Companies keeping up with consumer demands for environmentally-friendly goods
WITH the business environment getting tough, due mainly to shortage of skilled workers and the slow down in some industries, some local SMEs are turning to producing environmentally-friendly products to stay competitive in the market.
Environmentally-friendly products are gaining popularity, especially among the generation-X and generation-Y.
According to a 2018 Green Industry Analysis by the US-based Franchise Help, some 55% of consumers across 60 countries are willing to pay higher prices for goods from environmentally-conscious companies. A 2015 study by The Nielsen Company also shows that in the US, despite high unemployment rates and low wages, millennials are willing to spend more for products that are environmentally-friendly.
“Just over the span of one year, millennials willing to pay more for products and services from companies committed to positive environmental and social change increased from 55% in 2014 to 72% in 2015. Although seen by some as a niche minority, eco-minded consumers are now a major concern and opportunity for marketing departments across the country,” the report said.
Walta Engineering Sdn Bhd managing director Goh Kheng Sneah says the company has also observed similar trends in Malaysia and in South-East Asia.
“This is why, a couple of years ago, we invested in designing and development activities to produce detergent-free dishwashers. The targeted segments are hawker centres and restaurants,” Goh says.
Because the dishwashers do not use detergent, they are environmentally-friendly, he adds.
Instead, its technology makes use of high-pressure hot water to clean dishes. Each unit has the ability to clean 1,800 to 2,500 plates in an hour, says Goh.
Walta has spent a few million ringgits to design and develop the dishwasher.
“About 50% of the raw materials are imported and the remaining sourced locally,” he says.
About 250 units of the dishwasher will be rolled out for introduction into the local market this September, with selling price at US$10,000 per unit.
The company has already received enquiries from the local market, Singapore, Thailand, and the Philippines.
“The new business segment will drive the company to achieve turnover of RM70mil in 2019 from RM60mil targeted for 2018.
“In 2020, we expect to be able to do RM100mil, of which 40% will be the contribution from the dishwasher business segment. We aim to sell 500 units in 2019 and 1,000 by 2020,” he adds.
Walta will generate revenue from direct sales and rental of the dishwashers.
The dishwasher is expected to help restaurants and hawker centres reduce the use of foreign labour.
“This is why the product is appealing. Furthermore, the product is environmentally-friendly,” says Goh.
The shortage of workers makes it difficult for Walta to stay competitive as an automated equipment company focused on making customised equipment, which needs a lot of skilled workers.
“When we have successfully trained the foreign workers to do the work, they have to return to their respective countries. Some of them may choose to work in another country after acquiring the experience and training here.
“So it becomes necessary for us to develop a fresh product that could be produced according to a standard manufacturing process that does not require so much skilled labour,” Goh explains.
Goh urges the new federal government to make SME grants more accessible so that local SMEs can undertake development activities to produce more innovative products for new markets.
International reports have noted a steady growth in the global market for industrial and institutional cleaning products. This will provide local players with an opportunity to take part in that growth, particularly those with ready products for the export market.
According to a Smithers Apex report, the global market for industrial and institutional cleaning products will reach US$51bil by 2021 with a CAGR of 4%.
“The demand for using green products for cleaning is increasing through to 2021, in order to prevent creating non-biodegradable waste water and effluent.
“Manufacturers of cleaning products for industries and institutions have adhered to the changing societal demands and have started using bio-based ingredients, innovating cleaning products that require less or no water with eco-friendly and recyclable packaging,” the Smithers Apex report said.
Another local company banking in on the green movement is Danapac Industries (M) Sdn Bhd.
The company has adopted new manufacturing processes to make new environmentally-friendly products to drive growth, as its traditional markets – the electronic, food, and medical device sectors – are not performing well.
The electronic sector, for example, is saturated with mobile telecommunication devices.
“For this reason, new mobile devices are slow coming into the market, which has affected orders for trays to package the electronic components used inside the devices. To continue selling to these markets, we need products with environmental features.
“The electronic sector is phasing out the older trays and is switching gradually to the new environmentally-friendly trays,” says director Jansen Lim.
The company is using a hot laminated process technology to manufacture pre-printed high impact polystyrene (HIP) and polypropylene (PP) extrusion sheets that are used for making trays to hold medical devices, electronic components and food items.
“Innovation is key to survival. Since early this year, we have ventured into the production of pre-printed extrusion sheets with colours and logos on them, using a special hot laminated process technique.
“Previously, the extrusion sheets were printed with logos and colours only after the manufacturing process of the sheets is completed. Because the logos and colours were not pre-printed, the chemicals from the sheets can migrate to the environment, causing environmental problems,” Lim explains.
Lim says the company has invested about US$400,000 into the hot laminated manufacturing process to make the new pre-printed extrusion sheets.
Danapac has also invested into a total interactive quality assurance management system (TIQAMS) to cut down the production of defective extrusion sheets. The TIQAMS basically provides information for the manufacturers and customers to know about the defects and the ingredients used for the sheets.
“We have managed to reduce the number of defective extrusion sheets by 70% to 80%, which has strengthened the confidence of our customers in our company.
“As a producer, we are familiar with the problems that are linked to the manufacturing process of extrusion sheets that could be shared with our customers. The system allows the manufacturers to share the information collected by TIQAMS,” he says.
Danapac has been enjoying brisk sales thanks to the TIQAMS as the system lets its customers in on the manufacturing process of its products and ingredients used. This helps build rapport with its customers.
“From the information, we will also be able to improve the production process used,” Lim adds.