TRIANGLE BUSINESS The Age of International division of Processing in the construction and wood produ

1
TRIANGLE BUSINESSThe Age of International
division of Processing in the construction and
wood products industry

• Network specialization of manufacturing from
  design/planning, prime processing, secondary
  processing, assembling to marketing

2
Chinese wood products for JapanAn ultimate price
crusher

• An influx of Chinese wood products in the
  Japanese market has entirely changed Japanese
  price perception
• Japanese wooden furniture and fixture
  manufacturers have relocated their production
  base to China and South East Asia
• The second asset of Chinese manufacturers is the
  quick response to market needs
• Chinese solid flooring and finishing products
  have proved that price is everything
• The only weakness is an unstable source of raw
  materials

3
Triangle Formation Approach

• New trials have started
• Japanese trading companies execute securing
  materials for Chinese companies, buy their
  finished products and sell them in the Japanese
  market.
• Some West Canadian sawmills have started to ship
  West coast species log or semi-finished products
  to Chinese glulam or edge-glue plants to be
  processed and then exported to the Japanese
  market.

4
Japanese major housing materials manufacturers in
China

• Daiken (Ningbo)
• 33,000M2/mo of engineered flooring (plywood
  base), which needs 2.0/3.0mm sawed veneer of
  white oak etc.
• Opportunities for cut to size lumber for
  Quebec
• 8.000 doors/mo
• Tostem (Tostem Housing Products Dalian) with
  1,670 employees
• Doors built-in furniture
• Japan Kenzai (Building Materials) Ltd.
• A joint venture in Dalian in order to supply raw
  materials to Chinese wooden products
  manufacturers will import softwood lumber from
  North America to North-East Chinese
  manufacturers, who are starting to face tight raw
  material supply, and buy their products, such as
  gluelam to the Japanese market.

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Japanese major housing materials manufacturers in
China (continued)

• Wood One Co., Ltd.
• A major producer of secondary processed wood
  products, flooring, doors other fixtures
• Two plants in Shanghai
• 1st plant (1996) laminated door parts,
  staircases, table tops with decorative veneer of
  walnut etc. on top
• For Japan China
• 2nd plant (2004) Plywood base flooring with 2mm
  thickness decorative veneer and fixtures
• For Japan China
• Also targeting to develop Chinese markets

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Evolution of Japanese direct investment to China
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Tokyo
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Relocation to overseas, the wooden furniture
industry

• Nearly 20 plants in China replacing Japanese
  production

• CA 1.9 billion of wooden furniture and CA 1.1
  billion of furniture parts were imported in 2003

Domestic production of wooden furniture
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Wooden Furniture net working with Asian
countries
Maruni, a high-grade wooden furniture
manufacturer in Hiroshima

• Dalian Maruni, with 280 employees, is proceeding
  from  furniture parts production  to even some
  assembling in China
• In Japan, Maruni focuses on more integration of
  designing special processing technology.

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IMPACT ON THE QUEBEC FURNITURE INDUSTRYTrade
balance of Quebec furniture industry (,000,000
Can)
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Japanese flooring plants in China

• Nitto (Yunnan)
• Yahima (Dalian)
• Woodone (Shanghai)
• Daiken (Ningbo)
• Josei (Dalian)
• I.M.S. (Jilin) etc.

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Market size of Solid Wood Flooring in Japan
Domestic 4 million M2
16 Million (2003)
China 7 million M2
Other South-East Asia 3 million M2
Imported Hardwood 12 million M2
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Triangle Formation for flooring
Itochu, a large trading company, works on burbon
barrel flooring for Japan
Used W oak burbon barrels
Dalian
Flooring
Kentucky
15MM X 75MM X 1820MM Solid F/J 15MM X 150MM X
1820MM Solid Edge-glued F/J
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IMPACT ON THE QUEBEC FLOORING INDUSTRY Trade
balance of Quebec flooring industry (,000,000
Can)
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Housing Start - Recent History
(thousand units)

• Housing starts has declined by 30 from the peak
  in 1996
• However, starts of 2X4 houses rebounded to 90,706
  units in 2004 and approaching the peak figure of
  93,693 units in 1996

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Three Major Application of Glue Laminated Wood
for Japanese Traditional Housing
Beam
Post
Sill plates
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Advanced applications for traditional Post
Beam Housing
Hari Beam
Hashira Post
Mabashira Stud
Dodai Sill-Plate
Share of Precut 88 Share of Metal connected
PB timber frame30
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E.G.P.

• North-East interior China (Heilongiang etc.)
• Russian oak, elm and ash as well as Russian red
  pine
• Dalian-Shanghai-Shenzhen
• North American hemlock, sitka spruce as well as
  variety of species from all over the world
• Sichuan-Yunnan
• Special high grade species from Tibet, Myanmar
  and Laos
• From a simple E.G.P. to more integrated value
  added finish products such as furniture, stair
  units or other products using E.G.P.

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Canadian Wood projects in China
Cascadia Forest Prodcuts (Ex. MacMillan bloodel)
Yellow cedar lumber
Vancouver
China
Canada
HemlockLumber
Tokyo
Qingdao
EGP
Shanghai
Kunming
Door
EGP
Western Red Cedar
3 Chinese processing facilities
(Lattice/Panel/Picture frame)
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Canadian Wood projects in China

• A Japanese sawmill (Kuwabara) has also
  developed a triangle formation Canada, China and
  Japan
• Ship cants/logs of Canadian Yellow Cedar/
• DF/Hemlock/Sitka Spruce to Kuwabaras Dalian
  plant to produce 1,000M3/Mo of Panel/flooring
• Door-Window frame for Japan

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Import Statistics by Country of Structural
Laminated Lumber (HS4418.90.222)
(Value million yen, Quantity 1,000M3)
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Glu-lam Market (1995 2004)
(1,000 m3)

• Japan - world Largest
• Glu-lam Market
• Japan needs 1.8 millions
• M3 of lamina for their
• domestic production

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Japan as No.1 of gluelam market in the world

• What is most significant is the increase in
  imports of Chinese Gluelam
• Plants specialized for the Japanese markets

Shanghai Kaimoto Wood Industry Shanghai Kocho
Machine Wood industry
Dalian Dalian Ton-Nan Dalian Tanaka Dalian
Global Dalian Shuanghua Dalian Sun-Honest
Wood Dalian Ka-zan Dalian Nakahiro Jyou Sei
Furniture Dalian Riko-Sanwa
Guangdong China Pacific Laminator
Shangdon Chingtao Ryomoku Kokuhin Yantai Meikou
Timber Industry Co., Ltd.
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CONCLUSION

• SURVIVAL KIT
• Globalization (No market is protected).
• Protectionism is irrelevant. It is just a delay
  in facing the reality of our competitiveness.
• Rapid change needs rapid adjustments.
• China is not the only emerging market power
  Viet-Nam and India are waiting at our door step.
• The only solution is to control the new network
  raw material, design, processing, distribution
  and marketing.
• If you cant beat them, join them.