Afforestation and Woodchip Production Business in Vietnam
Create a Business Model to Achieve Both Reforestation and Woodchip Production
*Affiliations and titles are current as of the time of the posting of this article.
Is it at all possible to restore forests while continuing to produce and sell woodchips? At first glance, these two actions, logging for woodchip production and restoring forests, appear to be in conflict. Sojitz reconciled the two through afforestation, taking a unique approach to promote afforestation and the woodchip production business.Vietnam Japan Chip Corporation Ltd.(VIJACHIP) is an afforestation and woodchip production business company. We have a more than 20-year record of business with our stakeholders.
Business Model Promotes Independence of Tree Plantation Operators
The business was first started in response to a request made by the Vietnamese government during a conference between the government and Sojitz (formerly Nissho Iwai) in 1987. They wanted cooperation from us for afforestation and job creation in Vietnam. Because of war and traditional slash-and-burn agriculture, the forested land area was reduced to 29% of Vietnam’s total area in 1990 (it had been 43% in 1943). Restoring the forests of degraded land was an environmental issue.
Upon request from the Vietnamese government, Sojitz established VIJACHIP, afforestation and woodchip production company in 1993 with five state-run forestry companies as partners.
VIJACHIP started by establishing a business model that promotes independence of tree plantation operators. The company provided financing and tree planting technologies so farmers could begin tree cultivation, developed environments that facilitate the commencement of tree planting, and made guarantees to purchase timber. By switching from the earlier slash-and-burn agricultural sources of timber to products expected to produce steady income, the company supported the independence of many farmers as tree plantation operators. In 2001, VJIACHIP began providing free seedlings to small-scale farmers, successfully expanding their perspectives as tree plantation operators. Through 2010, the company provided more than 30 million* free seedlings.
VIJACHIP as well as VIJACHIP Vung Ang (established in 2001) and VIJACHIP Cai Lan (established in 2004), which also adopted this business model, successfully planted a total of 39,274 ha through the end of 2010 and created approximately 500,000 jobs annually. This business model, which promotes sustainable forestry, continues to contribute to regional environmental stability and economic development.
* Total for VIJACHIP, VIJACHIP Vung Ang, and VIJACHIP Cai Lan.
|In most of the reforestation, Acacia hybrid is used to restore soil fertility. We are also considering mixed planting with other tree species in the future.||Tree planting work. In consideration of sunlight, seedlings are planted about 2 meters apart.|
A Founding Member’s View
Responsibility as a Manufacturing Company
“Ensuring the safety of employees is the number-one priority of managers of manufacturing companies, followed by the environment. It is hard for a company to stay in business if it causes trouble for society. The concept of “safety first” is taken for granted in Japan, but establishing this concept at overseas sites requires repeated and sustained communication of its priority from management. Only then do employees realize the prime importance of safety, and eventually it becomes routine.
We hired an outside consultant to educate employees about 5S activities (seiri, seiton, seiso, seiketsu, shitsuke which mean sorting, straightening, cleaning, cleanliness, and training) and took various measures such as unannounced inspections. The aim is to create opportunities for employees to get a real sense of the importance of safety.
By using two approaches—direct dissemination by management and creating opportunities for employees to sense it themselves, innovations for improving safety with roots in the workplace will being generated little by little. I think that’s the instant that employees take “safety first” for granted. We will continue our efforts until “safety first” is taken for granted. The result will be a safe work environment for employees. I believe that is the first responsibility of managers” says Matsumoto.
Vice President Nguyen Phuc commented, “I feel that VIJACHIP’s contributions to Vietnamese society and the environment are considerable. Our job is not just managing the company, but also creating beneficial results for the country. I am proud to be a part of work that has these meaningful effects. The employees are my second family. Of course, management wants to create an environment where its family can work safely and healthily.”
Occupational accidents including minor ones previously exceeded 50 per year, but since the adoption of “safety first,” the number of accidents has fallen sharply, and in the fiscal year 2012, there were just two. The company will continue to reinforce its measures to create safe and comfortable work environment for its employees.
Woodchip Making Process: Safety Measures
With a More than 20-Year Track Record, Sojitz is Number One in Volume of Vietnamese Woodchip to Japan
Vietnamese woodchips have price-competitiveness attributable to its low cost of local materials and production and its low logistics cost resulting from short transportation distance to Japan compared with other major woodchip exporting countries. In terms of export volume, Vietnam exported 5.4 million tons in 2011, setting a new record and overtaking Australia to become the world’s largest woodchip exporter. Vietnam maintained its world-leading position in 2012, with exports of 5.76 million tons (according to statistics by RISI). Out of this amount, about 1.6 million tons were exported to Japan, accounting for about 14% of Japan’s total woodchip imports of 11.13 million tons (according to statistics by the Forestry Agency, Ministry of Agriculture, Forestry and Fisheries, Japan). Then, Sojitz handled about half of those imports, making it the number one dealer of Vietnamese woodchips in Japan.
“When paper making companies and suppliers want to know about woodchip market conditions in Asia including Vietnam, they first come to us. To meet their expectations, we have long gathered information from various sources and distributed it and engage in thorough consultations with clients. Companies doing business with us not only enjoy commercial benefits, but also obtain greater added value. The ability to build trusting relationships with many clients is the biggest advantage of being number one.
Leveraging the network of contacts in Vietnam built by our predecessors, we will tirelessly work to meet the expectations of our business partners and other stakeholders. I am convinced that this attitude is what has enabled us to continue this business for twenty years. A commitment to meeting the needs of others will continue to drive us forward. By transforming that commitment into action, we will build a lot of trust among stakeholders that Sojitz can fulfill their wishes. I hope that this trust leads to the continuation of this business as well as the creation of new business opportunities.”（Takao）
“I am proud to have worked in VIAJACHIP’s afforestation and woodchip production business, which has been conducted for more than 20 years amidst many drastic changes in the business environment. I hope to continue meeting market needs while contributing to developing in both Japan and Vietnam through this business and also to hand the baton to the next generation.” said Sakamoto.
Sojitz entered the afforestation and woodchip production business when it received a request from the Vietnamese government for cooperation with afforestation and job creation. Over more than 20 years, we have developed a track record and trusting relationships with a wide range of stakeholders including local governments, forestry companies, tree plantation operations, and employees. We seek to create new business by maintaining and expanding our operations.