Global Wood & Furniture Marketplace Online

American hardwoods Enter China Market

¡¾2002.07.12¡¿

Prospects never better in China

Prospects for American hardwoods in China have never looked better, according to Mike Snow, Executive Director of the American Hardwood Export Council (AHEC) at the press launch of their 7th South East Asia and Greater China Convention held in Shanghai during June.

The figures speak for themselves. Between 1995 and 2001, U.S. hardwood exports to China increased from around US$10 million to US$85 million. Annual GDP growth in China has been consistently close to 8% over the last 5 years. Annual per capita wood consumption in China is still low at only 0.2 m3, which compares to the world average of 0.6 m3, and an average of 1.15 m3 for the world¡¯s developed countries. Chinese building activity is rising strongly. Annual construction has increased from 0.81 billion m3 of interior space in 1996 to a staggering 1.61 billion m3 in 2000. Furniture production in China increased from $8.5 billion in 1991 to over $14 billion in 2000.

Contrary to popular belief outside China, the majority of furniture manufactured in the country, around $10 billion¡¯s worth in 2000, is sold into the domestic market. Unlike the rapid emergence of the Taiwanese and Korean furniture sectors in the early 1990s, a trend driven by export markets, the recent growth of the Chinese furniture sector has been driven mainly by the home market.

Just as demand for wood is rising in China, the availability of domestic wood supplies, particularly higher value hardwoods, is diminishing due to the implementation of the Chinese authorities¡¯ Natural Forest Protection Plan. Log harvests from China¡¯s forests declined from over 30 million in 1997 to around 11 million m3 projected in 2003. Timber production from plantations is rising, but the rate of increase will be insufficient to fully compensate for the loss of natural forest production. China¡¯s plantations are also dominated by fast-growing species unsuitable for most decorative applications. The Chinese authorities estimate that by 2010, total consumption of timber in China will amount to 250 million m3, while domestic forests will be able to supply less than 150 million m3.

American suppliers well placed

According to Eric Lacey, AHEC Vice Chairman, the American hardwood resource is well placed to fill part of the shortfall in Chinese supply. Figures from the most recent U.S. forest inventory in 1997 indicate that the volume of hardwoods standing in the nation¡¯s forests amounts to nearly 10,000 million m3, nearly double the volume standing in 1952. This increase in hardwood inventory has been sustained despite rising levels of domestic consumption and exports of American hardwoods. Reasons for the increase include improved efficiency in U.S. wood processing, which has allowed more usable wood to be derived from the same volume of raw material. Forest management and fire protection techniques have also improved considerably, while the increased efficiency of U.S. agriculture has allowed large areas previously under farmland to be returned to forest.

American hardwood exporters are becoming increasingly aware of the opportunities presented by the Chinese market, a fact reflected in the large turnout of around 50 representatives of U.S. exporting companies at the Convention. The overall turnout reached over 700, a vivid indication of the level of interest in American hardwoods in China and the surrounding region.

The Convention brought together timber traders and interior designers, providing an ideal opportunity for detailed discussions of species trends in East Asia. Many participants noted the continuing preference in China for classical and traditional styles for furniture and interiors which rely heavily on dark tropical wood.

In part this reflected the wide availability of tropical hardwoods in China from South East Asia, particularly from unregulated sources in Indonesia in recent years.

But tastes are gradually changing, particularly amongst the younger generation in urban areas. There is growing interest in contemporary styles which rely more heavily on temperate hardwoods.

The shift towards temperate hardwoods partly reflects a marketing focus of some large manufacturers and retailing groups on contemporary styles, and also the long term decline in the availability of tropical hardwoods.

Falling tropical hardwood supply

The significance of this last factor was suggested by Mr Ong Kim Chuan, Managing Director of Techwood Lumber Products in Malaysia. Techwood were one of the first Malaysian furniture companies to import U.S. hardwoods to replace rubberwood and other tropical woods. Mr Chuan said his company¡¯s decision to use American hardwoods partly reflected a desire to capture a niche in higher value furniture products, but also recent evidence that tropical hardwood supply is declining.

European beech benefits

Between 1999 and 2001, European beech was a major beneficiary of the trend towards temperate hardwoods in China. Beech remains popular for interior decoration, although it is no longer as dominant. Beech has suffered in the Chinese market due to problems of variable quality. Recent price weakness has also discouraged many hardwood importers in China from stocking beech. The problems with beech and tropical hardwoods have opened the way for suppliers of other temperate hardwoods, particularly American hardwoods.

Modern dark furniture designs

In the wake of the Milan furniture fair two years ago, many Chinese manufacturers started to produce for China¡¯s domestic market modern furniture designs in very dark, almost black colours, that would be combined with pale walls and other clean colours. The trend towards dark coloured furniture and interior fittings for contrast in contemporary interior design has generated strong demand for American black walnut. Prices for walnut have been rising, partly a reflection of relatively limited availability since walnut comprises only around 1% of the U.S. hardwood resource. This has encouraged a variety of other hardwoods to be used, such as oak and tulipwood, which are then stained. Much production for the Chinese domestic market is of lower end furniture, with great reliance on veneers over an MDF or chipboard substrate.

Possible fashion shift to oak

Barrie Ho, a leading interior designer from Hong Kong, predicted that modern design trends in China were about to shift again. There may now be a trend away from extremely dark furniture towards beige colours. This may create new opportunities for oak in China itself. Although China imports quite a lot of American red oak, this is sold mainly to manufacturers in southern China for re-export to North America and the EU. Oak is currently not much in favour in China¡¯s domestic interiors market, partly because Chinese buyers have difficulty distinguishing oak from ash. Although very popular during the mid 1990s, ash is now out of favour in China.

Source:Hardwoodmarkets.com