China’s Residential
Construction Market
West Virginia University
Global Competitiveness of Hardwood Products:
Strategies for Success in a Chinese Market
August 22-24, 2010
Gary Stanley, Director
Forest Products & Building Materials Program
U.S. Department of Commerce
China’s Growing Middle Class
Rising # of middle-class households:
150-300 million middle class wage
earners in 2009 (of 1.3 million)
($10,000-$12,500k/yr)
Chinese salaries have risen by nearly
10%
a year for the past decade
Even wages of China’s factory workers
are rising as China moves up the value
chain
The Result? Life even for those who
aren’t able to purchase luxury goods is
improving and with it, infrastructure
and construction quality.
Children’s pool
Suzhou
China’s Wealthy Class – the market
for imported US goods
2008: 1.6m “wealthy” Chinese
($37,000/yr +)
By 2015 – expected to be 4
million “wealthy” consumers
16% increase in this population per
year
“wealthy consumers trust foreign
brands more, are typically among the
first to buy new technology, and are far
more willing to pay a premium for highquality products than their mainstream
counterparts.” – McKinsey Quarterly
Construction Market
China’s construction industry
accounts for 6.7% of its GDP,
making it the 4th largest
industry in China for the past five
years.
2006: Construction industry
employs 40 million.
From 2005-09 residential
construction sales grew an average
of 38%/yr to US $65 Billion.
Five-Year Plan (2006-10)
emphasizes energy & water
conservation, increase of forest
cover. GOC – cut energy
consumption by 20% and major
pollutants by 10%.
Source: China Statistical Yearbook
Construction Trends
Rising energy costs = greater
demand for energy efficient
products
Rising competition among
developers = higher quality,
energy efficient materials to
attract customers.
More affluent consumers =
nicer interior finishes
Rising incomes/leisure time =
Luxury developments, golf
courses, amusement parks,
tourist areas
Non-Structural Markets for US Lumber
Interior finishes
Furring/Sleepers
Remanufacturing
Door cores
Moulding
Furniture
China Softwood Lumber Imports
Partner Country
World
Russia
Canada
Thailand
United States
Unit
M3
M3
M3
M3
M3
2007
6499097
1585483
674754
694390
1073044
Quantity
2008
2009
7,091,811
1,968,197
1,133,842
790,711
1,042,537
9,884,891
3,120,723
2,436,928
1,024,357
929,003
2007
100.00
24.40
10.38
10.68
16.51
% Share
2008
100.00
27.75
15.99
11.15
14.70
2009
100.00
31.57
24.65
10.36
9.40
Developments/Changes in Chinese Market
Growing acceptance of solid wood products in non traditional
applications. The “greening” of Chinese consumers.
One of the biggest and fastest growing timber consuming
countries in the world.
China’s timber consumption is forecast to continue to increase
rapidly due to factors such as strong economic growth, 2010
World Expo, 2010 Asian Games and improving living standards.
Reduced market access barriers and improved transparency in
China’s trading & distribution system
Greater awareness of amount of illegally harvested timber
entering China (Dec 2007 US-China MOU under SED)
Structural Markets for US
Lumber & EWPS
Construction
Concrete formwork
Landscaping
Hybrid Construction & Special
Projects
• Public buildings
• Clubhouses
• Amusement parks/roller
coasters
• Canadians promoting
wood frame in low rise
Wood frame houses (500/yr)
British Pavilion: Shanghai Expo
6-stories
60,000 acrylic
rods
$156,000 of LVL
British Pavilion = Internal Structure
Special Projects: Resorts/Hotels
Taiwan Flora Expo
Amusement Parks
& Other
Roller Coaster near Shanghai
Happy Valley Amusement Park
Other Non-wood product markets
Insulation
Wood Windows
Housewrap
U.S.-China Build Program
USG/Industry Public-Private Partnership
Under DOC MDCP, joint cooperation with
Evergreen Building Prods. Assn.
Promote US green building, energy savings
materials, technologies, and construction
systems in China
Inform Chinese Govt. & construction
professionals thru technical seminars, trade
promotion & publications
www.USChinaBuild.org
Two competitive grants from Dept of
Commerce & funding from FAS
1st – 2001-2007
2nd – 2009-2012
Zhujiajao, China
Government-industry partnership to
introduce US building materials to
China
EBPA and five industry cooperators
Administered by EBPA, which is
staffed by CINTRAFOR staff
•
SEC, APA, SFPA, State of WA, and CINTRAFOR =
cooperators
FloraExpo site - Taipei
Annual Chinese-language Company
Directory
4th annual Chinese
language publication of US
exporters. Company
profiles also included in the
web site
4,000 copies printed per
issue
Listed on US-China Build
Chinese website
US Housing & Building Products
Newspapers
Twice yearly publication
Technical articles
Program activities
US Project Profiles
Design Information
Advertising by US Companies
4,000 copies printed and
distributed at trade events,
seminars, & trade shows
US Building Materials Design Book
U.S. Trade Show Pavilions
Products Featured:
• Plumbing fixtures/systems
• Heating systems
• Water purification systems
• Panelized housing packages
• American hardwoods
• American softwoods
• Engineered wood products
• Treated wood decking
materials
• Doors and windows
• Paint and industrial coatings
• Insulation
Annual Sales Missions & Seminars
• Goal: educate architects,
developers, designers about US
building materials
• 106 US companies, 34 cities since
2002
• 4,460 Chinese attendees.
Numerous Chinese distributors
identified and signed.
•
Site Visits & Meetings
Looking Forward. What’s next?
Green Building
Second Tier Cities
Confront Standards Issues
Major world events/construction projects (2010 Asian
Games, Zhu Jiang & Baiyu New Towns - Guangzhou)
Monitor: 1) Chinese Govt. 5-Year Plans, 2) Chinese
Govt. Economic Stimulus Plans ($1.4 trillion – public
works, infrastructure) and domestic policy
developments (regulatory, trade, currency, raw
materials)
Looking Forward. What’s next?
Ministry of Construction Policies/Regulations
Recently Updated:
Decree 113 – Construction Works Sector
Decree 114 – Engineering & Design Sector
Decree 160 – Management Responsibilities for
Construction Survey and Design Enterprises
Decree 155 – Foreign Invested Construct. Sector
Ministry of Construction adoption of U.S. design
values and grading rules (GB 50005, GB 50206)
Looking Forward. What’s next?
Work with USG/Chinese MOC officials to
adopt internationally recognized
building materials standards and codes
and fire safety design requirements
Look for possible cooperation in G2G
strategic bilateral, regional, or
multilateral economic/trade dialogues
(e.g., SED, JCCT, APEC, TPP)
For More Information
Gary Stanley
Forest Products & Building Materials Program
DOC/Office of Materials Industries
Tel. 202 482 0376 Fax 202 482 2565
gary.stanley@trade.gov
www.trade.gov