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CHINA'S WOOD PRODUCTSS EXPORTS TO SURGE THROUGH 2010
The next wave of Chinese commodity and finished wood products exports to be fueled by further industry cost reductions, and increased technology and product quality.

Vancouver, BC - According to a new report, The China Book: Wood Products Industry and Market Review, researched and published by International WOOD MARKETS Group (IWMG), the Chinese wood products industry is poised for major export growth in a variety of wood products sectors. The rapid pace of industry expansion, as well as market penetration by Chinese-produced commodity and finished wood products, continues to impact many North American wood products producers, distributors, importers and retailers. Many offshore companies still have the opportunity to benefit from doing business with China’s wood products industry, the world’s low-cost production engine. Opportunities identified in The China Book include both selling to and buying from China, but understanding China’s competitive and strategic fit in export markets is the main short-term challenge facing many companies today.

China’s initial and rapid development in its wood products industry up until about 2004 has been accomplished as a result of a variety of contributing factors:

  • Low-cost labour (~US$100 per month);
  • Expanding foreign and domestic investment;
  • Declining domestic and international tariffs on trade;
  • Ongoing product quality improvements; and
  • Lower-priced imported raw material.

“Things are changing on this front, however. New competition, trade action and rising raw material, energy, transportation and labour costs have significantly challenged China’s manufacturers since 2004,” indicated Mike Jahraus, VP and the lead author of The China Book. “These factors are forcing the Chinese wood products industry to quickly take innovative steps to reduce costs and improve quality. And they are responding and responding quickly — by substituting wood-based panels and fast-growing plantation wood for more expensive imported solid wood as inputs for both primary and secondary wood products, as well as adopting state-of-the-art technology.” These competitive trends are outlined in detail in the report, which also contains a discussion of the wood products sectors featuring the major growth opportunities in export markets.

"We are all well familiar with the first wave in Chinese wood product exports that hit the international marketplace — it was furniture, and the Chinese industry has now captured a third of the U.S. market and is still growing,” said Russell Taylor, IWMG president and China Book co-author. “Chinese plywood and solid wood flooring exports have been making big news as the second import wave by hitting core markets in the U.S., Europe and Japan, and showing up in major home improvement centres such as Home Depot and B&Q.”

“But that’s not all,” indicated Gerry Van Leeuwen, VP and co-author. “A third wave is quickly building in the form of engineered and laminate flooring, mouldings, stile and rail doors, and even MDF. China’s impact on the global value-added sector could be very significant by the end of this decade, with potentially similar outcomes as those that occurred in the North American furniture industry.”

Some of the commodity product and competitiveness trends outlined in The China Book include the following:

  • China’s wood-based panel industry totaled a massive 55 million m3 (62 billion square feet, 3/8" basis) in 2004 — the largest in the world — but only 10 percent was exported. With panel capacity expanding in China and production costs expected to drop, the trend of rising panel exports to Asian, North America and Europe is expected to continue.
  • China is the No. 1 global producer in both plywood and blockboard, and exports are expected to continue growing, both in hardwood and softwood.
  • Major recent capital expansions in MDF have made China the No.1 producer in the world, now surpassing all of Europe; MDF exports are a new threat!
  • In particleboard, China is the No.3 global producer; however, this position is expected to change as planned investments raise China’s particleboard global position dramatically (and indirectly impact MDF).
  • In 2005, China was the No.2 country supplier to Japan of structural laminated lumber and beams, up from almost no exports at the start of 2000.

On the finished-product side, The China Book addresses some of the massive changes that are already occurring in China’s industry, and quantifies its competitiveness rating in high-priced export markets (North America, Japan and Europe). Some of the trends are extremely surprising, including what is coming next:

  • In wood furniture, the Chinese industry continues to expand and is a global powerhouse!
  • The largest stile and rail door plant in the world has just started up in China, and is two to three times bigger than the next largest one; this one plant’s potential impact on door markets in major, higher-priced importing countries appears staggering.
  • In flooring (solid, engineered, laminate and bamboo), world-class plants continue to increase their scale and focus on export markets.
  • Some emerging sectors are also featured in the report, including mouldings, LVL, and even softwood and hardwood lumber — all sectors that are changing rapidly!

The China Book: Wood Products Industry and Market Review is an in-depth and strategic report about the rapid emergence of the Chinese wood product industry, and provides an outlook on where the Chinese export phenomenon will likely make major inroads in the next three to five years. “The China Book,” emphasized Taylor, “is a valuable strategic planning tool for corporate management and business strategists in any organization involved in international wood products markets. This is especially relevant for offshore wood products buyers/importers and wood exporters, as well as domestic wood product manufacturers looking to supplement their own production. In order for many companies to remain competitive, understanding China’s competitive fit (or threat) will become more critical as the next wave of wood products exports starts up and changes traditional supply chains.”

The China Book provides the most comprehensive analysis of the Chinese wood products industry available today! The 700-page report is the result of over four years’ in-the-field research by IWMG consultants. It includes over 250 tables and graphs, and 125 pictures, and addresses the major trends and issues within China’s wood products sector in three distinct parts:

  • Part 1 provides a clear picture of the current factors impacting domestic wood supply (including plantations), imports, distribution and demand in China.
  • Part 2 includes a comprehensive analysis into emerging primary processing, wood-based panel production, and finished-product industries and production trends, including China’s costs of production and competitiveness.
  • Part 3 profiles the Chinese market and the growth potential for wood product exports from China.

For more information on this report, The China Book: Wood Products Industry and Market Review, please visit www.woodmarkets.com to view a color brochure with detailed table of contents, or call us at (604) 801-5996.

International WOOD MARKETS Group Inc. (R.E. Taylor & Associates Ltd. and International WOOD Markets Research Inc.) has provided business and market consulting services to the global wood products industry since 1993. The firm’s publications include WOOD Markets Monthly newsletter, WOOD Markets 2006: The Five-Year Outlook, and various other strategic reports about China, Russia, Europe and the Southern Hemisphere.

IWMG also operates an office in China and is sponsoring the China International Wood Products Summit Conference 2006, October 28–29, 2006 in Shanghai; two industry-focused and product-specific tours are also scheduled in China between early September and early November.