Star Bamboo Singapore

OK, let’s say you started a new business. Which is a better strategy:

A) Sell fewer products at higher prices? (Margin game)
B) Sell more products at lower prices? (Volume game)
C) Sell more products at higher prices (High margins and high volume)

Obviously C is the ideal case. But is it easier to reach there via route A or B?

What’s your answer?

Our favourite bald marketer argues for A. It’s easier to convert a small group of customers at a time. The higher margin buys you time while you improve your product and expand the market. At the same time, there are costs associated with reaching out to a huge group of customers.

Many will argue for B. Witness the number of new product launches with generous discounts. Lowering prices is the best way to attract the maximum number of new customers. Get the word out and the volume up, then increase the prices.

This is obviously too simplistic, so let’s analyse this further with the example of bamboo flooring in Singapore.

1. Familiarity of product

Bamboo flooring is a new product in Singapore, many people have not heard about or used this product before. A lot of effort goes into educating the market, and this is best done one-to-one.

Based on this, I would choose Option (A).

2. Price constraints

The cost of your product limits how cheaply you can price it. The prices of your competing products immediately places a constraint how much we can price bamboo flooring at. The two most popular flooring products here are laminate floors and teak parquet. Given that laminate floors are dirt cheap here, it would not make sense to fight based on price.

Again, it’s Option (A).

3. Ease and cost of distribution

Bamboo flooring is a bulky and heavy product, so transportation and storage costs are correspondingly higher. Bamboo flooring also require the skills of specialist hardwood floor installers.

Not surprisingly, Option (A).

So based on the 3 factors above, we should sell as a lower volume and higher margin product. Which is exactly what we have been doing (in Singapore. We also do international export trading, but that is a different story altogether).

Now contrast bamboo flooring to a software programme which could be downloaded from the Internet: It could be cheaply marketed to a wide market and transported at near to zero cost. This company chose Option (B) with excellent results.

So it’s not about which option is better. Rather, it’s about which option is better for your business.

Question: What is 07.07.07?

Answer: The perfect wedding date.

Just kidding. It’s also the date of Live Earth, a series of live concerts around the world to raise awareness of global warming.

It’s like Live Aid’s younger brother.

It’s also Al Gore’s latest project. Formerly known as the person who lost a US Presidential Election, he is now the face of the crusade against global warming:

The “7” in the dates also stands for the 7 continents where the various concerts will be held. Isn’t that cool?

As Star Bamboo is a Green Label recipient, I got an email on what’s happening in Singapore from our friends over at Singapore Environment Council (SEC):

Dear Green Label members and SEC Friends

On 7th July Saturday at Merlion Park One Fullerton, there will be a LIVE EARTH Satellite Concert Screening. (http://www.liveearth.org)

The screening will kick off in the morning (as Australia Sydney will be the first to start the ball rolling). We are pleased to have a big screen at One Fullerton to bring you the best from all over 7 continents. It is Free Admission.

The concert is set to feature over 100 headlining music acts, across all seven continents. Artists such as Madonna, Alicia Keys, The Smashing Pumpkins, Black Eyed Peas, Bon Jovi, Kylie Minogue, Snow Patrol and Jennifer Lopez are among the big names who will grace the show.

If you are attending, as a please bring your own tupperware for drinks and food, as concert shows always produces a lot of trash.

Reduce Waste First, followed by Recycling.

The Singapore Environmental Council will also be there.

—
Singapore Environment Council
Website: www.sec.org.sg

So do mark down the date in your diaries/PDAs. Enjoy the free concert and make merry, hopefully we’ll remember the real message after the hangover wears off.

Since the cuts in China export tax rebates was announced last week, there has been an immediate impact on the bamboo flooring industry.

For bamboo flooring, the export tax rebate has been reduced from 13% to just 5%. In a cut-throat and highly competitive industry, profit margins have been cut significantly overnight. So what changes should we expect as a result?

Firstly, many of the larger bamboo flooring manufacturers have temporarily stopped purchasing semi-products. Contrary to what they may say, many of the biggest manufacturers only do the tongue-and-groove milling and/or lacquering. The initial processing from bamboo poles to bamboo boards are outsourced to many smaller factories.

(Star Bamboo is a smaller player, so we can focus on quality and make the entire bamboo flooring in our own factory.)

There is now uncertainty in the market. Will the customers be willing to accept higher prices or would we have to bear the full burden of the tax cut?

No one is sure until the tax cuts take effect on 1 July, hence a temporary pause in production.

Secondly, those manufacturers that do continue buying semi-products have dropped their asking prices. This means that the big boys are attempting to pass on at least some of the lower margins to their supporting factories.

This will cause a cascading effect up the supply chain, and probably force many of the small factories to close down.

Consolidation is a good thing for us in the long term, as it eliminates many of our competitors.

I’ll have more updates for you as events continue to develop in China.

Update (26/6/07): The Today reporter said she only reported the estimated figure of 2.5m (which was prominently featured in the headlines), as provided by NWDCD, and advised me to contact them for clarification. I have emailed them and will update here if they reply.

I saw this headline in the Singapore papers today: “North West CDC initiates move to recycle 2.5m bottles yearly.”

That’s great news. For a population of 4.5 million people, 2.5 million plastic water bottles is a substantial quantity.

Until I read the article and realised that this plastic waste is created by North West CDC (NWCDC) itself.

OK, some background information for our overseas readers: A CDC is a government organisation which organises community-building programmes for Singapore residents. CDCs are divided according to geographical regions, and there are five in all.

NWCDC formed a Brisk Walking Club (BWC) five years ago to encourage regular walking as a form of exercise. BWC is not a single club, but an umbrella of over 100 separate clubs and 28,000 members. A typical walk is 2.4km long with warm-up exercises at the start.

Singaporeans love freebies. So there are various enticements to get us to participate, such as a complimentary breakfast at the end of the walk.

And a free bottle of water.

Hmm, there are 2 things I don’t get:

First mystery is why go to this trouble of recycling plastic waste that could have been avoided in the first place.

Simply encourage participants to bring their own water bottles. Or they could provide re-usable water bottles, similar to our recent campaign for plastic carrier bags.

What is also puzzling is how the figure of 2.5 million bottles is derived:

Liang Eng Hwa, MP, Holland-Bukit Timah GRC, said: “In the case of North West CDC Brisk Walking Club, we have monthly walks. “

28,000 bottles per participant x 12 walks a year = 336,000 bottles per year

Can anybody enlighten me?

The latest product to incorporate everyone’s favourite eco-friendly material is bicycles.

The creator is Craig Calfee, owner of Calfee Design which creates high-performance carbon fibre bikes. But he intends to make affordable bicycles out of bamboo for a very different market: the poor in Africa and Asia. This allows them to get around more easily and hopefully increase employment opportunities.

The intention is honourable, but I’m really not sure it will work out:

Firstly, the bikes are intended to be handmade. This requires skill, which means training, and that costs money.

Secondly, only the frame is made of bamboo. The rest of the bicycle, such as the gears, wheels, chains, pedals, seats and handle bars are made from the usual plastic and metal.

Thirdly, they are not really cheaper than conventional bikes. According to the price list on Calfee’s web site, a bamboo bike designed for professional racing starts from USD2,695. Compare that to his conventional racing bikes which start from only USD1,495.

Why is it so much more expensive? A 80% premium was charged because these bamboo bikes are hand-made and limited production pieces.

But what has that got to do with making bikes more accessible to the poor?

Instead of bamboo bikes, I’ve got a better suggestion: Ship unwanted used bicycles over.

Re-using and helping the poor. Now that’s killing two birds with one stone.

China has announced yesterday that they will cut the export tax rebates for more than 2,800 products starting 1 July 2007. The purpose is to reduce trade surplus and cut waste.

Export tax rebates means exporters in China get a refund on the domestic taxes they pay. This means they are able to charge lower prices than competitors from other countries. The whole scheme was started in the 1980s to encourage foreign investment.

But the booming Chinese economy and a burgeoning trade surplus meant that it’s a matter of time before this export tax rebate system is scrapped. Already, the rebates levels have been gradually reduced for many categories of products. This latest round of cuts is hardly surprising.

In all, 553 product categories deemed to be resource-intensive and polluting will have their rebates eliminated. Another 2,268 will have their rebate levels lowered.

So where does bamboo flooring fit into this?

Well, the details aren’t out yet. But our product is not polluting so I expect us to fall into the latter category of rebate reduction.

Unfortunately the USA is one of the biggest markets for bamboo flooring, and also the economy with the greatest trade deficit with China. This probably means bamboo flooring will have one of the lower rebate levels.

It’s a significant factor in an industry with paper-thin margins, and I expect prices to be adjusted upwards by 5-8% across the board. For the time being, we are holding our prices.

I’ll post updates on this as more details emerge.

We talked about eating bamboo, now let’s look at eating with bamboo. Disposable bamboo forks, spoons, knives, plates bowls and boxes, that is.

Most of our disposable cutlery are made of plastic, imagine the amount of plastic forks and plates we used and tossed away without a moment’s thought every year.

Then these two environmentally solutions appeared around the same time. Either great minds think alike or the market is ripe for such products.

Bella Bamboo (from Singapore) is made from reconstituted bamboo that is entirely(100%) biodegradable, without any artificial additives.

Eatware (Hong Kong) is a similar product, made of 100% natural fibers from bamboo, sugar cane pulp, starch and water without any chemical additive.

(Don’t they look like plastic?)

Making them from bamboo is always a bonus, as it is such a renewable source of materials. The more important thing is that these products are highly biogradeable, needing as little as 2 weeks to completely break down into nutrients.

But before we get carried away, don’t forget they’re still disposable items and designed to be used only once. If you could use durable kitchenware, that would actually still be the best choice.

After all, is doing the dishes really such a chore?

Sometimes we take ourselves and the business of saving the earth too seriously. It happens to the best of us.

“No Impact Man” aka Colin Beaven has been getting a lot of media attention for his one-year attempt to “live in NY City without making any net impact on the environment”.

This means cutting down on new purchases during this period. It got to the point where even buying new mounting tape for a family photo became a big no-no. I’m all for eliminating unnecessary consumption, but this seems a tad extreme.

Thankfully he saw the lighter side of it. It doesn’t have to be all or nothing, black or white. The environmental movement, like all things in life, comes in lovely shades of grey.

Just do whatever we can, every little bit helps.

I’ll leave you with some words of wisdom from Dogbert:

The inaugural Singapore EcoFriend Awards night was held last Thursday and the results splashed all over the local media the following day. Organised by the National Environmental Agency (NEA), the EcoFriend Awards honour 15 individuals who have made a difference in our fledgling environmental movement (click here for NEA’s press release).

But one individual deservedly got much of the attention.

Read the rest of this entry »

Hello! Thanks for dropping by.

This morning, a kind soul recommended this blog to StumbleUpon.com and we have been experiencing a flood of hits since then.

It is really astonishing to see the blog stats go crazy. I thought my eyes were bluffing me, but we were indeed getting 10 times our previous record high. It made our traffic graph look like a flat line with a sharp spike at the end.

So thanks very much, I really appreciate it. Hope you will stick around and check out the older (but still relevant) posts. Don’t forget to add our RSS feed to your favourite reader or join our email subscription.

I’ve heard others talk about the Digg effect, where a web site featured prominently on Digg.com can experience a surge in traffic. But experiencing it today really made me aware of how powerful the Internet is. In our own way, everyone has the power to influence opinions and decision.

So I’ve added Digg buttons to some of the more important (and hopefully better written) articles (such as this one), please do click on them to vote so that others may read them too.

Thanks again for your support and encouragement!