How rubber-growing Thailand became the No. 1 exporter of prophylactic devices in the world.
All day and all night at the factory that makes Durex condoms in an industrial suburb of Bangkok, young Thai women grab handfuls of pink-ribbed condoms, stretch them one at a time between their fingers, and slide them over phallus-shaped mandrels with a speedy dexterity that any mama-san in the red-light districts 30 miles away would have to admire.
The sheathed shafts rotate into an electronic tester that zaps them with 1,800 volts of electricity. If there's a defect through which a single volt can pass, the machine blinks red, and the condom falls into a reject box. The good ones - more than 97% - are rolled, inserted into wrappers, squirted with lubricant, then sealed and tested again to make sure the packet is secure.
Making condoms is such a sensitive operation that a single speck of dust can cause an imperfection. So workers in separate testing rooms also sample each batch for consistency and strength, inflating the condoms until they explode with party-like pops and stretching them until they snap.
"We can't use men to do this work," explains Surakait Kasemsuwan, production manager at the factory, which is owned by Britain's SSL International ( Charts ), makers of the Durex brand. "We tried men, but they get bored and tired, and they injure themselves. Those mandrels don't stop. This is a 24/7 process."
About 8,000 condoms a day pass through the hands of these women - and about three billion a year through factories across Thailand. More than three-quarters of those condoms are exported, with the biggest share, about 12%, going to the U.S., followed by Japan and 67 other countries.
They include not only Durex condoms but also such brands as LifeStyles (owned by Ansell Healthcare of Australia) and Kimono (owned by Mayer Labs of California).
Thailand has been the world's top rubber producer for some time, but it is only in the past two years that it has also become the world's leading exporter of condoms, pulling ahead of the Netherlands, Spain, Britain, and India. Exports grew 16% by volume last year and 23% in dollar value, to $46 million, according to the Kasikorn Research Center in Bangkok. They are expected to grow another 20% this year, to more than $55 million.
The impetus for the expansion came in 2001, when Prime Minister Thaksin Shinawatra proposed that his country take its huge rubber surplus and make condoms a high priority in global HIV/AIDS prevention as well as in its own export-driven manufacturing growth.
In part the push was linked to competition with Malaysia, which for most of the 20th century had been the world's top rubber producer. But rising wages and expensive land made tapping rubber trees there costly, says Prachaya Jumpasut, head of economics and statistics research at the International Rubber Study Group in London.
Malaysia shifted to more profitable palm-oil production and lost its lead in rubber, first to Indonesia, then to Thailand, in the 1990s. Since then Thailand has been picking up the slack in global supply, encouraging new planting in the country's north, and producing more than a third of the world's rubber, far exceeding all other grower countries. Thailand has also been satisfying increased demand from China's auto industry, particularly for tires.
Thailand learned a lesson by watching Malaysia. The rubber that Malaysia has continued to export over the past decade is nearly 90% in the form of processed finished products, such as medical and gardening gloves and a smaller amount of condoms ($26 million in 2004).
Thailand's production was the opposite, says Panyapat Taravanit, a senior researcher at the Kasikorn Research Center: Just 10% of its exported rubber was processed; the rest was raw.
By encouraging condom and tire production, Thailand could take advantage of its cheap labor and reap the added value of processing finished products at home, thereby diminishing the impact of a fall in world rubber prices.
Another factor in the growth of Thailand's condom industry has been domestic demand. To combat the country's AIDS epidemic, the government started distributing millions of free condoms in 1991 to encourage safe sex and reduce HIV transmission.
By 1996, according to a United Nations study, 97% of Thailand's commercial sex workers reported that they always used condoms, compared with 14% in 1989. Thailand's campaign dramatically reduced HIV rates and became a much-lauded model for the world. A study by the nonprofit Population Services International found that as the number of free government condoms increased, commercial demand also increased, prompting the opening of at least three condom factories. The government cut back on free distribution as the domestic condom market grew from virtually nothing in the early 1990s to $16 million last year.
Thailand still imports about $1 million worth of condoms a year - mostly varieties with exotic flavors and ultrathin, high-sensitivity brands made under even more delicate conditions in the U.S. and Japan. But condom imports fell 25% last year as domestic producers picked up on such consumer preferences and started making them for the domestic market.
Durex, which expanded its operations in Thailand from six to 15 manufacturing lines in 2001, encouraged by government incentives, has managed to capture more than 70% of the country's domestic market.
SSL now makes one-third of its Durex products, or about 300 million condoms annually, in Thailand, with the remainder produced in Britain, Spain, India, and China. "Thailand is still one of the most cost-effective manufacturing locations for condoms," says Tim Evans, SSL's Southeast Asia regional director.
Adds David Mayer, founder and president of Mayer Labs, which makes one of its Kimono lines in Thailand: "Japan used to be leagues ahead, but others like Thailand are catching up."
Thailand aims to nearly halve the HIV infection rate within three years, from the 15,000 new cases reported last year to 7,500. That means more public promotion of condoms for safe sex nationwide and a continued rise in domestic demand.
With another four million new infections reported worldwide last year and HIV infection rates increasing in places such as Indonesia, Vietnam, Pakistan, and sub-Saharan Africa, which have little or no condom manufacturing of their own, it's clear that Thailand's condom export market has a bright - if bittersweet - future.