Are Fair Trade Handicrafts Starting to Look Very Tired?

Back in the 1970’s during my student days I spent semester breaks travelling in SE Asia, and back home I would often visit the small stores selling Asian handicrafts. Many of these stores were the beginning of what we now see today as Fair Trade handicraft retailers.

But looking at these stores now, not much as changed and the products are looking tired.

In communicating with various Fair Trade producers, wholesalers and retailers a few things have become apparent. For many innovative and new Fair Trade handicraft producers it impossible to break into the Fair Trade market. Most have written to large distributors/wholesalers and the response coming back is usually along the lines of “Unfortunately at this time XYZ is unable to begin new partnerships ….. XYZ values the close relationships that it maintains with its current artisan and producer groups. These relationships help to ensure that our trading partners receive a consistent volume of purchases….”

Therefore we have a number of large wholesalers locked into a fixed group of producers supplying a significant percentage of the Fair Trade handicraft market. At the same time many Fair Trade producers are effectively locked out of this market. No wonder the Fair Trade handicrafts retail market looks tired.

Some retailers provide interesting retail environments for handicrafts. By combining handicrafts with organic and Fair Trade food, coffee, tea and tables where one can sit and enjoy a snack and coffee while browsing magazines etc. some pleasant retail spaces are being created. Interestingly, I find these sorts of stores are flourishing in the South where there is a lot more pressure on Fair Trade producers these days to sell locally as trade with the North has decreased significantly in recent years..

At Indochine Natural (www.indochinenatural.com) we have responded to these challenges in a number of ways? Firstly, we have given up entirely any hope of entering the Fair Trade market. We see are Fair Trade retailers/wholesalers trading in products similar to ours, but the focus is on low quality, and we cannot compete with our high quality products. Secondly, while maintaining our Fair Trade principles we are now competing on the open market with an emphasis on product quality pitching exclusively to top end markets including boutique hotels and organic retail chains. These buyers are not certified Fair Trade, but they support the principles of Fair Trade and leverage our Fair Trade status in their marketing.

There are very stark contrasts in dealing with the Fair Trade wholesalers who are very limited in the products that they will take and have the tendency to only want very cheap items (often well below our ingredient costs), and the open commercial market with its focus on our product quality and willingness to pay higher prices.

For us as a Fair Trade producer all of this is a no-brainer…..Fair Trade is a business model providing sustainable economic opportunities to the disadvantaged, and commercial sense says you go where the opportunities are without sacrificing Fair Trade principles. To survive, Fair Trade handicraft producers will need to move outside of the Fair Trade market and learn to compete in the open market. This will ultimately result in shrinking shop fronts in the exclusively Fair Trade retail sector (and even more tired looking products) as Fair Trade producers seek more lucrative sales channels. Ultimately, with more dynamic and interesting Fair Trade handicrafts appearing in upmarket mainstream outlets this may be a more effective channel for spreading the Fair Trade message. And it does not need to be limited to whole products, Fair Trade handicraft artisans may supply components of larger products, for example handmade decorative belt buckles for mainstream leather belts that may or may not be Fair Trade……the possibilities are limitless.

You can learn more about our company at www.indochinenatural.com

Disability, Poverty & Fair Trade

Indochine Natural  was the first, and is currently the only World Fair Trade Organization (WFTO) member in Malaysia, and our target has been working with the intellectually disabled. For the Indochine Natural team this has been a fascinating journey, and given the challenges faced, not such a difficult one.

I was reflecting the other day on the wedding we attended (see photo below) of one of the members of the rural based group of intellectually disabled we work with on Penang Island, and what we have learnt about the intellectually disabled generally over the past four years and the impact of our Fair Trade activities:

·      People with intellectual disabilities do not necessarily view themselves as disabled.

·      Disability is all about people and their social relationships in the community and wider environment.

·      Disability certainly puts individuals and their family at risk of being in poverty.

·      This risk of poverty is related to barriers of discrimination, lack of access to education and other public services, and a number of general broader community restrictions.

In working with intellectually disabled members of SteppingStone  on Penang Island, Malaysia, Indochine Natural has been able to improve through on-the-job training the production capacity and quality of their dish wash soap made from recycled cooking oil, and has now trained them to make a general household liquid cleaner, also from recycled cooking oil. This environmentally and skin friendly liquid household cleaner is a very good seller in the chain of JustLife organic stores in Malaysia, is a favorite of many boutique hotels, and has been exported to the USA, Singapore and Japan. Therefore, a remarkable outcome for this group.

In adopting the principles of Fair Trade combined with hands-on skills training, the production of these products made from recycled cooking oil has addressed a number of environmental and social issues in our local community.

Watching these intellectually disabled proudly at work producing these products, they certainly do not see themselves as disabled. The wider community values these products and they see this group as being valuable contributors to society. And most importantly, the income produced from these products addresses the risk of poverty.

Dr. Mike Thair

Co-founder & Managing Director

Indochine Natural

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.  

Business Ethics and Natural Products

 

We wonder if the average consumer is aware of an interesting trend in recent years...a number of iconic green and natural product companies have been bought out by large multinationals. For example, Clorox (they manufacture bleach and other chemical products) purchased the privately owned Burt’s Bees (handmade natural soap etc). Then there was the purchase of Body Shop by L'oreal, and other examples include the sale of Rachel's Organic and Tom's of Maine which was purchased by Colgate-Palmolive for $100 million. All of these started as small companies selling natural products.

The BIG question of course is whether these companies can keep their ethical principles after being absorbed into corporations not sharing the same set of values?

It seems the answer is NO!!! The Ethical Consumer magazine in the USA rates companies and their products on their ethical credentials. They have dropped Body Shop's rating from 11 (out of 20) to 2.5 since the sell-out. Tom's of Maine has fallen from 16 to just 5 because of Colgate-Palmolive's poor reputation.

These purchases are a big win these large multinationals because they are buying a ready-made package of values and history of trust.

Many consumers don't know who owns their favourite brands ethical brands, and others just don't care.

Should we be concerned? The profits that Colgate earns from Tom's of Maine, or that Clorox earns from Burt’s Bees, are being poured directly into companies with reputations for ecologically unsound products and practices. If this is of concern, then the answer is obviously yes.

Indochine Natural operates on clear ethical business principles and is a member of the World Fair Trade Organization (WFTO). Our ethical business principles can be found HERE.

THE INDOCHINE NATURAL FAIR TRADE JOURNEY 2007 - 2012

Indochine Natural's foray into the world of Fair Trade started not as a philosophical approach to doing business but more as a practical necessity in working with a commune of farmers in northern Viet Nam during 2007. Over a period of probably five years this commune had seen its fair share of "outsiders" coming and going with various business proposals, and in most cases the farmers were on the losing end in these deals. So not unexpectedly, they were cautious when approached by Indochine Natural.

Indochine Natural was interested in exploring the potential for providing economic opportunities for rural communities in Viet Nam, as this group is ranked as the poorest of the poor. The basic proposal was that farmers would grow loofah, and along with their families and other members of the community take part in value adding the loofah. This would provide a range of export quality bathroom loofah products for the company. Another component of the loofah products was a fabric backing made from hand-woven hemp produced by a women's group in a mountainous region in the north of Viet Nam.

Dr. Mike Thair, the Australian Managing Director and founder of Indochine Natural, developed an approach to build trust with the farming commune. Ms Le Thanh Thuy, the Vietnamese co-founder of the company, carried out the implementation. Central to the approach was a transparent contract with the commune that identified all of the technical and quality parameters of the loofah to be grown and purchased. Included in the contract were payment details, and most importantly an advance to be paid to the farmers so that they would not be out of pocket in purchasing fertilizer and other items required to grow the loofah. Importantly, the company provided training and other capacity building free of charge in those areas where the farmers lacked the skills and resources in producing the loofah products.

Particular attention was given to ensuring that those involved were earning a good living wage, especially as the payments were made on the number of loofah pieces grown and/or processed by the farmers and their families. The work was monitored by Ms Le Thanh Thuy to ensure that children were not being exploited, and she made direct payments in cash to the farmers and workers to ensure that middlemen weren't exploiting them.

Gender equity was important, and Ms. Thuy ensured that women were not discriminated against in any of the activities and earning opportunities. Safe and comfortable working conditions were provided in a vacant warehouse, and Indochine Natural provided all of the necessary safety gear and instruction on safe work practices.

The approach proved to be very successful with the initial group of 50 farmers, and as a result more farmers wanted to become involved. Subsequent research by Dr. Thair revealed that the approach adopted was in fact very close to the principles of the World Fair Trade Organization (WFTO) and similar organizations.

With the knowledge that Indochine Natural was using WFTO practices in their cooperation with the farmers, inquiries were made to WFTO-Asia on the steps required for accreditation and membership. An initial requirement is referees, and one of the referees must be a WFTO member in country. As there was only one Fair Trade accredited company in Viet Nam at that time, Dr. Thair immediately made contact with the view of having them get to know the company and provide the necessary reference. This approach from Dr. Thair was not entirely welcomed, and this particular Fair Trade company was not enthusiastic about becoming a referee. If one considers the position of this company as the sole Fair Trade accredited company in Viet Nam, and the enormous financial and competitive advantages this provided, perhaps it is understandable that they were not particularly enthusiastic in having a potential competitor. However, given the principles of WFTO membership and accreditation, this attitude is indeed surprising. As it appeared impossible to move forward without this referee, the ambitions of Indochine Natural for WFTO membership were temporarily put on hold.

Despite this set back, Indochine Natural made contact with approximately 100 Fair Trade retailers and wholesalers across the USA and Europe to offer the products they had manufactured with the loofah produced by Vietnamese farmers. Even though these were produced under WFTO conditions, the general response from those contacted was that unless Indochine Natural had Fair Trade accreditation with WFTO or a similar organisation, then these companies were not interested in doing business.

Fortunately, two businesses in the USA responded positively, and their approach was to make a personal visit and evaluate for themselves the practices of Indochine Natural. During 2008 the owners of both companies visited Ha Noi and did a reasonably thorough audit of Indochine Natural operations, including meeting with the workers and looking at their employment conditions. In both cases the company passed with flying colours and business negotiations were commenced that resulted in exports to the USA.

In 2009 Indochine Natural set up operations on Penang Island in Malaysia, and again the focus turned to Fair Trade. It was becoming clear that "Fair Trade" has become a prominent buzz word in marketing, and that certification through WFTO and similar organizations can be an expensive and time consuming process. While many buyers sourcing fair trade goods insist on some form of certification, the experience to-date indicated that some are more interested in the beliefs and practices of the company than the actual certification, and are willing to do their own audits.

With certification there were a number of other trends that were becoming of concern to Indochine Natural. For example, a number of cosmetics are being labelled as "Fair Trade" when in fact only a very small percentage of the ingredients are sourced as Fair Trade, and often these sources are hard to track. Also, from the direct experience a number of certified Fair Trade companies and organisations in developing countries are dubious, and often it is common knowledge locally that they are not following appropriate practices. It was becoming increasingly apparent that "Fair Trade" is a marketing term only as good as the self-policing a company puts into it. There is certainly a lot of abuse of the term, and groups such as WFTO are trying to change this, but with only limited success.

So where does this leave Indochine Natural on its Fair Trade journey? Firstly, Dr. Thair and Ms. Thuy, the owners of the company are committed to providing economic opportunities to women and disadvantaged producers. On top of this, they are of the opinion that Fair Trade is simply just good business practice. Therefore a decision was made to seek formal recognition through WFTO. Indochine Natural became a member of WFTO-Asia in 2011, and a full member of WFTO global in November 2012.

For more information please visit our website HERE

Ms. Le Thanh Thuy, our Executive Director - Fair Trade, with loofah farmers in Viet Nam