Introduction

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This case study analyses are about luxury yak wool company called Norlha on the Tibetan Plateau. The uniqueness of the Plateau is discussed along the Tibetan nomad’s lifestyle, their heritage, and problems they are facing in the modern world. Next, the founders of Norlha company are presented as well as Norhla’s business model including SWOT-analyses regarding Norhla’s current business model and its distinctive values towards diverse sustainability. Eventually, opportunities with Bureau of Commerce are discussed as well as possibilities to evolve Norlha’s business in the future.

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1) The Tibetan Plateau, the Tibetan nomads and introduc4on to the founder of the Norlha project

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The Tibetan Plateau is in 4500 m in altitude with about 2,5 million square kilometers of land. Local nomads have been growing and caring for their yaks and sheep over 3000 years in the area facing long arctic winters and short warm summers. The way the nomads have been moving naturally along the seasons together with strict local rules regarding herding have enabled to sustain natural ecosystems. (Yu & Arjalies, 2019: 1-2)

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Nomad lifestyle has progressively become unpopular as young nomads aspire to go to schools in cities and dream of modern way of life in cities with technologies etc. However, due to their poor language skills the young nomads have difficulty to find jobs in cities. The nomad families staying in the Plateau increased their herd size and broke established rules, which have started to cause environmental problems i.e. grassland degradation. A big difference between the two ways of living – modern and traditional – have caused disruption amongst local youths. (Yu & Arjalies, 2019: 2)

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Dechen Yeshi (later Dechen) is Tibetan-American woman, whose mother, Kimberly Yeshi, had dreamed of doing something good for the Tibetan plateau using yak wool and promoting local tradition. Dechen had studied photography and Asian studies in the USA. After her studies she went to the Tibetan Plateau because her mother sent her there to learn about the local culture. Dechen’s interest in the local Tibetan culture started to grow as she spend some time with the locals getting to know them and photographing them. Through her discussion with young local nomads who aspired the modern world Dechen developed an idea to unite the nomad tradition, yak wool and creating employment to locals. This project was called Norlha. (Norlha, 2012)

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2) Norlha’s Business Model

In this chapter Norlha’s business model and its value proposition is presented. In addition, SWOT analyses is evaluated.

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2.1. Business Model, Value proposition and SWOT

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Norlha has a community-based business model where local tradition of herding yaks and sheep combined with high quality textile production made by people from the community. It uses vertically integrated model where the company is responsible for all business activities including designing, producing, and selling textile products. Norlha emphasizes the deep connection of the “terroir”, which considers land use from different aspects including environment, water, climate, and social aspects. (Yu & Arjalies, 2019: 2-3)

Norlha uses yak’s fine undercoat (khullu) which falls off once a year. Khullu has technical constrains due to its short fibers. Norlha uses only best quality khullu produced by two years old yaks. Design inspiration for Norlha textiles comes from the Tibetian Plateau landscapes. All the production and manufacturing stages are handled by the locally hired people creating a community based business, which creates value to local people as well as to nomads who sell their yak wool. (Yu & Arjalies, 2019: 3)

The best quality khullu, which is transformed to the finest yarn and then locally inspired textiles have such unique aspects combined with local tradition and community empowerment aspects that are hard to copy by others.

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2.2. Diverse Strengths

 

Employment and well-being:

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• Employing people who come from families which have small herds.

• Especially employing women who are divorced or have other difficulties to earn their livelihood.

• Employing people who have no formal education or never left their home of their parents.

• Positive impact on women: workshop is almost easy work compared to traditional nomad life where women are milking the animals from early morning until midnight. An opportunity earning their own money.

• One salary/per family at Norlha enables to pay for basic needs, education etc. for the whole family.

• Offer warm shelter, shower, and physical activities to its employees.

• Employees’ dedication and believing in the project and doing their best to succeed by former nomads. (Norlha, 2012; Yu & Arjalies, 2019: 5)

 

Animal well-being:

• The herders can earn their living by using the wool of their animals.

• Supporting positive ethics: the herders don’t need to kill their animals. (Norlha, 2012)

• Power of education:

• Teaching nomads to read, calculate, speak languages, and attain IT- skills.

• Learning cash flow management; nomads who previously had difficulties to flow their one time per year income over the year which may cause borrowing money and forcing to sell their animals to be able to pay back.

• Education on land and environmental protection like collecting trash.

• (Norlha, 2012; Yu & Arjalies, 2019: 5)

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• Cultivating culture:

• Preservation of the Tibetan culture (language, traditions, believes).

• Possibility for the employees to stay in their home village and maintain their religious life.

• Enhancing local people to be proud of their culture. Creating their own future without losing the soul of their tradition. (Yu & Arjalies, 2019: 4-5)

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Unique design and know-how:

• Local nature inspired design.

• Rare and high-quality products made by local and skilled workforce. High level of savoir-faire (know-how).

• Sustainable Luxury award in 2012. (Yu & Arjalies, 2019: 3-4)

• Emerging trend of renewal of craftmanship and culture inspired design – an artisanal way of doing increases the preciousness of products (Socha, 2021).

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Brand image:

• Authentic story illustrated with animals and local people surrounded by the local environment.

• Uniqueness, high quality products, and its authenticity in storytelling. (Yu & Arjalies, 2019: 3-4)

• Young generations look for brands that have strong message, strong values, and strong heritage, which guarantee the quality and has a story (Socha, 2021).

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2.3. Weaknesses

• The best quality khullu comes from two-years old yaks only.

• After washing only 20% of raw material useable before spinning.

• Long specific training of employees.

• Isolated location, costly investments for facilities, electricity etc. (Yu & Arjalies, 2019: 3)

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2.4. Promising Opportunities

• Investing in the machinery: increasing local source of the yak wool, pay higher salary and be more competitive in the market.

• Chinese luxury market shifts from mass luxury products to more sophisticated items.

• Expansion from mainly Western luxury B2B to B2C in the Chinese market.

• High salaries: paying 66% higher salaries compared to an average urban wage in the region. Attracting employees to stay.

• Norlha is promoting sustainable livelihoods for nomads by utilizing their tradition and innovation in their traditional environment. (Norlha, 2012; Yu & Arjalies, 2019: 4)

• “In recent years especially, Asian consumers have increasingly turned to heritage as a source of style inspiration” (Socha, 2021).

• “Heritage means that luxury brands do not merely sway with the latest fashion fads, but focus on adapting traditions to create products that will last.” (Bendell & Kleanthous, P.32).

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2.5. Potential Threaths

• High salaries: paying 66% higher salaries compared to an average urban wage in the region.

• Long and costly training to attain specific skills.

• Limited formal education inhibits employees advancing in business development and onto management positions. (Yu & Arjalies, 2019: 3, 5, 12)

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3) Collaboration opportunity with the Bureau of Commerce in the Gannan Tibetan Autonomous Prefecture

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Norlha’s potential future moves, and their possible consequences are discussed in this chapter. I also present the co-creation value model and how Norlha and other stakeholders could benefit from it while promoting their diverse sustainable approach to product creation.

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3.1. A way forward by using “Co-creative value modelling”

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“Co-creative value model” includes four building blocks which include information access, multi -stakeholder cooperation, supply chain transparency and benefit and cost impacts. (Yang et al. 2017: 7)

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The first step is to create an information access by developing a co-creation platform. This platform should include a complete information flow and product specification available not only to Norlha’s customers and partners but also to its stakeholders such as investors, workers, communities, competitors, the media, and public/political institutions. This platform could provide a service which allows the customers to co-create textiles for customized purposes i.e. choosing color, design, structure etc. from a library, and perhaps include owner’s name or other customized elements. Through this platform Norlha’s customers could do pre-orders before production to secure unique and valuable pieces for themselves. By doing so Norlha could use pre-paid resources into their further machinery and facility investments.

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“Today’s social, environmental and cultural challenges are reminding us that true wealth is the ability to provide not only for one’s own needs, but for those of others” (Bendell & Kleanthous. P. 48)

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The second step is to establish multi stakeholder co-operation including other brands and NGOs. (Yang et al. 2017: 7, 9-10).

In this building block Norlha could reinforce its cooperation with its existing customers like Hermes. Norlha could emphasize its animal friendly approach and show the business benefits of such behavior and help well-known brands to move forward with their sustainable initiatives i.e. looking for leather alternatives instead of killing the animals to produce needed materials.

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Possibility to replicate its business model corresponds to its long-term strategy (enable people to stay and work in their local villages) but it is also human energy and resource costing (Dechen’s personal input and current managers’ input) (Yu & Arjalies, 2019: 8). Another aspect here is to look for opportunities how to cooperate with Norlha’s direct competition such as Khunu and mYak. Norlha unique approach to employees and animals’ well-being is so remarkable that its practices should be adopted by others within the industry.

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By reinforcing its partnership with the local authorities and the Bureau of Commerce can be beneficial to not only to Norlha’s future investments but especially to local communities, their employment opportunities and culture enhancement. Training nomads from two competing villages can be challenging (Yu & Arjalies, 2019: 8). It could also be an opportunity to build unity and willingness to succeed together.

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Norlha has had trouble to grow its business due to low formal education of the local people (Yu & Arjalies, 2019: 5). By strong collaboration with the authorities but also with local NGOs can help to build stronger formal and further education system that therefore can help local businesses to succeed. Through education the local communities can be informed about the environmental, social, and economic aspects, which again reinforces the local population and their capabilities to stay in their home villages and cultivate their landscapes and culture.

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« There is nothing luxury about sweatshops. ‘Deeper Luxury’ highlights how luxury brands need to excel in how they treat their workers and local communities, just as they excel in design, quality and marketing. Only when they can demonstrate this will they be seen as a potential ally for social development, rather than merely a symptom – or even symbol – of inequalities worldwide. » Barry Coates, Oxfam, New Zealand

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The third building block is about the supply chain transparency including the disclosures of production processes and raw material information by assuring green considerations from raw materials to finished products. (Yang et al. 2017: 7, 10-11).

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Here essential actions are to calculate footprints of production of raw materials to finished products by using efficient calculation tool. Such report would need to include carbon emissions, water consumption, land use, air & water pollution, and resource waste information regarding the production processes.

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Transparency on raw material information, in this case yak, could reveal practical information about yak herding, animal and nature protection possibilities and their impacts on environment but also socially on local communities.

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How about creating a museum in Shanghai or in another big city to promote the tradition, heritage, and story about yak herding, presenting life and local culture in the Tibetian Plateau or creating films and (virtual) factory visits to engage with youth and through authentic story telling (Socha, 2021)?

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Lastly benefit and cost building block will conclude the co-creative value model. Here the key is to be able to understand the benefit and cost associated with environmental impact by utilizing a calculation tool i.e., Environmental Profit and Loss (E P&L) reporting system, to help making better decision for the future business developments. (Yang et al. 2017: 7, 12). This block makes Norlha’s business decisions measured and helps to navigate especially in the unknown environment with more visibility.

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Conclusions

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There are sign of consumers’ preferences shifting from mass luxury products to more sophisticated items that represents heritage by adapting traditions to create products especially in Asia. Norlha has developed its business model from the beginning with strong social initiatives serving the local community by creating employment especially for women, providing education and informing about theenvironmental impacts concerning traditional way of living and aspirations of modern life while respecting cultural heritage.

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According to this study Norlha’s community-based business model is forward thinking and creates many opportunities to do sustainable business from 1) social (local employment, competitive salary, education, community enhancement, equal opportunity), 2) environmental (respecting natural resources, preventing from pollutions, environmental management), and 3) economic (economic growth, research, and development) points of view, and in intersections of each aspect.

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Norlha’s strengths are diverse and presents exciting opportunities moving forward as well as promoting values to its peers in multiple levels. Weaknesses and threats are evident but can be potentially adjusted with collaboration with multiple stakeholders including local authorities and even competition. In addition, Norlha has promising opportunities if it dares to invest and collaborate with its stakeholders as discussed in this paper when utilizing the co-creation value model.

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My view is that Norlha’s future lays on collaboration, which is its core value from the beginning. It shall not be afraid to offer its hand to competitive brands but rather be a sustainable leader in social, environmental, and economic landscapes and therefore strengthen local economies as well as promote Tibetan tradition – the way of being and doing.

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Preferences

• Bendell, J. & Kleanthous, A., “Deeper Luxury, quality and style when the world matters”. WWF-UK. (Available: https://assets.wwf.org.uk/downloads/ luxury_report.pdf)

• Norlha, 2012. Siemen’s Stories (A yak wool factory on the Tibetan Plateau). (Available: https://www.youtube.com/watch?v=MWL1HOjZJkY Accessed: 1/8/2022.)

• Socha, M., 2021. “Why brands are leaning into heritage”. WWD, May, 4th, 2021. Avaialble: https://wwd.com/fashion-news/designer-luxury/luxury-fashion-heritage- chanel-dior1234792018-1234792018/. Accessed : 1/8/2022)

• Yu, H. & Arjalies, D., 2019. “Norlha : Scaling up sustainable luxury on the Tibetan Plateau”. Ivey Publishing.

• Yang, Y., Han, H. and Lee, P. 2017. “An Exploratory Study of the Mechanism of Sustainable Value Creation in the Luxury Fashion Industry”. MDPI.

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