Increasing Chinese investment in wood industry concerns Vietnamese businesses

Wednesday, Jul 04, 2018 13:13

A wood processing line at Hoang Duc Linh Company in the central province of Quang Tri. — VNA/VNS Photo Tran Viet

Viet Nam earned US$4.15 billion from exports of wood and wooden products in the first six months of this year, marking an increase of 8.4 per cent compared with the same period last year.

A report from the Viet Nam Forestry Administration under the Ministry of Agriculture and Rural Development said that the United States, China, Japan and South Korea remained the four largest importers of wood and wooden products from Viet Nam, accounting for 78 per cent of the country’s total export value.

The country also spent nearly $1.1 billion importing wood, up 2 per cent year on year. Imports from the US, German and France rose during the first half of this year, while shipments from Cambodia and Malaysia fell.

According to the Vietnam Timber and Forest Product Association (Vifores), the drop in imports from Cambodia and Malaysia was due to the fact that Chinese businesses had increased purchases from neighbouring countries, including Cambodia and Malaysia. At the same time, Cambodia, Laos and Myanmar had tightened exports of timber due to a ban on shipments of logs and sawn timber from plantation forests.

Vifores said China had increased purchases of raw materials from neighboring countries due to a lack of material in the country. In addition, due to the impacts of trade with the US, several Chinese enterprises planned to invest in Viet Nam’s timber industry to take advantage of cheap labour and preferential policies.

At the end of 2016, Chinese enterprises snapped up materials from timber plantations in the Central Highlands and southeastern region, causing concerns over a lack of raw materials among domestic firms.

Although there are no detailed statistics, in southern Binh Duong Province where 600 enterprises are operating in the wood processing industry, one-third are from China and Taiwan.

This move is understandable as Chinese products are subject to high anti-dumping duties in the US, which spends $30 billion per year on wooden products from China.

Pressure on raw material supplies, changes in US trade policy, and an investment shift in the wood industry from China had affected and would continue to impact Viet Nam, said Vifores.

Nguyen Quoc Tri, general director of the Viet Nam Forestry Administration, said more than 1,500 enterprises had signed commitments to consume raw materials of clear origin and would not violate regulations of importing countries.

Viet Nam plans to focus on investment in large-scale timber plantations, certification and affiliations with local forest growers to supply raw materials for the domestic processing industry. — VNS

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