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Maria Yee Inc.:

Making 'Green' Furniture in China

Hemant Sankhla 0146/48

Karan Kumar 0167/48

Garvita Gupta 4009/18

Shruti Srivastava 4031/18

"We take from the Earth. We should giveback to the Earth."

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BackgroundStarted 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 giveback to the Earth."

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Cheap raw materials

Cheap labor availability in China

Labor cost diff: $3000/year in Chinacompared to $37000/year in US

Direct control over manufacturingcosts, product quality andschedules

Managers span of work is generally 2 years

Made-to-order model

No inventory

Business Model

"We take from the Earth. We should giveback 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 from25% to 47% in 1 year

"We take from the Earth. We should giveback to the Earth."

0%

50%

100%

2007 2008

2547

7553

Bamboo Hard Wood

Supplier Production Retailer Customer

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Electricity forheating

Solvent basedNitrocellulose

lacquer

Syntheticpolymers for

glues

"We take from the Earth. We should giveback to the Earth."

Supplier Production Retailer Customer

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"We take from the Earth. We should giveback to the Earth."

Supplier Production Retailer Customer

Reuse wood remnants as interior drawer panels or

back panels

Sawdust to fuel low-emission boilers

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"We take from the Earth. We should giveback 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

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"We take from the Earth. We should giveback 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 tocustomers

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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 suppliersSupplier

Chain-of-custody certification : for both manufacturingunits

Electronic record keeping using proprietary softwareProduction

"We take from the Earth. We should giveback to the Earth."

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Corporate Social Responsibility

"We take from the Earth. We should giveback to the Earth."

Reduce energy footprint associated with importing goodsEmployed farmers to produce higher quality bamboo

Improved incomes and standards of living for bamboo farmers

Lower quality bamboo used for products like sleeping matsand beddings

Supplier

Cultivate local management talent and product developmentand 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

Production

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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 giveback to the Earth."

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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 giveback to the Earth."

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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 giveback to the Earth."

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Recommendations/Solutions

Open a direct channel for consumers to market the company'ssocio-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 ongreen manufacturing

"We take from the Earth. We should giveback to the Earth."

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Thank You!

"We take from the Earth. We should giveback to the Earth."