China now has more millionaires than the US and has become the largest market for luxury car manufacturer Bentley.
While these two little known facts may not have any bearing on the Chinese plywood market, they are indicative of the state of the nation. China is the world’s fastest growing economy and, at current rates, will take over the top spot from the US within 20 years.
Until recently, up to 75% of the plywood produced in China was for home consumption. And, with up to 40% of the world’s cranes operating in the country at any one time, the knock-on effect for plywood production and home usage is not a big surprise.
What is, perhaps, more surprising is that the past five years have seen China shift from being a major plywood importer to being the world’s third largest plywood exporter in 2004, behind only Indonesia and Malaysia.
According to official Chinese data sources, plywood production in the country leaped 85% in 2003 to 21 million m3, making it the largest plywood-producing nation in the world, bigger even than the US in terms of total production.
Exports last year more than doubled to 4.2 million m3, the lion’s share of which found its way across the Pacific to the US. But, with domestic and US opportunities reaching saturation, many Chinese producers are looking at alternative markets, and where better than the UK, where home-grown manufacturers are fighting a battle to remain competitive in the face of rising energy prices, retailers’ price demands and, of course, cheaper foreign competition.
Tony Hackney, managing director of Sonae UK, said the UK industry should not underestimate the impact the development of the Chinese economy is having. “It is something we all have to be worried about,” he said. “In October last year, with demand for products still strong in Asia, the effect was minimal: now that demand in China has dried up a little, Asian manufacturers are looking for alternative markets.
“At the same time there has been a drive by our retailers to reduce prices and a search in China for cheaper suppliers: three of our customers have already gone out of business because retail furniture is now being sourced from China.”
Several UK companies are already successfully importing Chinese plywood, while others, like James Latham, are testing the water. “What we are being cautious about with China are the environmental issues,” said Chris Sutton, sales and marketing director of the company’s Panels Products Division. “We are dipping our toes at the moment but we want to make sure the product meets CE and CPD compliance, that the logs are sustainable and legally verified. We are looking to make sure the products are fit for purpose and tick all the right boxes.”
It’s certainly true that Chinese plywood has suffered from bad publicity, particularly with regards to suspect gluelines, CE certification and the possibility of supplies not originating from mills where orders are placed.
But Chris Williams, managing director of Panda Panel Agencies Ltd, believes these ‘problems’ are at one end of the scale, and not reflective of the many certified and responsible producers. “We’ve been selling Chinese plywood for three years, and we already have an established number of suppliers who have a good reputation for quality and service. At any time, you could walk into the mill and see they have strict quality controls, they ship on time and their prices are competitive. We’ve shipped hundreds of thousands of cubic metres, and have only incurred one or two problems.”
In fact, Panda Panel Agencies Ltd has recently opened an office in China to capitalise on growing demand. “The main reason for setting up the office was to ensure our source of supply, the quality and that what we bought is what we got,” said Mr Williams. “We also wanted to increase the range of products available. There are so many different products available in China: it’s literally become a one-stop shop for virtually every type of plywood you can think of. You name it, you can get it.”
Chinese plywood heart
The new office is based in Qufu in Shangdong province which, together with neighbouring Jiangsu province, forms the heart of the Chinese plywood manufacturing industry. Managing the office is Rain Wei, who formerly worked for Panda Panels supplier Qufu Luhan Woodwork Co Ltd. “She knows what’s required for the UK market,” said Mr Williams. “She can go to the plywood factories, and only buys if they meet those requirements.”
The company also has two quality inspectors who work from its Chinese office, and virtually every shipment that comes across is inspected by them prior to shipping: anything that is not up to standard is rejected. “They also go to see the production to make sure the glue used is genuine WBP, and that quality of core veneer actually complies with our contracts, as well as the face and back veneer,” said Mr Williams.
Others might be harder to convince. Finnforest UK was an early participant in Chinese plywood trading, bringing in a trial volume over two years ago. “The quality was good, but it seemed our mill was not typical of the thousands of others who mostly relied on a two-press process, making it extremely difficult to obtain a traditional WBP glueline,” said Bernie Ryan, the company’s sheet materials purchasing manager.
“Pressure is continually increasing on companies to ensure their products are not only fit for purpose – but are sourced with environmental credentials. Some customers who last year switched to Chinese ply are slowly reverting back to traditional hardwood plywood.”
It’s not a situation that’s bothering Panda Panels. “We only established our Chinese office three months ago, and we’ve already seen an increase in business as a direct result of having people over there,” said Chris Williams. “Most buyers can rely on getting the goods on time, of the right quality and a competitive price.
“We have different shippers who provide different quality to different buyers. I would never say that any of our products are low quality – they are perfectly acceptable for the UK. But we can supply much higher quality products that go to different end users where a product needs to be a premium product.”
