Trade barriers and tradition limit U.S. wood sales to China

AgExporter, Feb, 1996 by Roseanne Freese

Overall, U.S. sales of forest products to China declined from a peak of $448 million in 1988 to an estimated $26 million in 1995.

Despite this decline in sales, the Chinese market holds potential for U.S. exporters, primarily because of the growing need for wood panel products.

Plywood accounts for more than half of all imported wood products. China prefers tropical hardwood plywood that has a thickness of only three millimeters, which is thinner than most types made in the United States. This plywood is used for everything from interior wall paneling to furniture making, serving as a low-cost veneer for painted furniture.

Furniture and flooring are in high demand. Chinese buyers, sellers and processors, however, are familiar only with domestic hardwoods, mainly Chinese oak and ash, and tropical hardwoods.

Showrooms with Western furniture, paneling and flooring arrangements are highly popular as they permit buyers to see various wood products in use. Hard maple is the most popular temperate hardwood species for flooring. Shanghai importers are now beginning to keep oak, maple, cottonwood and cedar in stock.

On the other hand, the softwood picture is not so bright as U.S. softwood lumber suppliers face tough competition from Russia, New Zealand and Canada.

Wood Use Low for Construction

For the first time in history, China's housing starts in 1993 exceeded those of either the United States or Japan. Chinese government statistics show housing starts at 150.6 million, significantly higher than 132.3 million in 1992. However, Chinese housing often consists of one room plus a kitchen. Many Chinese are now allowed to purchase their own homes.

Five years ago, buildings in China's cities consisted mainly of three-, five- and seven-story apartment buildings, with an occasional high-rise reaching 20 to 25 stories. Today, 20- to 40-story buildings dominate the Chinese skyline. High-rises reaching 50 stories are not uncommon.

Despite this growth, wood use remains low. The high cost of land, the desire to appear "modern," the lack of a developed wood products market and a wood products substitution policy all discourage Chinese from using wood for housing structures, framing or siding. In addition, the Chinese associate wooden housing with rural poverty.

Chinese developers tend to prefer quality over price in supplying the top 20 percent of the urban market, such as foreign venture hotels and office towers.

Cities like Beijing, Shanghai and Guangzhou now have a dozen or more five-star hotels and several dozen three-and four-star hotels. While their construction may consist almost entirely of steel frame and concrete, wood paneling and moldings in new hotels are much more prominent than in the older, Soviet-style hotels.

Many older hotels are undergoing renovation, with U.S. bird's eye maple and fancy, hardwood burls being the leading panel products of choice. Chinese consumers are buying more furniture and paneling to renovate their homes as more factories sell their workers' dormitories to raise capital.

Furniture Market Booming

Showrooms and furniture stores are springing up everywhere and are numerous in major cities. They represent many furniture manufacturers and have wood products from many countries, including the United States. Most domestic furniture is either painted in black lacquer or made from the traditionally popular southeast-Asian hardwoods.

Demand for better quality furniture is growing. Solid wood furniture is coming on the market, replacing the common hollow construction made from three millimeter plywood.

Pride in home ownership by the newly rich is driving the demand for wood flooring, furniture and fancy plywood paneling. Wood flooring is especially popular for comfort in the south, where there are extremely humid summers and damp, chilly winters.

The domestic hardwood industry is satisfying most of the demand because domestic hardwood prices remain far lower than those of imported temperate and tropical hardwoods.

The Chinese prefer light-colored woods, such as ash and maple, especially for interiors. Dark woods are preferred for furniture because they can be lacquered or laminated over to cover defects.

Dark American woods, such as walnut, are not popular for furniture because they are expensive relative to domestic hardwoods. One firm claims that the grain in Chinese old-growth oak logs is finer than that of U.S. oak and thus is more competitive for furniture exporters.

China's Forests Shrinking

China's forest resources are coming under increasing pressure as the country's economy develops. Mature stands of timber are becoming increasingly scarce, as forests cover only 14 percent of total land area or 133.7 million hectares. Plantation or commercial forests cover 33.7 million hectares.

China's three major forest areas are in the northeast (Heilongijiang, Jilin and Inner Mongolia), the southwest (Sichuan and Yunnan) and the south (Guangdong, Guangxi, Fujian and Jiangxi). Production is shifting from the northeast's state-owned forests to collective-owned farms in the south.