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Scanviwood beats new paths in Vietnam: Environment certificate for Norwegian furniture-maker

After protracted efforts, the Vietnamese furniture factory Scanviwood, which is partly owned by the Norwegian businessman Arve Varleite, has acquired a so-called Chain of Custody certificate. This means that the factory can offer garden furniture which has been made from environmentally certified timber. As it turns out, however, furniture importers are reluctant to pay the extra costs implied by certification systems.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
After protracted efforts, the Vietnamese furniture factory Scanviwood, which is partly owned by the Norwegian businessman Arve Varleite, has acquired a so-called Chain of Custody certificate. This means that the factory can offer garden furniture which has been made from environmentally certified timber. As it turns out, however, furniture importers are reluctant to pay the extra costs implied by certification systems.


By Jørn Stave
Norwatch

- This was a pleasant Christmas gift, Arve Varleite says of the Chain of Custody certificate he received on Christmas Eve.

The Vietnamese furniture factory outside Ho Chi Minh City has spent a little more than two years on reorganising its production according to the requirements of the well-reputed Forest Stewardship Council (FSC), and according to Varleite, investments have come to NOK 3 million. The Chain of Custody certificate is a proof of traceability, which implies that the factory has a system for segregating the timber by origin. Most of Scanviwood's furniture output, however, is still based on timber that has not been approved by FSC.

FSC is an international body that has developed criteria for sustainable forestry, as well as a system for tracing the certified timber from the forest to the consumer. The environmental movement points to FSC-certified furniture as the only guarantee that production attends to both the forest's and the indigenous peoples' interests.

More expensive furniture
Scanviwood exports garden furniture to several European countries, among them Norway. Last year, the factory sold garden furniture to both SmartClub and Shell, but at that time, none of the furniture carried FSC certificates.

- We are relatively inexperienced in the market, and were led to believe that we would get FSC furniture, says Einar Vatne of Shell Norway. This year, he has decided to drop all wooden furniture and rather go for garden furniture in plastic.

Still, some chairs and tables made from rainforest timber will be found at Shell stations this spring and summer, since some furniture from last year is still in stock.

This year, only SmartClub is importing from Scanviwood. According to Gunnar Ingelsrud, SmartClub has bought FSC-certified garden furniture produced from the keruing tree sort. Ingelsrud will not make any statement to NorWatch on purchase volume or price, and explains the lack of transparency with competition concerns.

Scanviwood's Arve Varleite, however, informs us that the agreement with SmartClub covers nine containers of garden furniture, less than half the volume purchased by SmartClub last year.

- This illustrates that importers are reluctant to stake anything on environment labelling. Scanviwood offers FSC-certified garden furniture at a price 15-25% above that of non-certified furniture, and this seems to be too much of an extra cost for most importers, Varleite says with disappointment.

Scanviwood has also had trouble with sales in other parts of Europe. Varleite claims the factory can supply 100 containers of FSC-certified garden furniture, but so far, only 30 containers have been sold. Apart from Norway, the factory exports certified furniture to Sweden and Germany, while furniture without FSC certificates has been sold to Denmark, Finland, France, and the UK. According to Varleite, Scanviwood's total production of garden furniture amounts to 400 to 500 containers a year.

Hardwood from Borneo
The FSC-certified timber used in Scanviwood's furniture production is bought in Malaysia's Sabah State on Borneo. This is the only area in Southeast Asia that offers FSC-certified hardwood, mainly from the tree sorts yellow balau and keruing. According to Varleite, this timber is up to 50% more expensive than non-certified hardwood.

- High commodity prices for the FSC timber, plus a costly process of acquiring Chain of Custody, has made the factory dependent on importers who are willing to pay extra for environment-labelled furniture, Varleite stresses. He claims that false FSC certificates abound in the market.

- Many factories buy a few certified logs, in order to offer FSC-certified furniture equivalent to twice that amount of timber. This enables them to sell the furniture far more cheaply, and thereby destroying the opportunities for the serious businesses in the market.

Kim Loraas of the Rainforest Foundation in Norway doubts that Varleite can document these allegations, but presumes that he is mainly referring to the fact that some Norwegian dealers misunderstand the difference between a Chain of Custody certificate, which only proves that a factory has had third party inspection of the production line, and an FSC label, which is to accompany every single product from forest areas that have actually been certified. Loraas further relates that there have been instances, both in the Norwegian market and at German furniture fairs, of furniture producers and distributors operating with false labels on furniture, passing it off as FSC. If this happens, it must immediately be reported to the FSC secretariat, which will then take legal action.

- The FSC, and those certifying under the FSC, should be very aware that many wish to claim that they are dealing in FSC-certified products, without actually doing so. They should therefore react sharply to any form of cheating, so the brand and the logo are not undermined by cunning businessmen. Sales on false premises could constitute a problem for Norwegian purchasing managers, who should get written into every contract with the sellers that they may cancel the purchase and demand compensation if every single product is not in fact FSC-certified, Loraas stresses.

Scansia, which is 70% owned by Arve Varleite, opened a new factory in Vietnam in October last year. This factory mainly produces indoor furniture from pine imported from New Zealand and Scandinavia. Altogether, Varleite's furniture company now employs close to 3,000 workers spread over five factories in Vietnam.

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"High commodity prices for the FSC timber, plus a costly process of acquiring Chain of Custody, has made the factory dependent on importers who are willing to pay extra for environment-labelled furniture."
- Arve Varleite, Scanviwood, 7 February 2001

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Scansia in Vietnam
Norwegian furniture entrepreneur Arve Varleite controls about 70% of the Malaysian company Scansia Sdn Bhd. In 1991, Scansia Sdn Bhd (60%) formed a joint venture with a Vietnamese partner (40%), and established the Scanviwood furniture factory outside Ho Chi Minh City in Vietnam. Scanviwood produces various kinds of wooden furniture, and exports large amounts of garden furniture to the European market.

Norwatch Newsletter 3/01

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