China, B.C.
My parents send me an article from the Prince George Citizen on China and northern British Columbia, dated Nov. 6 2004. It got here a few days ago.
But doing business in China is not easy. While China has a huge number of housing starts each year – estimated 10 million per year, although that includes single apartments – they are overwhelmingly built with concrete.
While there is some opportunity to provide wood products for these apartments, the Chinese are more familiar with hardwoods than northern B.C. pine, softwood.
Canfor has sold pulp to China for years. It’s now trying to establish a foothold with lumber.
It expects to double its shipments to China this year to about 30 million board feet. However, that pales in comparison to the amount of lumber it expects to ship to Japan this year, about 400 million board feet annually, the amount of lumber shipped to China hasn’t even reached the one percent level.
Before coming to China I held a similar mindset for the potential of Northern B.C. to tap into the seemingly unlimited markets of China. From a glance, it would appear quite simple. China needs resources, and Canada has resources, and while the article mentions a few possible difficulties, it makes the same flawed assumptions that almost everyone in North America makes about China.
Yes, the Chinese are after natural resources. The construction boom here is unreal. However, I believe their goal isn’t to purchase natural resources; they want control of the resources. This stems from a history exploitation by European and North American powers to a desire to be self-sufficient and a desire to be redundant against any outside interference. Their greatest fear is being at the mercy of foreign companies, like they were during the 19th and 20th centuries. Value and profits must say in country. Most teachers for instance, are not permitted to convert their salaries into foreign currency. It must be spent in China.
In the coming decades the Canadian Tar Sands will become one of the most, if not the most important source of oil in the world. Estimates of crude oil reserves exceed the vast stores of Saudi Arabia. Chinese investment in developing the tar sands is expected to be large.
China and Canada are nearing a general agreement on Chinese investment in Canadian oil resources, part of an aggressive push by Beijing to secure access to energy supplies.
Furthermore, the search natural resources, while important, is only a means to the end, in the grand scheme of China’s development. The fuel for the engine, one might say. What China is really after control of the latest technologies. The Chinese computer manufacturer Lenovo recently purchased IBM’s PC business.
This isn’t to say opportunities don’t exist for northern British Columbia, yet I believe that when people and companies look towards China, they become spellbound by the potential profits to be made through selling their products, and in doing so, overlook the very real idea that the Chinese are staring right back, not at the product, but at the CEO chair.
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09 Jan 2005 05:34 pm Bryan 7 comments
It seems as if our northern representatives do have a very narrow vision of potential relationships/investments with China. A contingent of local level politicians from Prince George, with the mayor at the helm, are scheduling another visit to China in the near future. They sure seem willing to pay lots of our money to facilitate/nuture these connections.
I believe that there are definetly economic opportunities to be made, but I also believe that both parties hold different goals.
While companies like Canfor seem bent on getting products out into China, I would see the Chinese as being more interested in aquiring Canadian milling technologies which would enable them to produce their own lumber/pulp/paper using our raw logs/chips.
The article does nail the idea that there isn’t a wood culture in China. Concrete is King. This is mainly because concrete can be produced locally and cheaply, without relying on imported materials. Furthermore, timber harvesting has been all but banned here, causing China to look overseas for their timber resources (mainly in Indonesia and Russia, where they control several companies). Relying on imports is never a good thing.
I’ve noticed that it doesn’t take much to generate interest in this country. Skepticism is pretty low. If you create a funky image around wood products (using celebrities etc.) people here would literally flock to it. Cool and hip is the key here. Make the herd mentality work in your favor.
I guess I’ve just been reading too many articles on China that say exactly the same thing. “China = unlimited profits but there are some difficulties”…but the difficulties listed are always western-centric, such as “what problems will OUR company face” but they always overlook the notion of what China wants, which is possibly the largest hurdle.
The benefits of using wood are huge, especially products produced in Canada, yet I think the western world generally underestimates how clever the Chinese actually are when it comes to their development.
Another point about China trying to become less dependent on imports.
A friend of mine’s Dad works at a steel mill in Sault Ste. Marie. He was telling me that the mill is running at full capacity right now because China has such a huge demand for steel. However, China is using this steel to start building it’s own steel industry. Once the industry gets up and running, my friend’s Dad figures the Canadian steel industry is going to be in for some hard times.
You might say they are trying to steal our jobs. ;)
oooooooooh – That was low Bryan!
Hi Bryan…I don’t usually weigh in on these threads (mostly because I can’t spell) but I just happended to recall a pearl of wisdom passed on by a international marketing proffessor who lived throughout Asia for 20-years…thought it might be relavent:
(I’m paraphrasing here)
“trying to sell softwood to china is like trying to sell a fish a bicyle: they live in an a perpetually hot and humid climate which takes a huge toll on softwood structures, causing premature rotting. They can also import longer lasting hardwood at a fraction of the cost from neighbooring Russia. Canadian softwood producers simply see China as this massive dollar sign and don’t give any thought to the value their product will provide…a mistake has and will continue to cost millions.”
China has a range of climates, you know. You won’t get those problems up north.