18 June 2010

Impact of the weakening Euro on Chinese exports

Europe is the world’s second largest wood product consumer area accounting for one third of global consumption. Most of wood product imports by European countries are from Asia. The EU is also the major wood product market for China accounting for 16% of China’s total wood product exports in the first four months of 2010.
The continued weakness of the Euro has the effect of making Chinese exports less competitive in the Euro area. In May 2010, the average exchange rate was RMB8.4 per Euro, down 18% from the beginning of the year.
Analysts believe that the Euro area’s economic downturn and weakening Euro will severely impact China’s wood product trade in the following areas:

• export-oriented wood product manufacturers will suffer most and they have to readjust their foreign trade strategies;
• as a result of the slowdown in the European market, some of the exporting companies will sell their products in domestic market hence, increasing domestic competition;
• the effect will be long term, if the purchasing power of the Euro continues to weaken.

In addition, the Due Diligence Regulation being developed by the EU will further erode the competitiveness of Chinese manufacturers.

Boost for furniture manufacturing in Dongguan City
Steelcase Furniture, the biggest office manufacturer in the world, announced recently the establishment of a plant and R&D centre in Dongguan City, Guangdong Province, which will be the company’s biggest centre in Asia. It is planned that 75% to 80% of the products from this plant will be sold in Chinese domestic markets and the rest will be exported to Japan, India and other Asian countries.
The Steelcase Furniture has 3 plants in Asia; in China, Malaysia and Japan. Call for greater China-US cooperation in forestry At the second meeting of the China-US Strategic and Economy Dialogue, the vice administrator of the State Forestry Administration, Madam Yin Hong, spoke on forestry cooperation between China and the USA.
Madam Yin Hong said that China and the USA have good cooperation in the fields of combating illegal logging, Chinese garden construction, Wetland and Reserve Action Plan and Network on Asia-Pacific Forest Rehabilitation and Sustainable Management.
She appealed to the two countries to undertake common efforts in promoting greater cooperation in forest management and ecological conservation.