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Wood exports to China up, but businesses unhappy   2011-08-28 - TBKTSG

The fact that China has unexpectedly become the second biggest importer of wooden products from Vietnam, just after the US, has raised a lot of questions and doubts.

Timber materials bleeding to China


Nguyen Huy Cuong, manager of an enterprise which specializes in providing materials to processing workshops in Long Thanh district of Dong Nai province, said that a lot of Vietnamese and Chinese businessmen have come to order preliminarily treated timber materials to export to China.

In the past, businessmen only sought to purchase raw materials, but they are now looking for smoothed planks. It is because the preliminarily treated timber bears the export tariff of five percent, while raw materials would bear the higher tax rate of 10 percent.

In 2010, Cuong said, his enterprise sold 150,000 timber units to Chinese businessmen, the highest level so far.

Chinese businessmen and their Vietnamese representatives always collect all the things they can, accepting to pay the prices higher by 5-10 percent than the prices paid by domestic companies.

“Every time after they (Chinese businessmen) leave, our storehouses get empty,” Cuong said.

Domestic enterprises have complained many times that since Chinese try to collect timber to bring to their home country, some kinds of timber, including rubber wood, has increased by 20 percent to nearly 4 million dong per cubic meters just within four months.

According to Trinh Kim Thanh, Director of Kien Phuc private enterprise in Dong Nai province, wood suppliers inform the sale price increase continuously. Thanh’s enterprise is fulfilling the orders with nacre wood materials, priced at 4-5 million dong per cubic meter, which is much higher than the prices at the beginning of the year.

“Many orders are coming, but I dare not take the orders, because the material prices keep increasing,” she complained

A Vietnamese businessman said that China itself is a big wood furniture exporter in the world; therefore, the demand for timber materials is very big. Meanwhile, the high inflation rate has made timber materials, including polar wood, the main kind of timber in the country, become more expensive. Therefore, Vietnam plantation wood has become the good alternative material for the Chinese industry.

China, the second biggest market for Vietnam?

The statistics released by customs agencies show that the wooden product export turnover in the first seven months of 2011 unexpectedly rose to 344 million dollars, an increase of 63 percent over the same period of the last year. This was for the first time China surpassed European countries to become the second biggest market for Vietnam.

As such, Chinese import turnover from Vietnam is now just lower than that of the US, which consumed 745 million dollars worth of wooden furniture from Vietnam in the last seven months.

Nguyen Ton Quyen, Deputy Chair of the Vietnam Forest Products and Forestry Association, said the high exports are really a big surprise to him, even though he has been warned about the increase in the exports to China. “The sharp increase needs thorough consideration,” he said.

“The increase of the exports to China may not be a good thing. We need to analyze what kinds of wood are being exported to China,” he added.

It would be a good thing if Vietnam exports finished products, but it would be a very bad thing if Vietnamese enterprises keep timber materials or the preliminarily treated timber.

Quyen said his association has proposed the Ministry of Finance to raise the tariff to 20 percent on railway sleepers, which saw the export turnover increasing sharply by 300 percent in May compared to the exports in May 2010.

According to Dang Quoc Hung, Deputy Chair of the HCM City, Chinese now only demand two kinds of wood – preliminarily treated wood, and the wooden furniture products which have been carved as fine arts.

Hung said that the latter products are now the advantages of traditional craft villages in the north, while the enterprises from the central region to the south only make products for export to the US or EU.

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