China has become the focus of much interest by the Canadian forest sector for its potential as a growth market for Canadian wood products. Such interest spans the full range of products (softwood and hardwood lumber, wood-based panels and other further processed wood products) and end-use applications (residential and non-residential construction, doors, windows, interior finish, furniture, and industrial end-uses).
This preliminary competitor analysis is the first step towards actively positioning British Columbia as a supplier to the Chinese market for the purpose of increasing market share. The two key objectives of the analysis are to do a thorough review of existing information on China’s wood products market and industry and to identify gaps in information. The results will provide Forestry Innovation Investment with a basis for prioritising future research, product development and promotional activities for China’s market.
When analysing information on China’s market and industry it is important to keep in mind that much of the officially reported data is not reliable. Comprehensive and reliable statistical collection systems have yet to be established in China. This report is primarily based on adjusted official figures and published primary research reports.
The key conclusions from this analysis are:
· China’s raw material supply from plantations and imports is increasing.
· Russia and Southern Hemisphere countries will remain B.C.’s main competitors for softwoods.
· China’s domestic sawmilling industry is uncompetitive.
· Panel demand is rapidly growing while lumber demand is steady; at the same time lumber imports are rising.
· Substitution with reconstituted wood-based panels and non-wood materials affects lumber demand.
· Furniture and interior finish are the main drivers of wood demand in China; softwood lumber consumption depends largely on civil construction activity.
· There is a mismatch between the main wood products currently supplied by B.C. and market demands in China. China demands hardwood for interior finish and furniture and softwood logs for processing in China to compensate for the decline in domestic harvests. B.C., on the other hand, supplies structural softwood lumber that has limited existing applications in China. In China demand for non-structural reconstituted panels is growing fastest while B.C. produces mainly structural panels.
· Any opportunities for B.C. producers to capture a significant market volume in China therefore require either developing a new market for existing B.C. products or developing new products for existing markets.