Does Being Ethical Pay?

As the first and only Fair Trade certified company in Malaysia (we are a member of the Netherlands based World Fair Trade Organization) this is a question that we ask ourselves constantly. This question arises particularly during our meeting with potential wholesale companies interested in retailing our Indochine Natural products or having us manufacture under their own label.

For many companies, social responsibility has become a big business, and large amounts are spent on doing good things and then trumpeting these efforts to the public. But, does it reap commercial benefits and boost profits?

The rationale applied here is that consumers will pay a premium for products made with higher ethical standards. The big question of course is how far does a company really need to go to win people over?

What we have found over the years we have been meeting with potential wholesale buyers is that even though we may assume ethical production can lead to higher sales, some buyers prefer a lower price even if they know a product is produced unethically. What we have learnt out of this is that we should be very careful where we place Indochine Natural products, because if we are associated with unethical products, while consumers are willing to purchase, they will only do so at a significant discount.

What we have also found is that increasing levels of ethical production do not necessarily correlate with increasing price premiums. Once we have reached a certain ethical threshold, anything beyond that point might reinforce our company image, but doesn’t encourage people to pay more.

The bottom line at the end of the day is that the expectations of the buyer….those with high ethical expectations are willing to pay premiums for ethically produced products, while those with low expectations are not willing to pay.

What have we learnt from these experiences, and how do we implement these lessons in day-to-day business practice?  We have learnt to screen potential wholesale customers from first contact, usually incoming phone calls or emails. By putting our own ethical standards up front, and asking a few simple questions, this initial screening aims to reach out to buyers with high ethical standards. It these wholesalers who ultimately will deliver the biggest potential profits on our ethically produced Fair Trade products. From this initial screening we then move forward with a face-to-face meeting and tour of our production facility, and if all goes well orders will follow. This way we have been able to associate with similarly minded ethical wholesalers, and obtain premium wholesale prices for our products.

What is the difference between Fair Trade & Ethical Trade?

As the first and only World Fair Trade Organization (WFTO) certified company in Malaysia, at Indochine Natural we are often asked this question.

Firstly, the term “ethical trade” is a fairly broad term that covers a range of business practices that are designed to promote more socially and environmentally responsible business practices. For example, this includes adherence to internationally recognized codes of practice for labor and ethical business behavior, plus other practices that minimizes harm that may be caused by trade.

On the other hand, “Fair Trade,” while embracing the principles of ethical trade, goes one step further and seeks to encourage and find opportunities for the economic development of disadvantaged people. This is not in the form of charity, but positive capacity development to enable these disadvantaged people to take part in business and generate income to help them along the road to economic independence.

In Viet Nam, Indochine Natural worked with poor farmers to develop capacity in growing and producing loofah products. In Malaysia we work with a group of rural based intellectually disabled people to produce a range of household cleaning products made from recycled oil collected from local restaurants. In both cases the capacity development provided by Indochine Natural has helped these groups to become more finically independent and has made a positive contribution to their lives.

As a consumer you cal also make a positive impact on these people's lives by purchasing these Fair Trade products from all JustLifestores in Malaysia, or from our online store.

More details of our Fair Trade activities are available on our website 

BUSINESS TRANSPARENCY – CONSUMER BENEFITS

The lack of transparency in most mainstream body cares supply chains makes it virtually impossible for consumers to know if the bathroom/personal care products they buy were produced following environmentally and socially sustainable methods.

Indochine Natural, as Malaysia’s first and only certified Fair Trade company with its certification by the Netherlands based World Fair Trade Organization (WFTO), changes many conventional business practices. Our customers are becoming part of an increasing number of consumers globally who are demanding ethically produced body care products.

The key here is transparency, and the ability to trace products from the retail shelf to their origin in order to avoid anonymity and, as a consequence, human rights, labor and environmental infringements. This traceability enhances the confidence of the consumers in their intention to support sustainable development of communities in developing countries.

What does this mean in practical terms for Indochine Natural customers? Our production facility and records are open to public scrutiny, and visitors are welcome to inspect our facilities and talk with workers. We have absolute transparency with our partners. For example, with the group of intellectually disabled who produce our eco-friendly generalhousehold cleaning liquid we pay them above the price they requested to make this product, and they are kept informed of our wholesale price to distributors and the retail pricing so that they are fully aware of the profit margins along each step of the supply chain. In this way, consumers can be assured that these intellectually disabled producers are receiving a fair return for the product they produce.

Pictured here is Indochine Natural’s Dr. Mike on the right with our Stepping Stone staff and members who are a group of rural based intellectually disabled producing our eco-friendly general household cleaning liquid.

You can read more about the Indochine Natural Fair Trade principles, producers, and employment policy HERE.