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World's biggest toy company building base in Southeast Asia's top solar producer
Nearly everything at Lego's groundbreaking in Binh Duong, Vietnam, was made of toy bricks, from flower settings to dragon dancer statues. (Photo by Lien Hoang)
LIEN HOANG, Nikkei staff writerNovember 3, 2022 18:15 JST
BINH DUONG, Vietnam -- Lego has broken ground on a $1 billion carbon-neutral factory in Vietnam that will be the size of 60 soccer fields, as the world's biggest toymaker looks to build its business in Southeast Asia and beyond.
The Danish company's CEO, Niels Christiansen, and Denmark's Crown Prince Frederik on Thursday dug dirt using shovels made of colorful Lego bricks in a ceremony at the site 50 km from the country's main business hub, Ho Chi Minh City.
Christiansen told Nikkei Asia that renewable energy was the "nonnegotiable" factor that helped Vietnam -- Southeast Asia's top solar producer -- beat other countries to become Lego's sixth global manufacturing hub.
The company's first carbon-neutral facility is slated to start production in 2024, tapping solar power from panels on its roof and a neighboring solar farm. It will supply Asia outside China, just as other factories in Europe, the U.S. and Mexico sell to their respective regions.
The toymaker's strategy of regionalizing supply chains predates COVID-19 and helped shield it from some of the shipping chaos sparked by the pandemic and the Ukraine war, Christiansen said.
"We never know [in May] what children want for Christmas," he continued, noting that locating factories near customers means Lego can design products closer to the holidays, as well as cutting down on transport pollution.
The 90-year-old company aims to reduce its reliance on oil-based plastic in the coming decade. Half its products contain some sustainable materials, Christiansen said, adding that Lego's pending factory in Vietnam's sunny southern province of Binh Duong "will not be putting waste into landfills."
Having solar panels nearby is the "only way we can guarantee" carbon neutrality, he said. "Companies need to stand up and be willing to make some of the investments."
After Super Mario- and Harry Potter-themed sets helped Lego more than double profits during the pandemic, its next strategy is to sell items bridging toys and digital entertainment, as well as targeting Asia and its rapidly expanding middle class.
Vietnamese Vice Premier Pham Binh Minh and other local officials also joined Thursday's ceremony, flanked by dragon dancer statues built from rainbow bricks.
Although Vietnam surprised people by announcing a net-zero carbon target last year, it depends heavily on coal, and businesses have found it tough to source enough wind and solar power. They also struggle to find recycled plastics from the threadbare supply chain.
Factory parks have swelled as investors move in from China for Vietnam's big, cheap workforce, one-party stability and proximity to sea lanes, though weak infrastructure and supplier ecosystems remain problematic.
Encircled by forests, Lego's 44-hectare site is set to employ 4,000 people over the course of 15 years. The family-owned company aims to meet LEED Gold standards for responsible use of energy, water and waste. LEED (Leadership in Energy and Environmental Design) is a certification for efficient, environmentally friendly buildings.
Lego has also pledged to plant 50,000 trees near the site, accommodate electric vehicles and reduce its absolute global carbon emissions by 37% from 2019 to 2032.
Lego breaks ground on $1bn carbon-neutral factory in Vietnam
World's biggest toy company building base in Southeast Asia's top solar producer
asia.nikkei.com
