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East Midlands Chamber News

Fair trade is child's play for wooden toy exporter Lanka Kade

Wooden toy company Lanka Kade has taken fair trade into the mainstream by sourcing products from artisan Sri Lankan manufacturers that are sold into Europe and other markets. But with the end of the UK-EU transition period set to complicate Britain’s trading relationship with Europe, the Leicestershire company has turned to the ChamberCustoms service for help. Co-founder Diane Soysa explains to Dan Robinson how important this has been to continuing the firm’s ethos.

 

Every month, a ship leaves Sri Lanka with at least one 40ft-long container packed with wooden children’s toys.

It is headed for England, where it will eventually be delivered to a warehouse in Market Harborough for unloading and picking.

The team at Lanka Kade sort through the colourful animal figures, sealife jigsaws and fire engines into gift sets for distribution across the UK and continental Europe, mostly via lorry.

Until now, it’s been a relatively smooth process between the artisan Sri Lankan manufacturers and British, German and Dutch independent retailers, but 1 January 2021 is set to complicate all that.

“A lot of the European orders go from the UK because it has been very easy to expand the market next door to us,” says Lanka Kade’s co-founder and director Diane Soysa.

“So I’m horrified by Brexit as there’s going to be a huge expense. I don’t think there’s anything we’re going to gain and we have a lot to take into account now due to toy safety marking and labelling.”

To navigate the stormy waters faced by many exporters as the transition period between Britain and the EU comes to an end in less than three months, Lanka Kade has turned to the international team at East Midlands Chamber for support via the ChamberCustoms service.

Lanka Kade's warehouse in Market Harborough

A new trading relationship with the EU will involve new requirements for customs declarations when sending goods across borders, and the Chamber is helping importers and exporters to ensure their customs clearance is accurate, timely and avoids additional costs through delays or errors.

Diane adds: “We used to go through a freight forwarder and trading with Europe was really simple, but now we’re having to relabel our products and make sure we give them all a clear customs code.

“There’s a lot of paperwork involved that we didn’t need to know about beforehand, but the Chamber has been really useful in helping us in these areas by holding some informative training sessions for our staff.

“Having to do exports and imports documentation is an additional cost to the business so we really need to keep those prices down.”

Story of Lanka Kade and why its founders source wooden toys from Sri Lanka manufacturers

Lanka Kade, which employs 10 people in the UK and another eight in Sri Lanka, is the product of a volunteering expedition for ex-teacher Diane. She first turned up on the South Asian island in 1987 to work for charities including Save the Children, introducing play activities in its day centres and pre-schools.

It was during another role as a translator for the Red Cross when she met her future husband Upul, a Sri Lankan native. Despite eventually moving to England in 1992, they didn’t want to lose touch with a country that was very close to them both and set up Lanka Kade – which translates as “The Sri Lankan Shop” – in 1994.

Beginning life by stocking imported toys in suitcases at their Market Harborough home and selling at trade fairs, Diane and Upul recruited their product designer neighbour Anne Westgate as their first employee to carve out their niche.

Diane Soysa

She has been responsible for designing the distinctive range of toys – there’s about 1,200 at any one time – which are educational, have bright and bold colours, and natural wood finishes.

“The emphasis is on low-tech,” explains Diane. “They’re aimed at under-sevens generally as that’s the age group from my teaching background.

“They’re inspired by some of the products made in Sri Lanka but, as we realised many of these are copied all over the country, we’ve created our own unique designs.

“We work very closely with our suppliers and when we take them on, we promise continuity of work.”

This is a crucial part of the business model as Lanka Kade only works with selected Sri Lankan artisan manufacturers – there are currently 10 on board, ranging in size from six to 35 staff – that agree to pay both their workers and suppliers fairly and on time.

Diane, who has two children with Upul, recalls once posing as a buyer from a major stockist to tour a factory and discovering the workers were frightened of their employers, while others stood outside hadn’t been paid for three months. One of those workers would eventually set up a business that became one of the company’s biggest suppliers.

She says: “The idea came that if we’re going to go into business, we’re going to work with good people and ensure everyone down the line gets paid properly.

Upul Soysa

“Because myself and Upul both speak the language, we can go absolutely anywhere in the country and find suppliers that otherwise wouldn’t have access to an export market.

“We work with them to stabilise their business and provide interest-free loans if they need to expand their facilities, which are only repaid by deducting a percentage according to how much they supply to us. We’ll also help them to maintain accounts, buy vehicles, take on staff and move equipment.”

How Lanka Kade built a global customer base - but Brexit causes a headache

Diane admits they didn’t have a clue about running a business when they first set out; the only thing they were sure about was retaining contact with Sri Lanka and giving opportunities to people who wouldn’t usually be given them.

But she and Upul have managed to build a company that now sells more than half a million products every year. Achieving this has required finding the right stockists, which include St Paul’s Cathedral, London Transport Museum, the Babi Pur ethical children’s shop in Wales, and Twycross Zoo.

Further afield, there are other zoos, museums farm shops and independent gift shops in countries such as Germany, the Netherlands, Sweden, Spain, Australia, Japan and South Korea.

Lanka Kade aims to gurantee regular work for carefully-selected artisan manufacturers in Sri Lanka

The eastern markets are served directly from a Sri Lankan warehouse run by a subsidiary called Lanka Kade Export – which is also responsible for paying suppliers, chasing orders and collecting goods – but the Market Harborough facility, based in Riverside End, receives, sorts and delivers products into Europe.

“One of the ways in which we have worked is we’ve done a huge amount ourselves,” she says. “Everyone in the team puts ideas forward, whether it’s about the website, products, labelling or box sizes. We don’t tend to use too many experts because they don’t know who we are.”

Brexit means the company has had to soften this approach slightly, however, by signing up for the ChamberCustoms service to continue its successful European export operation.

Diane admits the international element is important to the business as large orders help to secure the continuity of work for suppliers that sits at the heart of its ethos.

“Fair trade is the absolute bottom line for us, but we decided in the early days that we didn’t just want to make a fair trade product that would be sold in a back street shop,” she adds.

“We wanted fair trade to be mainstream. In a large sense, we’ve done that by creating a name, quality and design style for ourselves, as well as promoting the traditional wood and fabric skills of Sri Lanka at an international level.

“We’ve spent several years now building up a lot of trade with Europe, so it’s really crucial we continue doing this even after Brexit.”

 

For more information on how East Midlands Chamber can offer support, email international@emc-dnl.co.uk or click here.

 

This article features in the October edition of the Chamber's Business Network magazine, which is available to read here.

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