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Supply market purchasing strategy--Zitan

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Amelia Wan

on 4 February 2014

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Transcript of Supply market purchasing strategy--Zitan

Market strategy (Value of Zitan)

Quality Level:
Normally 9 out of 10 Zitan Wood is with hollow inside.
There are 3 kinds of Zitan: Original Zitan wood, Zitan wood with hollow, Zitan wood without hollow.

The price is hugely different.
Price of Zitan wood in 2013 (from Chinese wood market organization)

It is rare to find antique furniture made from zitan, and because of its rarity when items do become available they usually fetch very high prices. (key success factor)

Historical value:
Only the imperial household was allowed to use Zitan in China from the 17th to the 19th century.

Collective value and investment:
Collecting zitan furniture has been an increasingly popular pursuit for furniture connoisseurs. (increasingly valuable)

ASTM C31-69
- It is the test procedure for making compressive test cylinders.
o For standard test cylinder - is 6 inches in diameter by 12 inches high for aggregates up to 2 inches.
o For larger aggregates - the diameter should be at least three times the aggregates size and the height at least twice the diameter.
- The molds used are generally waxed cardboard or plastic.

• Fill the test cylinders with three equal layer rodded 28 times.
- Concrete of 1 – 3 inch slump - may be rodded or vibrated
- Concrete under 1 inch slump - must be vibrated
- Concrete over 3 inch slump - must be rodded
• Stuck of level and cover with glass or steel plate or damp burlap and allow setting for 24 hours.
• Move the cylinders to proper curing facilities where moist curing will take place for the required time.
The strengths of the cylinders are generally taken 7 to 28 days.

Accelerated Tests
- Are being developed to allow earlier acquisition of strength information.
o 2-day break – have been cured in boiling water or in autogenous curing boxes
o 5-day break – have been cured under heat and pressure and a system that will chemically analyze concrete before placement for its potential strength
The compressive strength of the concrete is determined by loading cylinders to failure.
S = P/A ; S = compressive strength
P = load in lb A = area in sq in.

To test compressive strength of in-place of concrete, various destructive and nondestructive methods can be used:
o Coring with diamond – used to remove specimen for strength testing.
o Ultrasonic – nondestructive; by correlating density to strength
o Impact Hammer – measures the rebound of a spring-loaded plunger after hitting a smooth concrete surface.

http://english.forestry.gov.cn/web/article.do?cid=200911160914197647(China Forestry government)
http://english.forestry.gov.cn/web/article.do?action=readnew&id=201310230441269846(Canadian new trade mission)
http://www.un.org/documents/ecosoc/cn17/iff/1998/background/ecn17iff1998-bgite.htm(United Nations)
http://www.forestry.gov.cn//portal/main/s/525/content-104748.html(indonesia )
http://www.iucn.org/about/union/secretariat/offices/asia/elg/elp/?6277/forest-governance-and-law-enforcement-findings-from-the-field (IUCN )
http://baike.baidu.com/link?url=7Le35WHvQjt4UAE_BaGQW-UseSlXe_Qaq5-dcFOWF-X-5Cxf0iBIMR29XpEcIXiCHsFOOcVuPhdm4MqOGD5pka (Greenpeace organization )
http://www.fao.org/forestry/trade/en/ (Food and Agriculture Organization of the United Nations---Forest products trade and marketing)
http://news.jc001.cn/13/1031/765296.html(new raw material)
http://news.jc001.cn/13/1018/762592.html (archaized furnitures)
http://news.jc001.cn/13/1019/762774.html (imported raw material price down)
http://news.jc001.cn/13/1115/769254.html(embargo )
http://news.jc001.cn/13/1220/776192.html (generetic technological conditions)

http://bj86866.1688.com/page/offerlist.htm?keywords=%D0%A1%D2%B6%D7%CF%CC%B4&priceStart=&priceEnd=&tradenumFilter=false&priceFilter=false&mixFilter=false&privateFilter=false&groupFilter=false&sortType=showcase&pageNum=2#search-bar(category of timber)
http://news.xinhuanet.com/jiaju/2010-11/17/c_12786258.htm(Hermes Shang-Xia)
http://s.1688.com/company/-D0A1D2B6D7CFCCB4BCD2BEDF-1043670.html?button_click=top&pageSize=30&n=y(alibaba furniture company yellow page)
http://www.wood168.com/hqmain.htm(timber supply market in China)
Name : Zhejiang Dongyang
1300 factories
a. They want to cooperate with the forest controller and buy the raw material at a low price.

b. They want to set up company in main import harbor buying origin wood and sell them to secondary distributors.

Supply market purchasing strategy
----- Zitan Luxury Funiture Company
Fang WAN
Jingxin LI
Wenyu YANG
Kaiju SHI
Supply market
Demand market
New entries
Barriers and opportunities

What is Zitan?
What is Zitan?
A member of rose wood family

2 quality grades: solid & hollow

Mainly used for furniture, artwares, accessories

€648,253 - €907,554

€40,000 - €60,000
Price comparison
But in the auction house...
Concentration :

open competition market.
Number of supplier:

always stay at a steady number because of the capacity. An increasing number of supplier in China because of the need from the furniture market. Suppliers are not independent and normally keep in a medium size( not under organization)
Geographic location:
Although the zitan tree is not extinct, it is very slow growing and the growth is confined to India, Malaysia, islands in the Indian Ocean and few in southern China, Indochina and Vietnam.

The Zitan market is in the mature market on the life cycle curve.

The top suppliers now are mainly in India as the climate there is appropriate for the growth of Zitan Tree. The capacity is going to increase because of the new market of the tropical area in Africa but have a trend of decreasing because of extremely slow growth of its trees, all these factors make Zitan more rarity in the future.


The cost of preservation

It is easy to have expansion or shrinkage due to the humidity and other weather factors. (human resource, ware house, technology…)

The market segment share of Zitan product

The quality distribution in different segment

Name: Fujian Xianyou
About 500 factories
Price: Burma Tulipwood 40000~180000RMB/ton
Burma padauk 10000~15000RMB/ton

Accumulate stock of current zitan supplier / Acquire this company/ Corporate with another furniture company with relatively lower brand reputation but comparative advantage

Sign long-term contract with existing supplier / Build solid relationship with them / Develop assistance for them

Search and analyze potential new high-end timber supplier/ Invest on them

Analyze the trend of zitan market/ Promote other high-end timbers as adequate substitute to consumer

Production Capacity
Cost Structure
Supply Chain
Quality and Price level
Production Capacity
Purchasing competitor geographical distribution
New technologies / materials
Burma Tulipwood
Burma Padauk
Burma chickenwing wood
Cost and Trend (RMB)
Main import city of substitutes
Substitutes Provider
The New Comer
5 has a turnover between 7,000,000 – 10,000,000 RMB
(800,000 – 1,250,000 euros),

3 has a turnover between 30,000,000 – 50,000,000RMB
(4,000,000 – 6,250,000 euros),

One has a turnover over 100,000,000RMB
(12,500,000 euros).

Annual Turnover
High-end market trend analysis
Thank you for your questions
Inferior quality zitan

Superior quality zitan
General Trend Analysis
Accessibility/ Supply risk





Inferior Zitan

Superior Zitan

Strategic Segment
Full transcript