Meet Riverstone’s co-founder Wong Teek Son

By Mahbob Abdullah

I RECENTLY met Mr Wong Teek Son to talk about Riverstone Holdings Ltd, a company listed in Singapore that he controls. He is the chairman and CEO of the glove maker that has a market capitalisation of nearly RM2 bil.

Wong is a slim, intense person who grew up in Cameron Highlands where his parents are farmers, studied chemistry at the University of Malaya, and went on to study for an MBA at Monash University. He joined a multinational involved in electronics before he set up his own company to produce gloves.

“I started the business with a partner in 1989, when latex glove production had attracted a lot of businessmen, and many licences were issued. I was looking for gloves that would not cause problems to some workers, unlike in the case of latex gloves, which has proteins that can cause an allergy. I was looking for protein-free material, easy to put on and powder-free, and which can improve its smoothness after chlorination.

“After many trials I found that nitrile gloves could be the choice. I also concentrated on the customers who make hard discs, and semiconductors, like Intel, Seagate and Western Digital, as their workers handle precision products and components. More companies wanted cleanroom gloves, and I found my niche there.

“I also produce latex gloves, but mainly for healthcare, and only a small proportion of the total of 10 billion gloves a year. In 2006, we went for listing in Singapore.

“The glove industry is big, (producing) nearly 300 billion gloves including for healthcare, and growth is above 8% a year. But the competition has reduced the players, and now only a few remain.

“In Riverstone, we want to focus on what we can do best. We look for customers who want custom-made products, particularly for cleanroom gloves, required by industries such as in mobile phones, tablets and sensors, all of whom are in manufacturing of precision components.

“The customers want quality and reliability, as well as a comfortable feel when using the gloves. They have their own standards that we have to meet, such as nitrile gloves that are accelerator-free and halogen-free. I have about 20 people in the research department to find improvements, including on quality, while we do not stop looking for new products. We also make finger-cots for the electronics industry, and packaging material, as well as face masks.

Automation the way to go

“It is a business where you cannot stand still about costs. The prices of gloves per unit have gone down so much in the years since the boom in the 1990s. For example, a case of gloves could be sold for US$80 in 1989, and now the price is only US$22. That is how far the industry has moved.

“So we look for ways to reduce costs. The gloves have to be thinner, more reliable, and you do all the innovations you can on the machines in order to lower your costs of production. We try to lower the use of gas by generating power with solid fuel, and we even try to collect rainwater for our needs.

“Automation is also a way we can reduce workers, and the quality is even more assured. We have our engineering department, working with many manufacturers, to put in new lines with features according to our needs.

“Expansion is the key to growing our business; it can raise turnover, income and cash flow, although margins per piece are reduced from where we were five years ago.”

Riverstone has more than doubled its turnover from nearly RM400 mil in 2014 to RM921 mil in 2018. Its equity had also improved over the same period from RM327 mil to RM709 mil. Total assets in 2018 were RM873 mil, with a net cash position of RM77 mil.

“We have a blueprint for our next phase of growth. We are mindful about our inventory and receivables in order to have cash for expansion. For our next phase, we have bought nearly 15 acres for our new lines. It cost about RM18 mil.

“Most of our production is in Malaysia at Bukit Beruntung near Rawang, and also near Taiping. We also have production in Thailand. In China, our facilities are at Chiangsu, and we shall move to an area designated by the government as a pharmaceutical production park. I think it will take us about two years to do our expansion fully. As you can see from our annual report, our sales are still small in China so there is scope for growth.”

Would he want to grow by acquisition?

“No, we don’t have plans to do that. The business is special to each company. They have their own machines, with their formers and moulds, and their culture and practices would be somewhat different. So it would make more sense to grow organically.

“We train our people to do things the way we want, and set up more plants with the layout that would suit us. And we train our own marketing team. Our offices are in the USA, China, Thailand, the Philippines and Singapore. We can concentrate on our customers, and have our in-house team to serve them and make the relationship stronger.

“We will expand the team as the market grows. Now more demand for gloves is created by a higher awareness about hygiene, even among people who did not use gloves before, such as in immigration departments, and in industries involved in car manufacturing, and making batteries.”

Wong, at 56, has no plans to slow down. He still appears young and fit and likely to have the energy to lead the company for many more years, and willing to go anywhere if it can help the business to grow.

The challenges are many. He had mentioned that raw material prices may go up and there could be even a shortage. Labour shortage is another issue, and the costs of power and water are on his mind. Some things are also beyond his power, such as currency movements.

Highly resilient

But glove companies have faced these challenges before and have survived the hard times, and they all seem to be highly resilient. They would use their management skills to see that collectively, they make Malaysia the biggest producer of gloves in the world.

I had followed Wong Teek Son’s business for some years, and I saw how he had managed it, in his quiet way, and keeping away from the limelight. Now it has grown to double its size of five years ago. All he wants is to be left to do the job that he likes intensely.
Would he want to do anything other than gloves?

“No, not at all. There is enough here to keep me busy. I have no plans to diversify,” he said.

Mahbob Abdullah is a former planter. Comments:

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