By Xavier Kong
In this first part of the issue, KiniBiz takes a stroll down memory lane with Karex CEO Goh Miah Kiat, and takes a look at the beginnings of the condom manufacturing giant that Karex is today.
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If you think the biggest manufacturer of condoms in the world is Durex, think again! That particular honour actually goes to a Malaysian company that goes by the name of Karex, which listed on the Main Market of Bursa Malaysia on Nov 6 last year with a debut price of RM2.34, a 26.5% premium to its offer share price of RM1.85, and raised RM75 million.
The company may be known as Karex now, but back in 1988, when the company was first started by Goh Miah Kiat’s grandfather, the company was called Banrub, with “ban” being a dialect term for ten thousand, and “rub” an abbreviation of the word rubber. People asked, why Banrub, as it sounded so much like bankrupt, and this led to the name of the company being changed in 1994 to what it is now, “Karex with a ‘K’”.
The company started in Pontian, Johor, where MK’s grandfather had been in the rubber industry. However, that particular industry was considered a “sunset” industry, and MK’s grandfather wished to move to a downstream product.
This led to the family turning to a family friend, who was in a rubber research centre, but had left. The family had requested a glove manufacturing machine, which would allow them to set up a single line of production to start with.
However, the family friend had supplied them a condom-dipping machine, but “did not conduct a full trial or anything,” so “a lot of reverse engineering had to be done by my uncle, who has a background in engineering, ” according to MK. The family shrugged, figured “Why not?” and got into the business of manufacturing condoms.
With the knowledge gained from the reverse engineering of the first machine, the family began to fabricate their own machines for their production lines. The family began purchasing the parts required, and if anything needed to be fabricated by precision machining, they turned to turned to computer numerical controlled (CNC) lathe machines, according to MK. CNC lathe machines are one way of creating precision parts for the condom manufacturing machines on the company’s production lines.
Goh Miah Kiat
“If we needed any particular parts, which had to be precise, we went for CNC, and they would do it,” said MK, who added that the fabrication of their own machines was a unique strength of Karex as a company.
“Life was tough when I was younger,” reminisces MK. “Our family didn’t have a lot of money, so we helped out in the condom factory as well. It’s very tough starting a condom factory, and especially when you start a condom factory, you don’t have the track record, and the needed level of trust that people have in the company is just not there. But at least, today, we have 25 years in the industry, and have built a reputation. I think the listing has created a great platform for the company. Suddenly today, people know who Karex is.”
“It can be said I moved into a condom factory since Form 2, to help out with the family business.” added MK.
This had exposed MK to the industry at a young age, and it continued after he had finished his studies overseas. MK graduated in 1999 with a degree in economics, and was told to come home by his family.
It was here that MK had related that his father had not wanted him to join the family business, but, as his father had passed away in his second year of university, he was asked to be part of the family business.
“I suppose the rest of my family is a little bit more camera-shy, so they pushed me to the front.” MK joked, then further mentioned that he is the only grandson, with not many in his generation, and that joining the industry was a challenge he took up.
Part of the whole deal that makes Karex stand out is also their willingness to listen to their clients, then tailoring research and development towards those requests, noting that “condoms are changing, it’s not just a safety product anymore.”
MK noted examples from the 80s like Mr Condom and Mr Safety, and mentioned that condoms have evolved since that time, that “people are looking for something besides safety.” One particular simile that MK had was likening the purchase of a pack of condoms to a car.
“When someone buys a car, he already knows what he is going to get, namely something with four tyres, round, and made of rubber. That is a given. It’s the same thing with condoms. When someone buys a pack, they already know that it is safe. But people want to know that in the event they buy a condom, what additional pleasure can they get from it?”
Another aspect was that the newer designs are more appealing to young adults. “All that is just about making sure that people are well-protected. It’s not like someone picks up a condom and says that they will go out and have sex and do so, but it works the opposite (way). It’s more like that when two people decide to have sex, they will think of getting a pack of condoms.” says MK.
MK is of the opinion that this is socially correct, that the person is being responsible, and not creating a human life when they do not have the means to care for it. “People will actually think about sex first, and then think about condoms next. Or at least they buy a pack of condoms and know that if they are going to have sex, they will be well-protected.”
A “growing” success
MK had plotted his first sales chart in 2000, where he made sales of about RM7 million. However, in 2013, last year’s figure was RM230 million, a “rapid expansion”, as MK noted.
“But, I think, most of all is, people today have to understand their market. When you come into a market, irrespective of whether it is condoms or not, I think the understanding of your market is very important. And today, like in the service industry, people always tell you that ‘your customer is always right’. People have to really understand that, and deliver to people what they want.”
MK then went on to iterate his growth model, that “instead of knocking on people’s door, I make sure that we were, number one, very competitively priced, that is very important, and number two, you must have the quality that people want. It’s no point that I give people a very low price, but it is not the quality they want. I want to be able to deliver the quality that people want.”
MK then remarks on how the company was lucky, as they were in the industry when there “was a revolution happening, when there were a lot of changes happening,” going on to note Durex as an example, as, even though Durex was established in 1915, the use of condoms was not widespread at that time.
“However, we came in at the right timing, when HIV/AIDS became full-blown, and governments around the world started telling their people to use condoms. The United Nations was also encouraging the use of condoms, and a lot of promotional awareness campaigns came in.”
“It was there,” MK said, “that condoms moved beyond a safety product to a product that had pleasure, and we were there, and we were willing to hear what my customers want, instead of telling them ‘take this bag of condoms, this is what I do,’ but what we did was we kept our ears open, and we took that as a challenge,”
MK then went on to say that as Karex builds their own machines, they were able to adapt quickly to shifting customer demands. “When people wanted a condom with multiple colours, we took that as a challenge and we built a machine for it. When people wanted condoms in odd shapes, we were there also to cater our machines for it. When people wanted to add all these different flavours, we were there immediately to work out all those flavours for our customers. When people wanted a durian-flavoured condom, instead of saying ‘no’, I said ‘OK, let’s look into it.’ We did our durian-flavoured condoms. A guy from Amsterdam said he wanted marijuana-flavoured condoms, we also did it,” said MK.
“I suppose it is the attitude of not saying ‘no’, it was practically just looking into it.” noted MK, adding that, “as I tell my sales guys, everyone starts small. No one starts big overnight. I think we invested in a lot of small customers that sometimes people were not willing to look at. We took them, we helped them grow the business, and today they are very loyal customers of ours. You build a relationship.”
“That’s a way of engaging, and basically, for me to see how the company has grown, from really a nobody, to what it is today. We’ve put in our efforts, and I’ll say that it’s not just my effort, it was a collective effort. On the whole, everybody from my family,” said MK.
Tomorrow: A day at the condom factory.
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