KOSSAN Rubber Industries Bhd, the world’s second largest glovemaker, is leveraging intellectual property (IP) to stay ahead of the competition.

The group launched its first patented low derma technology for synthetic gloves, which helps to protect users with hypersensitive skin, in September this year. It is the first Malaysian glovemaker to be granted permission to claim low dermatitis potential by the US Food and Drug Administration.

The patent will last for 20 years, adding to Kossan’s list of patents from Japan, China, Hong Kong and Taiwan.

“Every blue ocean will eventually turn red [when competitors start to catch up in terms of value delivery],” Datuk Lim Kuang Sia, group managing director and CEO of Kossan, tells The Edge in an interview.

This is why he is ensuring that the group has patent protections in place, especially for its highly technical products, to fend off competitors for a longer period of time.

In view of its focus on IP rights, Kossan has invested heavily in research and development, with the opening of its first R&D centre slated for July next year.

“The building equipment [for the centre] cost more than RM30 million. For automation, we are preparing to spend nearly RM100 million. Our R&D is mainly focused on innovation and IP,” says Lim, 64, a nominee in the Master Entrepreneur category in the Ernst & Young Entrepreneur of the Year 2016 Malaysia awards.

Meanwhile, Kossan is looking at providing in-house training for existing employees because of the mismatch between training and the growing needs of the industry.

“We have to do away with labour-intensive industries,” Lim says, adding that automation will reduce reliance on labour, of which there is a shortage.

In addition, mechanisation will reduce the need for general workers who can be replaced by skilled vocational workers.

He believes automation is the way forward, not just for the rubber industry but for the economy as a whole.

“Our expansion is not just for the sake of [increasing] production capacity, but it is about overall transformation,” says Lim, who has been at the helm of Kossan since its inception in 1979. Lim is an indirect substantial shareholder by virtue of his substantial shareholding in Kossan Holdings (M) Sdn Bhd, a substantial shareholder of Kossan.

Over the years, Kossan has grown from a producer of marine rubber cutless bearings into one of the world’s largest manufacturers of industrial rubber products and disposable latex gloves, exporting to over 160 countries.

It was listed on the then Main Board of Bursa Malaysia in 1996, and has remained profitable ever since.

For the financial year ended Dec 31, 2015 (FY2015), Kossan delivered record earnings of RM203.26 million compared with RM145.6 million the previous year, which it attributed to its investments in automation, business process computerisation and production process optimisation while exercising cost discipline.

Revenue grew to RM1.63 billion in FY2015 from RM1.3 billion in FY2014.

According to its website, Kossan churns out 16 billion pieces of gloves annually while its technical rubber product operation uses over 15,000 tonnes of rubber mixing compounds.

Kossan’s market capitalisation stood at RM4.44 billion as at last Thursday.

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