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Abstract
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.