China's forests cover 174.90 million hectares or 4.6% of the world's forests. Forest coverage is 18.21%, far lower than the world average of 61.52%. Forest reserves are 12.46 billion cubic meters, which is less than 3% of total world reserves. Forest area per capita is 0.132 hectares, less than 1/4 of the world average and forest reserves per capita are 9.421 cubic meters, less than 1/6 of the world average. China is in need of forest products.

Market overview

In the first quarter of 2008, China imported 8,514,700 cubic meters of logs with a unit price of 164.42 U.S. dollars per cubic meter, which was an increase of 22.25% from 134.5 U.S. dollars in 2007. There is a large demand for timber by the paper manufacturing industry, followed by the furniture and wood fixtures industries. In 2007 the total amount of machine-made paper and paperboard output in China was 77.87 million tons. The output of wood-based panels was 88.3858 million cubic meters, up 18.98 per cent year-on-year; wooden flooring was 343.43 million square meters, up 46.77 per cent year-on-year, amounting to a significant increase.

Opportunity for Canadian Lumber Exporters

Canada lumber exports to China are driven primarily by demand from China's Pulp industry, furniture manufacturers and construction sectors. The decline in China's forest production began prior to China's logging bans and is largely a consequence of the depletion of China's mature natural forests. Eighty percent of China's state forest enterprises have exhausted their mature timber resources and cannot support their own mills. A major user of lumber, the housing sector, will continue to grow. Paper consumption is likely to continue to shift away from non-wood fibre to wood-based papers, including recycled paper. Demand for raw materials for plywood mills and pulp and paper mills remain strong.

Canadian businesses must understand the unique China market characteristic

The Housing market boom in China has greatly increased residential housing construction and has resulted in increased demand for interior products such as flooring, moulding and wall panels. The market prices of imported wood are published in network newsletters. However, price communication between the markets is infrequent and imperfect. Therefore, you can find differences in prices for a similar product in different markets.

Distribution of wood products in China has not been mapped. In other words, there are no current distribution channels for wood products. Most of import deals are done by middle sized businesses using personal connections.

China has a "West Strategy" which will drive lumber demand in the next 10 years. The Chinese government has shifted its attention from the coastal regions to the seven west interior provinces, which cover 56% of China's land area.