Bamboo Flooring Report - Setting up in Cambodia

Bamboo Flooring:

Setting up in Cambodia

By: Sharina Mutreja 4680260

Shruti Mishra

Pakkapong Veerakiatikit

Chanika Limkriengkrai

Table of Contents

Executive Summary

Introduction

There are about 1,000 species of bamboo that can be found in diverse climates and are generally found in Northeast to South and Southeast Asia, parts of Australia, parts of Africa and Southeast of the USA. Established bamboo can grow to reach its full height in a single season which makes it the fastest growing woody plant. Bamboo forms a hard wood which is light and quite tough making it useful for things such as houses, fences, furniture, chopsticks and several other products. More recently, companies are trying to increase the use of bamboo flooring which is made from bamboo pieces that are steamed, flattened, glued together, finished and then cut. The popularity of bamboo has been increasing for several reasons. Since it is a renewable resource, it is kinder to the environment and the growing trend for people to be more eco-friendly means they are looking for alternative sources of wood. Bamboo also has the Asian appeal which makes it a stylish product to use. It matures in three to four years, regenerates itself and requires minimal fertilization and pesticides. It’s tensile strength is 29,000 per square inch compared to 23,000 per square inch for steel. Bamboo is the fastest growing plant on earth and offers 25 times the yield of hardwood. It is much more sustainable and renewable. Bamboo can be harvested without killing the plant and replenished with virtually no impact to the environment. Bamboo is such a hard plant that it requires no pesticides or fertilizer and is harder than red oak and Borth American Maple.

At the moment, the largest manufacturer and exporter for bamboo products is China which has over 500 species of bamboo and was the first to recognize and capture the opportunity. While Asia contributes about 95% of the world’s bamboo export, Cambodia holds an extremely minimal percentage in that. Authorities estimate that forest covers about 30-35% of Cambodia’s total land area. Bamboo at the moment has a very low priority among the people and the government and the sustainable use and management of it is very poor. We see this as an opportunity to enter the Cambodian market and set up the first large scale bamboo manufacturing plant and take advantage of the natural resources available there. With careful research on how to best use the resources available to us, we can develop the bamboo industry in Cambodia and essentially work towards becoming one of the key players in the market.

This paper will go through an analysis of the external factors affecting the markets, an industry and key competitor’s analysis along with an internal analysis in order to identify key issues affecting our business in order to come up with strategic alternatives and eventually choose the best strategy for us.

II. External Analysis

Most people’s experience of bamboo is limited to use bamboo baskets, chopsticks or eating bamboo shoots. Now there are a variety of commercially available bamboo products like bamboo flooring, laminated furniture, and building panels. They are successfully competing in the world marketplace and gaining market share. For the world market, we can group bamboo into traditional and emerging market. Bamboo flooring is in an emerging bamboo market which has been pioneered by Asian producers. The future demand for bamboo products will be driven by global market growth rate and penetration rates for bamboo into the global market.

There are significant macroeconomic changes affecting the wood market. First, there is a strong worldwide demand for materials along with an establishing and growing environmental awareness which is forcing changes in the way the product is produced. Second, the production and exports in China are changing the business context for US and European suppliers. Third, a global shortage of certified renewable wood and shortage of all wood kinds in Asia is opening up opportunities for substitute product like bamboo flooring. Lastly, the growth in interest for a source of environmentally friendly products will have an effect on wood based products which creates an opportunity for the bamboo market. Bamboo is a fast growing grass which can be found in many regions of the world. Therefore, bamboo flooring will be the new choice to the global