Penetrating International Markets

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1 Penetrating International Markets Michael Snow American Hardwood Export Council May

2 AHEC s Global Reach Washington, DC London S Spain Germany Italy Korea Osaka India Shanghai Mexico City Singapore Hong Kong Brazil

3 Outline Why Export? Risks and Challenges Where are the current and potential markets? What are our strongest marketing messages?

4 Why Export? Globalization Manufacturing is Global Consumption is Global Consumption of Wood products increasing fastest outside of US

5 Global Trade for Wood Products Down 31% $90 $80 $70 Oct-Dec Jan-Sept $60 Billions $50 $40 $30 $20 $10 $ Source: Global Trade

6 $40 Global Trade for Wooden Furniture Down 22% $35 $30 Oct-Dec Jan-Sept Billions $25 $20 $15 $10 $5 $ Source: Global Trade

7 U.S. Hardwood Exports $ Million

8 Growing Importance of US Hardwood Exports: Exports as a % of US Production Source: Hardwood Review,

9 New Markets: Middle East (Dubai 1990)

10 New Markets: Dubai (2007)

12 China Furniture Production & Exports Billion USD China National Furniture Association

13 The Worst of Times 54% 47% 40% 34% 27% 20% 13% 7% 0% Live Animals & Products Fruit/Vegs Cereals and Oilseeds Animal/Vegetable Fats & Oils Prepared Food Petroleum & Other Mineral Products Chemical & Allied Industry Products Plastics, Rubber & Articles Thereof Hides & Skins, Leather Wood, Pulp & Other Fibrous Materials Textile & Textile Articles Jewelry & Precious Metals Base Metals Including Iron, Steel & Copper Machinery, Appliances & Electrical Equipment Transportation Including Cars, Trains, Airplanes Optical, Clock, & Musical Equipment Furniture & Toys Miscellaneous Source: Global Trade

Shipping documentation Transportation costs/availability of containers.

14 Risks and Challenges Will I get paid? What paperwork do I need? Phytosanitary Certificates? Legality requirements/traceability? Shipping documentation Transportation costs/availability of containers. Board feet vs cubic meters? Do I sell through sales staff or import agent? Finding Customers: Importers/distributors vs manufacturers

15 A Few things to Consider Forwarder Fees Export Packaging Inland Freight Ocean Freight Port Charges Export Clearance Marine Insurance Foreign Port Charges Customs Clearance Customs Duties Who Pays? Buyer or Seller?

Switzerland Some require wood to be verified "legal and sustainable"

16 Green Public Procurement: What s s Required Where? Some require wood to be verified "legal" Denmark, New Zealand, Japan, Mexico, Switzerland Some require wood to be verified "legal and sustainable" Netherlands, UK, Germany, Belgium Others more flexible allowing a range of evidence Japan, France, Spain, Italy, Norway, China

17 Green Building Rating Systems:

18 Where are the Markets?

19 American hardwoods have flown the flag for in export markets for over one hundred years : One British importer has an original invoice for American white oak dated 1898 A stained mahogany fire surround removed from a 1930s Edwardian style room in Buckingham Palace was found to be Yellow Poplar The Victorian organ casing in St Martin-in in-the- Fields church in London was American red oak.

20 World Hardwoods 2008

21 World s s Leading Hardwood Lumber Exporters: 2008 Source: Global Trade Atlas

22 US Hardwood Lumber Exports by Value 2009 Source: US Census Bureau ($1,000)

23 US Hardwood Lumber Exports by Volume 2009 (m 3 ) Source: US Census Bureau

24 World Hardwoods 2008

manufacturing in furniture and interior fittings sectors; Hospitality

25 Demand Drivers Housing Privatization Commercial Construction Rising consumer wealth and sophistication; Domestic and export oriented manufacturing in furniture and interior fittings sectors; Hospitality industry 2008 Beijing Olympics/2010 Asian Games in Guangzhou/2010 World s Fair Shanghai

26 Greater China: Furniture Sector Chinese Furniture Export by Province 2008 (Million US$) Others 100 Beijing Province Liaoning Tianjin Shandong Guangdong province accounts For over 50% of China furniture exports. Shanghai 543 Jiangsu Fujian 574 Zhejiang 726 Guangdong

28 Chinese Domestic Market China Accounted for 20% of Global Economic Growth Largest Automobile Market in the World Largest Mobile Phone Market in the World Estimated 15% of Population with Middle Class Purchasing Power. Represents 200 million consumers and growing!

29 AHEC Model Home: Shanghai

30 Per Capita Wood Consumption China World OECD USA In cubic meters per capita Source: China Timber Import Export Co/Hardwoodmarkets.com 2005

31 China Domestic Timber Output Under NFCP Source: China Timber Import Export

33 Other Markets to Watch Southeast Asia/Vietnam Middle East Latin America India **The EU**

34 Million US$ S.E. Asia: Market Overview

35 VIETNAM U.S. Hardwood Log, Lumber & Veneer to VIETNAM Million US$

Vietnam Wood Industry Overview Wood & furniture factories in VN: 2,000 companies; 600 export furniture factories to 120 markets Foreign investment: 200 FDI companies

36 Vietnam Wood Industry Overview Wood & furniture factories in VN: 2,000 companies; 600 export furniture factories to 120 markets Foreign investment: 200 FDI companies contribute approximately 56% of furniture exported. Furniture manufacturer distribution Ho Chi Minh City Binh Duong Dong Nai Binh Dinh Da Nang ~10% in the t North Binh duong Dong nai

37 Mexico: Hardwood Import Market Share Source: Global Trade Index

38 Top ten Middle East markets for US hardwood lumber January to December ($,000) 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 UAE Saudi Arabia Israel Egypt Lebanon Jordan Turkey Qatar Om an Kuw ait Source: USDA Foreign Agricultural Service

39 South America Emerging Furniture Industries 13,000 Brazilian manufacturers U.S. exports of promoted products doubled Brazil 12 th largest market for veneer Opportunity High end furniture AHEC/AF&PA Korea Office September 2002

40 INDIA

41 Indian Hardwood Imports: (Millions of Dollars) Source: World Trade Atlas

44 World s s Leading Hardwood Lumber Importers: 2009

45 EU Hardwood Lumber Imports (Billions of Euros) Source: EUROSTAT

46 What Else Can We do? Explode the Myths

47 Myth #1: Wood is Scarce

48 Non-tropical forests are the main source of timber and are increasing in size Proportion of internationally traded industrial roundwood by forest type Tropical Nontropical

49 A fence to the sun and back During the 1990s, volume of wood standing in temperate and boreal forests increased by 21,000 million m3. That s s enough wood to build a 1m x 8cm fence to the sun and back (or 7500 times round the earth)

50 38 million houses a year. Between 2000 and 2005, volume of wood standing in temperate and boreal forests increased by 884 million m3 per year Enough to build 38 million two storey timber frame houses every year (assumes 50% conversion & 11 m3 per house) Global housing starts = approx 36 million/ann ann.

American hardwood forests US hardwood growth and removals (million m3) 350 300 250 200 150 100 50 0 1952 1962 1970 1976 1986 1996 2006

51 American hardwood forests US hardwood growth and removals (million m3) Net Growth Removals US hardwood inventory (billion m3) Private National Forests State & Local

52 Selective harvesting and natural regeneratio n lead to biodiversity

53 High species diversity Distribution of US hardwood species by volume 0% 5% 10% 15% 20% Red Oaks White Oaks Soft Maple Other Hardwoods Yellow Poplar Hard Maple Hickory Sweetgum Ash Cottonwood & Aspen Tupelo & Black Gum Black Cherry Beech Red Alder Basswood Yellow Birch Black Walnut

54 Myth #2: Certification is a saving the rainforest

55 Certified forest as % of total forest area, by region % EU/EFTA North America Oceania Other Europe and CIS Latin America Africa Asia

56 Resources for Exporters USDA Foreign Agricultural Service (FAS) Export Import Bank Department of Commerce APHIS

57 For More Information:

Appalachian Hardwood Product Exports An Analysis of the Current Chinese Market

Appalachian Hardwood Product Exports An Analysis of the Current Chinese Market Jingxin Wang * * Corresponding author jxwang@wvu.edu Jinzhuo Wu Jinzhuo.wu@mail.wvu.edu David B. DeVallance David.DeVallance@mail.wvu.edu