Chinese Wood Products Edging Out Canadian Companie
Vancouver, British Columbia, December 7, 2006--China's emergence as a major exporter of plywood, furniture, and other wood products is cranking up the competition for Canadian manufacturers, says University of British Columbia Prof. David Cohen, according to the Vancouver Sun.
"In many cases, China is eating our lunch," said Cohen, a professor in the university's forestry department.
Cohen said China is becoming the largest log importer in the world, with neighbouring Russia as its biggest source of softwood.
China imports some 25 million cubic metres of logs per year from Russia to produce plywood and wood flooring and for furniture-making, he said.
He added that China has become a large supplier of plywood for the Japanese and South Korean markets, cutting into Canadian producers' efforts to tap those markets.
Besides the advantage of having significantly lower labor costs, some Chinese mills can offer cut-rate prices because they operate using loans they don't have to pay back, Cohen said.
This is sometimes the case for state-controlled companies that are granted loans by state-controlled banks, he said, adding it's difficult to determine which Chinese operations are in this situation.
China has also surpassed Italy as the world's largest wood furniture manufacturer, while Canada's furniture production is stable or declining, Cohen said.
He said China's rise is putting pressure on Canadian furniture manufacturers to change the way they do business.
Some domestic companies are already outsourcing the production of nearly all their low-end furniture to China, while they import parts and components from the country to make middle-end products.
Meanwhile, most companies still keep the production of higher-end furniture here in Canada, he said.
Cohen estimates many successful domestic companies currently import around one-third of their furniture or furniture components from China, designing the products at home.
But Cohen said Canadian manufacturers need to "be smarter," and focus more on design and ways to distribute product through China to major markets like the U.S.
"One of the things we have to do is we have to use the things we have to our advantage... We have to use our knowledge of the supply chain, distribution system and styles of design to become profitable,"he said. "It's going to be a difficult transition, but it's a transition we can't avoid."
