Prices offered by Middle East markets are quite low and most of the Chinese plywood manufacturers cannot make these lower prices cost-effective. A further issue is that local governments are paying more attention to product quality improvement and would like to attract more investment in value-added product production in the Pizhou area.
The development of the plywood industry in Pizhou started in the early 1990s and resulted in over 3,000 companies being established to service and manufacture plywood. Today, 30% of plywood manufacturers in Pizhou have ceased production and it is estimated that 50% of the factories will be closed by the end of 2008.
At present, the average profit level is at zero or in a loss position at small-sized factories, 1-3% profit margin at middle-sized factories and 5% at larger ones. Meanwhile, some factories which used to focus on the export business are also shifting panel production to supply the domestic furniture industry.
Source: China Bulletin