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SSL sets up new unit in Qingdao

By Tang Zhihao (China Daily)
Updated: 2009-07-10 08:05

Two women walk past a Durex advertisement in Qingdao, Shandong province. The new Durex plant in the city will make more than 800 million condoms a year. [China Daily]

"We decided to build the new factory much before the (outbreak of the financial) crisis," said Garry Watts, chief executive of UK-based SSL International, the parent firm of Durex. "Compared with other industries, our products are recession resistant," he said.

Garry Watts

The new Qingdao factory, which began production yesterday, is the company's largest facility in the world. "It is the biggest condom manufacturing (factory) for us and for anyone else in the world," said Watts.

SSL group opened its first contraceptive factory in Qingdao in 1998 with an annual production capacity of 250 million pieces last year. China, with a huge potential condom market, continues to be one of the major investment destinations for SSL.

"It is proper to have our business integrated into China through this big plant and commercial base. We would leverage a strong skill base rather than simply looking for a very low-cost producer," Watts said.

According to figures compiled by industry statistics provider Reportlinker, condom sales in China were about 6.3 billion pieces last year, while sales revenue reached around $530 million.

Although the market in China is big, only 18 percent of the Durex condoms produced in Qingdao would be sold in China, with the balance going to global markets like the United Kingdom and Russia.

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"We plan to sell 160 million pieces in China this year. We are growing at about 30 percent every year," said Watts, adding that the company has a 10 percent market share in China.

SSL chose to stick to its unique brand Durex rather than diversify its brand portfolio.

"We will strengthen our brand by investing heavily in marketing like advertising. It is probably a better use of our money," said Watts.

Indeed, the condom market is expanding very quickly in China with official estimates projecting an annual growth rate in excess of 15 percent.