condoms, dental dams, and other products. The company owns and operates 46 manufacturing facilities in Malaysia, Thailand, China, and Vietnam.
Buying Gloves is Complicated..
This reminded me of my attempt sometime back in June this year when I was trying to buy hospital surgical gloves for a Saudi buyer. It was a time where demand was skyrocketing (it still is actually) and it was truly a seller’s market. That exercise revealed an interesting insight. Almost all of the glove manufacturers’ actual and forecasted production output were already pre-sold to buyers, most of whom were buying simply to resell their rights to the production. You couldn’t even connect with any manufacturers because they had no interest in you, after having sold out their production quota for the rest of the year and even beyond. What was available in the market then were these pieces of paper, bestowing the holder to the production rights and they were selling for many times their original cost. Some of these papers had changed hands multiple times and there was only the promise of future stocks backing their value.
The Lesson Here…
The distribution channel is not as clear cut as you think. Buyers and Sellers in different markets have to grapple with different issues. Sellers were demanding cash payment deposits upfront. LCs (Letters of Credit) were not acceptable to sellers here, simply because they actually don’t have the stock physically and/or are merely buying the stock from another party who was demanding cash upfront too. You get the picture. For manufacturers like Top Glove, the pandemic was a godsend as they sold out their production in advance and receive certain cash upfront. So for businesses setting up their supply chain, it is imperative that they understand how the players work before they even start their journey.
