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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2304)	12/30/2003 12:23:53 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

A sign of 'luck and prosperity' in China By KEITH RUSSELL Staff Writer Walk inside a high-rise condominium complex in China and don't be surprised if many of the residents' entryways feature ornate doors made of high quality hardwood, says Eric Lacey of Averitt Hardwoods International in Clarksville. ''What it says to everyone who walks up is that there's luck and prosperity behind this door,'' said Lacey, Averitt's manager of export sales. Such status symbols point to the opportunity Averitt and other suppliers of American lumber see in China these days. Rising incomes, a construction boom and relaxation of restrictions on private property ownership are combining to create fast-rising demand for lumber products in China. That, combined with domestic logging restrictions put into place by the Chinese government in fall 1998 over environmental concerns, have increasingly forced Chinese lumber consumers to turn to international suppliers. The trends have quickly made China the U.S. hardwood industry's biggest export market. Shipments of American hardwood increased from $40 million in 1999 to roughly $120 million in 2002. Exports totaled $109 million during the first seven months of 2003, a 13.9% increase over the same period in 2002, according to the American Hardwood Export Council. State-specific hardwood exports for Tennessee weren't available. Of course American suppliers aren't the only ones trying to satisfy China's hunger for hardwood. The AHEC estimates U.S. hardwood's share of China's import market totaled just under 10% in 2001, a figure that placed it behind Indonesia, the European Union and Malaysia. Efforts are under way to help U.S. exporters make further inroads. In the fall, AHEC opened a three-story house in Shanghai to showcase to Chinese consumers the various uses of U.S. hardwood. The three-story house was built along neoclassical designs by a well-known Hong Kong designer using a combination of U.S. hardwood varieties, including red oak and red alder, the two most popular species imported by China. One highlight: a walnut wood carving plaque featuring stylish Chinese calligraphy. In February, meanwhile, the Tennessee Department of Agriculture hopes to give a boost to local suppliers by organizing a trip to Shanghai for an important industry trade show. Local companies will join suppliers from other nearby states to mingle with Chinese builders and furniture factories with the goal of landing new customers. ''It's basically one-stop shopping for China's factories,'' said Paul Nordstrom, the state agricultural marketing specialist organizing the trip. To be sure, a substantial portion of U.S. exports still consists of low-end wood destined to be made into frames for couches and other inexpensive types of furniture, as such production has shifted to China in recent years. Averitt's Lacey estimates that as much as 80% of China's lumber imports are used for such purposes. ''It's a very low price market,'' Lacey said of such products. ''A lot of it is made into furniture and flooring and shipped back to the U.S.'' Lacey said such business does not particularly interest a company like Averitt, which focuses on supplying higher-priced hardwood. What does interest the company are all of those hardwood doors and other interior fittings popping up in Chinese homes. Housing sales in China mushroomed 44.8% during the first six months of this year, to $25.4 billion. In turn a number of those new residences are being bought by a growing Chinese middle class with a newly acquired taste for higher quality interior decorations and furniture. Estimates from AHEC say such purchases by Chinese consumers totaled $9 billion in 2001. Lacey said the bare-bones manner in which Chinese residences are built makes the market even more attractive. ''For the most part, with all the new high rise construction, when someone buys (a housing unit), all they are getting is a concrete shell,'' he said. ''The floors, wood trims, kitchen cabinets ?all of that has to be put in after the place is built. That's what we're more interested in ?the high-end interior fittings.'' China accounts for about 10% of Averitt's export sales. Lacey sees that number growing in the future, though he said Europe will likely remain the company's most important foreign market, especially if the dollar maintains its current weakness relative to the euro. Exports make up about 35% of the company's overall sales. ''China is definitely a growth market, but I don't know if it's going to be tremendous for us,'' Lacey said. ''My company's philosophy is to not put too much into any one place.'' tennessean.com