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Sawmills in China: a $9 billion industry?

The main drivers for the sawmill industry in China are the country’s rapid urbanisation, transportation construction, the development of the real estate market and increasing purchasing power for high-quality wood furniture.
Over the next five years, the Chinese government will continue to boost investment in this growing industry and support pilot projects to reduce productions costs.
China’s urbanisation rate increased from 45.7% in 2008 to an estimated 50.0% in 2011.
The rapid development of the real estate market created huge demand for construction wood, wood for decoration, and wood furniture, which resulted in growing demand for products from the sawmills industry.
Fast growth in the transportation sector also boosted demand for special timbers and sleepers provided by sawmills.
As a result, IBISWorld estimates that the sawmill industry in China will generate $9.1 billion in 2012, reflecting 24.8% annualised growth over the past five years.
According to IBISWorld, the top four companies in this industry-Rizhao Huada Investment Development, Yantai Northwest Forestry, Shandong Hailan Import and Export Corporation, and Qingdao Westwood Lumber-account for only 8.5% of total industry revenue.
As sawmill products are manufactured from logs of different forestry species into items with different specifications, one sawmill cannot satisfy the needs of all the markets.
Therefore, sawmills tend to specialise focusing only on products of certain specifications.
Over the next five years, the Chinese government will continue to boost domestic investment in the sawmill industry and encourage Chinese enterprises to invest in countries with abundant forest resources.
With favourable policies and low purchase costs, top enterprises are expected to account for a larger market share in the coming five years, says IBISWorld.