China Forestry Inc. (chfy.ob)
Diversified Services
- State of the Industry: According to the State Forestry Administration of China, the forest sector alone is expected to be worth RMB¥1.2 Trillion (approximately USD$150 Billion) in 2010. In addition the sector has been developing at a double-digit speed annually over the past six years and reached a value of RMB¥726.9 Billion in 2005 (Source: Ministry of Foreign Affairs of Denmark). Even so, current production levels in China have been insufficient to meet demand, and with the strong economic development in the country this trend shows little evidence of reversal. At present, China remains heavily dependent upon wood timber and saw timber imports that are equivalent to roughly half of the country’s domestic timber output. In addition, China imported 20 Million tonnes of scrap paper in 2007, approximately one-third of the entire global supply (Source: Market Avenue). With forestry production in the country struggling to meet burgeoning demand, China Forestry is in excellent position to take advantage of the tremendous potential in the market.
- Growing Problem: Generations of aggressive exploitation and unsustainable practices have seriously affected China’s forestry resources. The country’s current forest coverage stands at approximately 18% of total land mass, and at 0.13 hectares per capita (less than one-fourth of the world average), China ranks 134th in the world. As part of the PRC’s goal to increase forest coverage by more than 40% by 2050, the government has instituted major land ownership tenure reforms that now allow individuals to possess and transfer land ownership rights. China Forestry’s wholly owned subsidiary Harbin Senrun has signed Letters of Intent with local producers and intends to purchase two additional forest lands with area of 1,166 hectares and wood quantity of 93,392 metric meters in addition to the 1,561 hectares divided among four parcels of private commercial forestland in Heilongjiang Province, the People's Republic of China.
- Related Industries: China is now the single largest consumer of paper and paper products in the world, having surpassed the United States to become the largest market. Growth in this industry has progressed at a blistering pace, outpacing even the impressive gains in Chinese GDP. By the year 2010, many expect at least 200 to 220 enterprises will be producing 100,000 tons or more, with a total production of more than 80 Million tons, an increase of 42.9% in production in just five years (Source: China Paper Beijing). In the Chinese paper industry, the availability of raw materials is of particular concern due to the fact that the country’s consumption far outstrips its present ability to produce sufficient supplies. According to recent United Nations statistics, from 2001 to 2005, China’s imports of pulp and waste paper rose more than 126%. By comparison, U.S. imports rose just 16% over the same period (Source: United Nations Commodity Trade Statistics Database). At present, China remains heavily dependent upon wood timber and saw timber imports that are equivalent to roughly half of the country’s domestic timber output. In addition, China imported 20 Million tonnes of scrap paper in 2007, approximately one-third of the entire global supply (Source: Market Avenue). In a climate of such tremendous demand, China Forestry is confident that its ability to control thousands of hectares of valuable timber land has the potential to prove exceptionally profitable in the Chinese market.
