Title: Market Developments for Value Added Wood Products
1Market Developments for Value Added Wood
Products
- Jukka Tissari
- Market Development Officer - Wood Products
2Contents
- Global trade in Value Added Wood Products (VAWPs)
- Competitive environment
- Conclusions
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3Products covered (SITC)
- 248.3/5 Profiled wood
- 635.3 Builders joinery and carpentry
- Ex-821 Wooden furniture
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4OECD Imports of three VAWPs
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5OECD Imports of Wooden Furniture by Type
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6OECD Imports of BJC by Type
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7 OECD Imports of Wooden Furniture by Major Markets
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8OECD Imports of BJC by Major Markets
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9OECD Imports of Profiled Wood by Major Markets
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10Imports of Wooden Furniture by Origin USA
Japan
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11Imports of Wooden Furniture by Origin Germany
UK
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12Imports of BJC by Origin USA Japan
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13Imports of BJC by Origin Germany UK
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14Imports of Profiled Wood by Origin USA Japan
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15Imports of Profiled Wood by Origin Germany UK
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16ITTO Consumer Imports of Tropical Wood Products
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17Major Tropical VAWP Exporters (1999)
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18Changes in ITTO Export Structure
Asia-Pacific
Latin America-Caribbean
Africa
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19Competitive environment drivers
- 1. Government policies to add value, taxes on
primary products, investment incentives - 2. Technological developments in the processing
of plantation species and lesser-used species - 3. Foreign direct investment
- 4. Wage and cost advantages
- 5. Falling tariffs under GATT/WTO agreements
- 6. Rapidly growing domestic/regional markets
- 7. Improved shipping services
- 8. Specific export import promotion programs
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20Competitive environment challenges
- 1. Growing out-sourcing of semi-finished products
- 2. Tightening certification and labelling
requirements on furniture (e.g. the USA in the
next 2-3 years) - 3. Substitution pressure from new materials
- (natural fibres and synthetics)
- 4. Higher potential supply for more diversified
plantation wood products - 5. Product standards and design
- 6. Consolidation of distribution
- 7. Mounting of non-tariff barriers on trade
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21On competition
- 50 US-furniture plants closed by mid-2001
- high-end producers with customisation and rapid
delivery will survive - manufacturers transform into assembly, finishing
lines or distributors/marketers - out-sourcing of semi-finished products and
components from China, Asia-Pacific, Latin
America - still capture most of the value-adding potential
in design, distribution and marketing functions
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22On competitiveness
- from comparative advantage to competitive
advantage - In Europe flexible but efficient production with
the highest technological quality, superior
design, innovative market promotion, and swift
distribution with minimal stock-keeping - In the tropics moving from original equipment
manufacturing (OEM) towards original design
manufacturing (ODM) and ultimately to original
brand manufacturing (OBM)
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23Market access
- trade liberalization has reduced tariff
escalation ( higher tariffs for value added
products) - EU, Japan and USA apply no import tariffs on FPWP
from GSP countries, for most other countries 2-6 - eliminate tariffs on wooden furniture completely
by 2005 - generally tropical producers retain higher
tariffs to protect their industries - regional agreements reduce tariffs
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24On End-use markets for VAWPs
- Consumer market (DIY products, household
furniture and BJC products) - Commercial and industrial enterprises (building
and construction materials, intermediate and
finished joinery products, contract furniture) - Institutional buyers (building and construction
materials, office public premises furniture)
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25On Certification
- In 1st and 2nd segment, the role of
intermediaries (sourcing agents, brokers,
importers, wholesalers, retailers, etc.) is
essential - complex consumer market involves large
corporations, who manage supply chains (IKEA,
Home Depot, BQ) and a lot of medium and
small-scale operators - on institutional side, many governments in Europe
are developing their procurement policies (WTO
rules breach?) largest volumes, less certified
yet
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26Conclusions 1
- International trade of VAWPs has liberalized,
increasing export opportunities for DMECs. - Around 40 of all OECD imports originate from
developing market economies and China. - Competition will force industrialized countries
to transform their manufacturing industries and
participate in the supply chains from
cost-competitive regions like Asia-Pacific and
Latin America.
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27Conclusions 2
- The contribution of VAWP to the forest sectors of
tropical countries will continue to grow. - Tropical value-added processing (furniture in
particular) tends to develop in phases gtgtgt
standardized products gtgtgt originally designed
products gtgtgt branded products. - Tightening tropical wood resources call for
- Processing of more plantation woods
- Expanded (unconventional) trade flows of primary
processed products
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