Having launched a national Forest and Trade Network (FTN) in China in 2005 (its 26th worldwide), WWF’s Global Forest and Trade Network (GFTN) held its breath and hoped the format would work in one of the world’s largest, but least transparent markets for forest products. Everything indicated that China was a place GFTN had to be, but it was a very different market from the many others where we’ve operated to date.
For many of the buyers that GFTN works with across Europe and North America China has long been a problem country. Most of the raw material has been imported and re-exported and those looking to trace and assess the environmental status of their supply chain have found it can be almost impossible. “Chinese manufacturers didn’t understand why their customers wanted to know about the source of the wood,” said Jin Zhonghao, manager of the China FTN. “Now that we have the network established we are finding that companies are beginning to understand the issues involved and why their customers ask such difficult questions.”
The China FTN requires participating companies to commit to cleaning up their supply chains using a stepwise approach. Using a translated version of the GFTN guide to responsible purchasing and GFTN participation requirements, Mr Jin and his colleagues are able to agree action plans with the participants.
The companies participating in the China FTN fall into two main categories: those that see the export market as the main driver, and those that see the potential for a “greener” market in China itself.
Companies in the former category include Guangdong Yihua Timber Industry Co and Foshan City Shunde Yingbin Wood Industry Co. These hardwood and laminate flooring manufacturers have joined the network as a direct result of customer pressure – particularly from Europe. While it’s early days, Yihua has responded to its action plan by beginning to source FSC pine logs from the Russian Far East – probably the first Chinese company to do so.
Jinlin Province Baihe Forest Bureau and Heilongjiang Province Youhao Forest Bureau are the two forest managers in the China FTN. Both achieved their FSC forest management certificates in 2005 and quickly signed up to China FTN. Since joining they have attracted interest from buyers looking for FSC products both at home and abroad.
European demand
By far the largest name in the China FTN is Hong Kong-based Kingfisher Asia Ltd. “Our customers in Europe demand certified and legal timber,” said Peter Cox, quality assurance manager. “China FTN can provide the support to our Chinese manufacturers that will help us meet this demand.”
The domestic market in China is growing rapidly as living standards rise. Anxin Flooring, a China FTN participant based in Shanghai, relies on the domestic market for 95% of its business. Its president, Carl Liu, believes the domestic market will begin to “green” in the next few years. Anxin, uniquely in China, has recently received its FSC chain of custody certificate purely for the domestic market. It may be a small step, but Mr Liu is confident that increasingly affluent Chinese consumers will begin to question the origins of their wood products.
As the China FTN moves in to its second year it is looking to expand and broaden the range of participants. “We have received applications from different sectors, including the plywood and furniture board industries” said Mr Jin. “Many of these companies have begun to approach us first, often having spoken with their overseas customers.” Lack of technical capacity and understanding of the issues and chain of custody certification are a real problem given the relative newness of the FTN and certification in China. China FTN has already run training courses on responsible purchasing and chain of custody and will run more in 2006-7. China FTN also recognises the lack of local (and lower cost) auditing capacity and will continue to develop training opportunities for Chinese based auditors.
The recent launch of the FSC China National Initiative and progress towards an FSC-recognised China Forest Certification Standard will almost certainly lead to greater and faster progress. Since 2003 WWF has worked in China with FSC, the Chinese Academy of Forestry and other stakeholders on this process.
Some WWF UK-FTN participants have already begun to use the services of China FTN to help them with their suppliers. “Interest in plywood has been great in the last six months and UK buyers have helped us engage with two major producers recently,” said Mr Jin.
