Challenges and the opportunitiesfor the Chinese value-added wood products companies

The past decades have witnessed a dramatic increase in the demand for China’s wood products. However, a fast-growing demand for wood products and limited domestic timber resources has increased China’s dependence on imported wood. As a result, China has grown to be the most important player in the global trade of wood products both as an exporter of value-added wood products and as an importer of wood resources. The objective of this study is to examine managers’ perceptions of the challenges and opportunities facing the Chinese wood products companies by applying the modified Porter’s five force model. In the empirical part, qualitative semi-structured interviews with 28 managers of 7 wood products companies in China were conducted. The results suggest that low labour costs were no longer perceived as a source of competitive advantage for the Chinese companies. To develop and maintain competitive advantage in global markets, the Chinese firms should adjust their business strategies by changing production focus from low-end to high-end products, by changing sales direction from overseas to domestic markets, and focusing on development of independent brands. To compensate for the deficiency in raw materials, the Chinese companies should improve the utilization of raw materials, acquire forest lands or invest in sawmills in lower-cost and forestrich countries. With the encouragement of the Chinese government, the Chinese farmers are showing higher enthusiasm for afforestation. Furthermore, the volatile government policies bring not only challenges but also opportunities for future development of China’s wood products industry