Maria Yee 584323

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 • Labor cost diff: $3000/year in China compared to $37000/year in US

Cheap raw materials

Business Model Direct control over manufacturing costs, product quality and schedules

Made-to-order model • No inventory

• Managers span of work is generally 2 years

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

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• 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

53

50% 25

47

0% 2007 Bamboo "We take from the Earth. We should give back to the Earth."

2008 Hard Wood

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

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

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

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• Three major Retailers: – Crate and Barrel – Room and Board – Best Buy’s 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."

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• Green Branding – 2005: BambooTimbreTM – 2006: EcoLuxuryTM

• Eight- page booklet with furniture explaining – – – – –

ery system FSC Certification BambooTimbreTM Eco – friendly manufacturing Yee’s life story and her “Vision for Green Living”

• Reluctance to the environmental costs to customers

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

Green Supply Chain: Forest Stewardship Council Certification

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

• 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 -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 ion 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 ery system readied the furniture for varying climate conditions – Exclusive ary 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 Valsper’s 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."