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Home > Natural Resources > Land Management for Sustainable Communities and Natural Resources > Forestry Investments for Sustainable Land Management

China's Progress with FSC Certified Wood Production

China imports FSC certified wood from the US and Europe while struggling to certify domestic forests

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Forestry Investment in Sustainable Management

The business of forest products is changing with certification of forest conservation and research into carbon sequestration potential of forests.

Although forest certification was initiated to confront the severe deforestation of tropical rain forests, certified forests are unbalanced in geographical locations in 2006, with 60% of certified forests being located in North America and 36% in Europe.

The Center for International Trade in Forest Products conducts research studies about forest products and in one research summary about forestry certification programs in China, they found the following benefits for certification:

Certified companies expressed a positive attitude towards most of the survey statements regarding forest certification and its influence on the industry.

Statements viewed positively included:

  • The belief that certification can help companies enter new markets (especially markets in Europe and North America);
  • Certification can help maintain a company's existing markets if new requirements on environmental issues are implemented;
  • Certification is helpful in enhancing the competitiveness and public image of companies;
  • Companies were optimistic about the increased market share and profits that would be generated from selling certified wood products over the next two years.

Forest Products Industry Investment

The report summary continues, "The Chinese forest products industry has an advantage in low cost labor, convenient infrastructure, and favorable export trading policies. The number of Chain-of-Custody (CoC) certified companies, mostly wood products manufacturers, soared between 2004 and 2006, reaching 200 by the end of 2006.

Certification of forest farms in China, however, has been relatively slow and difficult, with only four forests (less than 1% of all the FSC certified forest area in the world) having obtained Forest Management (FM) certification by 2006."

Forestry Investment in Certified Wood

The US is currently the most important source of certified wood raw materials for wood products manufacturers in China , with 24.9% of certified wood originating from the US . The issue of profitability can be viewed from several different perspectives:
  • The market share of certified wood products
  • The market growth rate; the increased cost of certified wood
  • The small price premium obtained for certified wood products
  • The lower profit margin for certified wood products relative to non-certified wood products
The profitability of certified wood products will influence both the short-term and long-term marketing strategies of companies considering selling certified wood products.

Certified companies obtained an average 6.3% price premium for certified wood products in European markets, a 5.1% price premium in the United States and a 1.5% price premium in Canada . About 24.4% of the companies reported that the profit margin for certified wood products was 6.7% higher than for non-certified wood products, while 39.0% of the companies reported a loss of about 5.6%.

Forestry Management and Certified Wood Products

The mix of certified wood products made by survey respondents can be divided into ten major categories: indoor furniture and accessories, craft products, stationeries and toys, outdoor furniture and accessories, wood material, garden and BBQ tools, flooring, doors and windows, logs, pulp and paper, and others. Most of the certified wood products are small piece, uni-material, finished products.

The two biggest export markets for certified wood products were Europe and the United States, accounting for 54.6% and 29.8% of exports respectively. The giant DIY chain stores such as Home Depot and B&Q are important retail markets for certified wood products. Furniture retailers, pulp and paper companies, public procurement by governments, and other users form a niche market for these products.

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Edited by Carolyn Allen, owner/editor of California Green Solutions
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