Maria Yee Inc.

: Making 'Green' Furniture in China

Hemant Sankhla Karan Kumar Garvita Gupta Shruti Srivastava

"We take from the Earth. We should give back to the Earth."

0146/48 0167/48 4009/18 4031/18

Background
Started in 1988, Headquartered in Santa Cruz Direct owned business model, 50:50 by Maria Yee and her husband Chinese Ming Dynasty design furnitures Products made of Chinese-grown hardwood or bamboo

Two self-owned factories in China employing more than 800 people

Special focus on environmental sustainability

"We take from the Earth. We should give back to the Earth."

Cheap labor availability in China

Cheap raw materials
Labor cost diff: $3000/year in China compared to $37000/year in US

Business Model Direct control over manufacturing costs, product quality and schedules
Managers span of work is generally 2 years

Made-to-order model
No inventory

"We take from the Earth. We should give back to the Earth."

Supplier

Production

Retailer

Customer

Green Initiatives
Started using bamboo as an alternative to hardwood Bamboo : Quick Renewable grass
Harvested in 5 years

% of bamboo increased from

25% to 47% in 1 year

100% 75 50% 25 0% 2007 Bamboo 2008 Hard Wood 47 53

"We take from the Earth. We should give back to the Earth."

Supplier

Production

Retailer

Customer

Electricity for heating

Solvent based Nitrocellulose lacquer Synthetic polymers for glues
"We take from the Earth. We should give back to the Earth."

Supplier

Production

Retailer

Customer

Reuse wood remnants as interior drawer panels or back panels Sawdust to fuel low-emission boilers

"We take from the Earth. We should give back to the Earth."

Supplier

Production

Retailer

Customer

Three major Retailers:

Crate and Barrel Room and Board Best Buys Magnolia Home Theatre

Very little control on retailer operations Promotion of green initiatives via the features and benefits of the products

"We take from the Earth. We should give back to the Earth."

Supplier

Production

Retailer

Customer

Green Branding
2005: BambooTimbreTM 2006: EcoLuxuryTM

Eight- page booklet with furniture explaining

Joinery system FSC Certification BambooTimbreTM Eco friendly manufacturing Yees life story and her Vision for Green Living

Reluctance to pass the environmental costs to customers

"We take from the Earth. We should give back to the Earth."

Green Supply Chain:

Forest Stewardship Council Certification
Buy FSC timbers and bamboo within China Incentives to suppliers for seeking FSC Certification Possibility of forming FSC Co-operative with suppliers

Supplier

Production

Chain-of-custody certification : for both manufacturing units Electronic record keeping using proprietary software

"We take from the Earth. We should give back to the Earth."

Corporate Social Responsibility

Supplier
Reduce energy footprint associated with importing goods Employed farmers to produce higher quality bamboo Improved incomes and standards of living for bamboo farmers Lower quality bamboo used for products like sleeping mats and beddings

Production

Cultivate local management talent and product development and marketing expertise Workers were paid above typical wages as required by law Insurance, unemployment and disability benefits Dining halls, dormitories and internet bars within factory

"We take from the Earth. We should give back to the Earth."

Drawbacks
High quality and FSC certification cost increases by 20-25% but believed that green need not be premium-priced Consumer awareness Retailers promote their own brand name Lack of awareness in consumers about green products

"We take from the Earth. We should give back to the Earth."

Critical success factors

For Maria: hobby turned into business, thus the passion for work Maria maintained personal relationships with the retailers American market most likely to buy the idea of green Idea of being environmentally sustainable Investing in a healthy relationship withsupply chain partners Hand Joinery system readied the furniture for varying climate conditions Exclusive Joinary techniques - Ming reproductions Company investing in research producing Bamboo Timbre EcoLuxury minimizing the toll on environment

"We take from the Earth. We should give back to the Earth."

Critical success factors(contd.)

Manufacturing plant located in china Labor arbitrage from US Benefits to labor made them a preferred employer to work with Better control on manufacturing due to direct ownership Made-to-order model made them inventory free Cultivating local talent FSC certification gave them edge over competitors No major competitor Conveying the journey as vision for green living Use of sustainable material and eco friendly suppliers

"We take from the Earth. We should give back to the Earth."

Problems
No direct marketing channels through promotional media Highly dependent on distributors

"We take from the Earth. We should give back to the Earth."

Recommendations/Solutions
Open a direct channel for consumers to market the company's socio-environmental mission in order not to upset distributors Word-of-mouth through blogs Use of social media like Facebook, Youtube Participation in Valspers customer education seminars on green manufacturing

"We take from the Earth. We should give back to the Earth."

Thank You!

"We take from the Earth. We should give back to the Earth."