penetrating international markets - northern forest...wood & furniture factories in vn: 2,000...

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Penetrating Penetrating International MarketsInternational Markets

Michael Snow Michael Snow American Hardwood Export CouncilAmerican Hardwood Export Council

May 2010May 2010

AHECAHEC’’ss Global ReachGlobal ReachLondon

Washington, DC

Mexico City Hong KongShanghai

KoreaOsaka

Singapore

India

Brazil

ItalySSpain

Germany

OutlineOutline

Why Export?Why Export? Risks and ChallengesRisks and ChallengesWhere are the current and potential Where are the current and potential

markets?markets?What are our strongest marketing What are our strongest marketing

messages?messages?

Why Export?Why Export?

GlobalizationGlobalization––Manufacturing is GlobalManufacturing is Global––Consumption is GlobalConsumption is Global––Consumption of Wood products Consumption of Wood products increasing fastest outside of USincreasing fastest outside of US

Global Trade for Wood Products Down 31%Global Trade for Wood Products Down 31%

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Bill

ions

Oct-DecJan-Sept

Source: Global Trade Atlas

Global Trade for Wooden Furniture Down 22%Global Trade for Wooden Furniture Down 22%

$0

$5

$10

$15

$20

$25

$30

$35

$40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Bill

ions

Oct-DecJan-Sept

Source: Global Trade Atlas

U.S. Hardwood ExportsU.S. Hardwood Exports 19881988--20092009

$ Million

Growing Importance of US Hardwood Growing Importance of US Hardwood Exports:Exports:

Exports as a % of US ProductionExports as a % of US Production

Source: Hardwood Review, Source: Hardwood Review,

New Markets: Middle East (Dubai 1990)New Markets: Middle East (Dubai 1990)

New Markets: Dubai (2007)New Markets: Dubai (2007)

China Furniture Production & China Furniture Production & ExportsExports

Billion

USD

•China National Furniture Association

The Worst of TimesThe 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 Atlas

Risks and ChallengesRisks and Challenges

Will I get paid?Will I get paid?

What paperwork do I need?What paperwork do I need?–– PhytosanitaryPhytosanitary Certificates?Certificates?–– ““LegalityLegality”” requirements/traceability?requirements/traceability?–– Shipping documentationShipping documentation

Transportation costs/availability of Transportation costs/availability of containers.containers.

Board feet Board feet vsvs cubic meters?cubic meters?

Do I sell through sales staff or Do I sell through sales staff or import agent?import agent?

Finding Customers: Finding Customers: Importers/distributors Importers/distributors vsvs manufacturersmanufacturers

A Few things to ConsiderA Few things to Consider…………

Forwarder FeesForwarder Fees

Export PackagingExport Packaging

Inland FreightInland Freight

Ocean FreightOcean Freight

Port ChargesPort Charges

Export ClearanceExport Clearance

Marine InsuranceMarine Insurance

Foreign Port ChargesForeign Port Charges

Customs ClearanceCustoms Clearance

Customs DutiesCustoms Duties

Who Pays? Buyer or Seller?

Green Public Procurement: Green Public Procurement: WhatWhat’’s Required Where?s Required Where?

Some require wood to be Some require wood to be verified "legal" verified "legal" –– Denmark, New Zealand, Denmark, New Zealand,

Japan, Mexico, SwitzerlandJapan, Mexico, Switzerland

Some require wood to be Some require wood to be verified "legal and verified "legal and sustainable" sustainable" –– Netherlands, UK, Germany, Netherlands, UK, Germany,

BelgiumBelgium

Others more flexible Others more flexible allowing a range of allowing a range of evidence evidence –– Japan, France, Spain, Italy, Japan, France, Spain, Italy,

Norway, ChinaNorway, China

Green Building Rating Green Building Rating Systems: Systems:

Where are the Where are the Markets?Markets?

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American hardwoods have flown American hardwoods have flown the flag for in export markets for the flag for in export markets for

over one hundred years :over one hundred years :

One British importer has an original invoice for One British importer has an original invoice for American white oak dated 1898American white oak dated 1898

A A ““stained mahoganystained mahogany”” fire surround removed fire surround removed from a 1930s Edwardian style room in from a 1930s Edwardian style room in Buckingham Palace was found to be Yellow Buckingham Palace was found to be Yellow PoplarPoplar

The Victorian organ casing in St MartinThe Victorian organ casing in St Martin--inin--thethe-- Fields church in London was American red oak.Fields church in London was American red oak.

World Hardwoods 2008World Hardwoods 2008

Source: Global Trade Atlas

WorldWorld’’s Leading Hardwood s Leading Hardwood Lumber Exporters: 2008Lumber Exporters: 2008

US Hardwood Lumber Exports by Value 2009

Source: US Census Bureau

($1,000)

US Hardwood Lumber Exports by Volume 2009 (m3)

Source: US Census Bureau

World Hardwoods 2008World Hardwoods 2008

Demand DriversDemand Drivers

Housing Housing PrivatizationPrivatization

Commercial Commercial ConstructionConstruction

Rising consumer Rising consumer wealth and wealth and sophistication;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

3650

726

574

566.6

543

374.1

237.4

222.1

100.6

100

0 500 1000 1500 2000 2500 3000 3500 4000

Guangdong

Zhejiang

Fujian

Jiangsu

Shanghai

Shandong

Tianjin

Liaoning

Beijing

Others

Greater China: Furniture SectorChinese Furniture Export by Province 2008

(Million US$)

Prov

ince

Guangdong province accountsFor over 50% of China furniture exports.

China Accounted for 20% of Global China Accounted for 20% of Global Economic Growth 2000Economic Growth 2000--20092009

Largest Automobile Market in the World Largest Automobile Market in the World

Largest Mobile Phone Market in the World Largest Mobile Phone Market in the World

Estimated 15% of Population with Estimated 15% of Population with ““Middle Middle ClassClass”” Purchasing Power. Represents 200 Purchasing Power. Represents 200 million consumers and growing! million consumers and growing!

Chinese Domestic Market

AHEC Model Home: ShanghaiAHEC Model Home: Shanghai

Per Capita Wood ConsumptionPer Capita Wood Consumption

0

0.2

0.4

0.6

0.8

1

1.2

1.4

China World OECD USAIn cubic meters per capitaIn cubic meters per capitaSource: China Timber Import Export Co/Source: China Timber Import Export Co/Hardwoodmarkets.comHardwoodmarkets.com 20052005

China Domestic Timber Output China Domestic Timber Output Under NFCP Under NFCP

Source: China Timber Import Export Source: China Timber Import Export

Other Markets to WatchOther Markets to Watch

Southeast Asia/VietnamSoutheast Asia/VietnamMiddle EastMiddle East Latin AmericaLatin America IndiaIndia

**The EU** **The EU**

S.E. Asia: Market OverviewS.E. Asia: Market OverviewM

illio

n U

S$

U.S. Hardwood Log, Lumber & Veneer to U.S. Hardwood Log, Lumber & Veneer to VIETNAMVIETNAM

VIETNAMVIETNAMM

illio

n U

S$

Wood & furniture factories in VN: Wood & furniture factories in VN: 2,000 companies; 600 export 2,000 companies; 600 export furniture factories to 120 marketsfurniture factories to 120 markets

Foreign investment: 200 FDI Foreign investment: 200 FDI companies contribute approximately companies contribute approximately 56% of furniture exported. 56% of furniture exported.

Furniture manufacturer distributionFurniture manufacturer distribution

Ho Chi Minh CityHo Chi Minh City

BinhBinh DuongDuong

Dong Dong NaiNai

BinhBinh DinhDinh

DaDa NangNang

~10% in t~10% in the Northhe North

Vietnam Wood Industry Overview

Dong naiBinh duong

Mexico: Hardwood Import Mexico: Hardwood Import Market ShareMarket Share

Source: Global Trade Index

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

UAE Saudi Arabia Israel Egypt Lebanon Jordan Turkey Qatar Oman Kuwait

2007 2008

Source: USDA Foreign Agricultural Service

Top ten Middle East markets for US hardwood lumber

January to December 2008-2009 ($,000)

South AmericaSouth America

AHEC/AF&PA Korea Office September 2002

•Emerging Furniture Industries–13,000 Brazilian manufacturers–U.S. exports of promoted products doubled –Brazil—12th largest market for veneer

•Opportunity–High end furniture

INDIAINDIA

Source: World Trade Atlas

Indian Hardwood Imports:Indian Hardwood Imports: (Millions of Dollars)(Millions of Dollars)

WorldWorld’’s Leading Hardwood s Leading Hardwood Lumber Importers: 2009Lumber Importers: 2009

Source: EUROSTAT

EU Hardwood Lumber ImportsEU Hardwood Lumber Imports (Billions of Euros)(Billions of Euros)

What Else Can We What Else Can We do?do?

““Explode the MythsExplode the Myths””

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Myth #1: Wood is ScarceMyth #1: Wood is Scarce

NonNon--tropical forests are the main source of tropical forests are the main source of timber and are increasing in sizetimber and are increasing in size

Proportion of internationally traded industrial roundwood by forest type

Tropical

Non-tropical

A fence to the sun and backA fence to the sun and back……

During the 1990s, volume During the 1990s, volume of wood standing in of wood standing in temperate and boreal temperate and boreal forests increased by forests increased by 21,000 million m3. 21,000 million m3.

ThatThat’’s enough wood to s enough wood to build a 1m x 8cm fence to build a 1m x 8cm fence to the sun and back (or the sun and back (or 7500 times round the 7500 times round the earth)earth)

38 million houses a year38 million houses a year……..

Between 2000 and 2005, Between 2000 and 2005, volume of wood standing volume of wood standing in temperate and boreal in temperate and boreal forests increased by 884 forests increased by 884 million m3 per yearmillion m3 per year

Enough to build 38 million Enough to build 38 million two storey timber frame two storey timber frame houses every year houses every year (assumes 50% (assumes 50% conversion & 11 m3 per conversion & 11 m3 per house)house)

Global housing starts = Global housing starts = approx 36 million/approx 36 million/annann..

American hardwood forestsAmerican hardwood forests

0

50

100

150

200

250

300

350

1952 1962 1970 1976 1986 1996 2006

Net Growth Removals

0

2

4

6

8

10

12

1953 1977 1987 1997 2007

Private National Forests State & Local

US hardwood inventory (billion m3)

US hardwood growth and removals (million m3)

•

Selective harvesting and natural regeneratio n lead to biodiversity

High species diversityHigh species diversity

0% 5% 10% 15% 20%

Red OaksWhite OaksSoft MapleOther HardwoodsYellow PoplarHard MapleHickorySweetgumAshCottonwood & AspenTupelo & Black GumBlack CherryBeechRed AlderBasswoodYellow BirchBlack Walnut

Distribution of US hardwood species by volume

Myth #2: Certification is a Myth #2: Certification is a ““saving the rainforestsaving the rainforest””

Certified forest as % of total forest Certified forest as % of total forest area, by region 2005area, by region 2005--20092009

05

1015202530354045505560

EU/EFTA North America

Oceania Other Europe and

CIS

Latin America

Africa Asia

%

2005 2006 2007 2008 2009

Resources for ExportersResources for Exporters

USDA Foreign Agricultural Service (FAS)USDA Foreign Agricultural Service (FAS)–– www.fas.usda.govwww.fas.usda.gov

Export Import BankExport Import Bank–– www.exim.govwww.exim.gov

Department of CommerceDepartment of Commerce–– www.usatrade.govwww.usatrade.gov

APHISAPHIS–– www.aphis.usda.govwww.aphis.usda.gov

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