Trial Assessment Set

Questions 1 to 7 are based on the following passage.

1. At a time when most industries are predicting gloomy days ahead, the country’s rubber glove manufacturers see a bright future. Global demand is expected to remain strong, especially for medical gloves. Historically, the rubber glove industry has been blessed with rapid growth in global demand estimated at 8 per cent to 10 per cent per annum. The growth in demand is anticipated to continue, driven mainly by the traditional medical market and an aging population. Malaysian glove makers are the world’s leading players, accounting for 55 per cent to 65 per cent of the market share. Industry players have also begun to focus on nitrile gloves as these gloves have become more popular in hospitals due to their low protein content versus latex gloves. 5

2.     A leading glove manufacturer, Mr Lim, expects demand for medical gloves to be stable, if not increase. “Greater emphasis will be placed on healthcare in companies’ annual budgets as no one can afford to fall sick or incur heavy medical expenses in such times. Therefore, the medical glove industry is resilient1 in any economic climate,” he said. Nevertheless, he predicted a slight decrease in demand for industrial and laboratory gloves from the non-medical sectors, including the electrical and electronics and food and beverage sectors during periods of economic slow down which could lead to lower business activities and thus lower usage. “While we are more prudent2 in terms of expansion, we will focus on research and development to offer higher value products. We aim to achieve double-digit growth in revenue for the next two or three years. With our new plant which produces premium grade nitrile gloves scheduled to run soon, we are confident of achieving our targeted growth,” he said. 15

3.     Another leading glove company reported that the group had allocated some RM80 million for capital expenditure, which would include expansion and potential acquisitions. “We continue to focus on producing high quality products efficiently and at a low cost. The main challenge for the industry is the volatility3 of latex price, crude oil price and also foreign exchange. As long as all these factors remain stable, it will be good for us. As rubber gloves make up less than 1 per cent of the total cost of healthcare centres, any increase in selling price is deemed too insignificant to affect overall demand,” he said. 25


Figure 1: Profitability of Glove Companies


resilient1 (line 15): able to withstand or recover quickly from difficult conditions prudent2 (line 19): acting in a careful and sensible way volatility3 (line 28): instability or liable to change rapidly and unpredictably .
Question 1

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