December 27, 2011 by Tam Yu Ling
A world without plastic bags would be quite unimaginable for many consumers long used to having these items to hold their purchases. This is why despite being in the green business, Alan Yeap, chief executive officer of green technology solutions company New Quantum Holdings, decided to incorporate rather than eliminate plastics from his company’s product line.
Still, mindful of the fact that plastic bags are not at all kind to the environment, New Quantum decided to manufacture eco-friendly bags which both look and feel like ordinary plastic bags but can degrade within two years, unlike conventional plastic bags which take more than 1,000 years to disintegrate.
Currently, the company produces the bags under its two in-house labels: Oxium and Ecoplas. Oxium provides plastic bags for the mass market, and has plastic polymer chains that have been chemically shortened to increase the speed of plastic degradation through the oxidation process.
Then there is Ecoplas, New Quantum’s luxury line of biodegradable bags that are produced using starch extracted from tapioca roots.
For Mr Yeap, the idea of developing eco-friendly plastic came about due to the challenges of applying the 3Rs (reduce, reuse, and recycle) principle of environmentalism in the plastics industry.
‘Most plastic bags are reused as garbage bags to throw garbage. While a small percentage of plastic bags end up being recycled, it is a difficult process due to the huge amount of manpower, money, water and energy that is needed,’ said Mr Yeap.
‘In some incidences, improper recycling processes could lead to contamination of the recycled finished product, and this creates another set of social and environment problems.’
Even for PP (polypropylene) non-woven shopping bags, which are supposed to be more environmentally friendly because they can be reused many times, problems still exist.
‘Our research has also shown that the majority of consumers do not use these so-called environment-friendly plastic bags in accordance to the reuse and reduce concepts. According to one United Kingdom researcher, in order for PP non-woven bags to be efficient and effective in reducing plastics usage, it has to be used 170 times as the PP non-woven bag is 20 times thicker than normal polyethylene (PE) plastic bags.
‘Sadly, most of us do not reuse these bags that many times, and they end up increasing the total garbage amount in‚ open landfills, drainages, rivers and oceans as non-degradable plastic waste,’ he lamented.
Given the ‘lack of good alternatives to plastic bags’, New Quantum has chosen to focus on making plastic bags eco-friendly, said Mr Yeap.
And choosing to use their environmentally friendly bags need not hurt the pocket too. Mr Yeap describes his pricing strategy as ‘competitive’. Its Oxium degradable bags are priced 3-5 per cent higher than the conventional plastic bags. In contrast, other companies usually price their degradable bags ’20 per cent more expensive when compared to normal plastic bags’, he claimed.
‘The cost leadership model that the Oxium bags are based on – using oxo-degradable technology to turn normal plastic bags into environmental friendly green products – has worked well for the company so far,’ said Mr Yeap.
In fact, the company now counts well-known brands such as Nike, Zara and Carrefour among its clients. This year, New Quantum has also managed to achieve total revenues of US$30 million.
But success did not come overnight. New Quantum spent its first eight years doing research to develop the product prototype for the environmentally friendly bags, while another two years went into commercialising and testing the sustainability model of the product in order to perfect the degradable plastics into a marketable form.
During the long pre-revenue stage, Mr Yeap said he managed to overcome the trying period by constantly reminding himself that ‘we need to love our world from now on, and if we don’t do something now, environmental disasters will come’.
This environmentally conscious message that New Quantum seeks to promote is not limited to product development but is present at every stage of the production process, from sourcing to marketing efforts.
For example, while the same biodegradable technology can also be found in eco-bags made out of corn, the company has chosen not to use corn in making the Ecoplas brand of eco-bags.
‘The reason why we have chosen to use tapioca roots as the raw material for our Ecoplas bags is because it is not the main food staple in many parts of the world.
‘Had we chosen to use corn (which is eaten more widely) in making Ecoplas, we would not be solving the environmental problem but would create another set of problems in terms of a possible food crisis.’
An added benefit of using tapioca in making biodegradable bags is the social impact on tapioca suppliers. New Quantum estimates that for every 100 tonnes of Ecoplas bags that they produce, they contribute to the livelihood of 1,000 tapioca farmers who are able to sell their crops at a fair trade price. As a result of this practice, the company is also in the midst of getting a Fair for Life certification for its Ecoplas bags.
Likewise, in the marketing of its products, the company walks the eco-friendly talk. The office that it occupies at its Bukit Batok location does not store stacks of paper brochures promoting its in-house products. Customers who ask for product brochures will instead be sent an electronic version through its e-commerce channel which is ‘borderless and can therefore help the company to efficiently reach the global market’.
As an industry veteran in the green technology business, Mr Yeap admits that one key challenge that he has to constantly face is the growing price inflation of the raw materials he uses in his plastic products.
‘With higher (raw material) price comes higher risk. Price volatility is very common in the commodities market. But our profit margins remain the same despite increasing raw material prices.’
To cope with the challenge of high capital tie-ups and low profit margins, Mr Yeap said there is a ‘need to set a clear direction for value chain growth’.
In line with the ‘value-added business model’, New Quantum forms strategic business partnerships to set up regional manufacturing centres in China, Vietnam, Indonesia, so as to capitalise on the relatively cheaper labour costs in these countries.
It also taps into the ‘quality human resources that can be found in Singapore’ to work on the technology application, design, branding and intellectual property involved in its eco-friendly products, and uses the local platform to reach the global market.
Looking forward, the company expects annual 20-30 per cent growth for the next three years, given that the ‘green business is booming as the world continues to face plastic waste pollution and also climate change environment issues’.
Profits aside, Mr Yeap is driven by a sense of urgency that the world needs to do something right now to build a sustainable future.
‘We are responsible to protect the earth, for ourselves now and the generations to come.’
Source: The Business Times