The following article was written by Hezhu Zhang, a fellow at China House Kenya
Chinese timber business in Africa is continually faced with numerous criticisms. And the reprobation of exporting raw materials without developing processing industry locally is one of the most heated points.
The same happens in Zambia. Chinese timber business has been in Zambia since around 2005, mostly exporting material in forms of lumps and boards. Zambia government is now encouraging Chinese timber companies to transform from exporting raw materials, or unfinished products into producing finished wooden products, generally speaking, wooden furniture, adding values to the industry and offer more job opportunities to Zambians.
“Lots of Chinese businessmen they want quick money. But we want patient ones. In five years, Chinese companies doing furniture business will gain high profitability and those who export raw material now will be gone.” Said, Whiteman, a Zambia government official who deals with Chinese timber businessmen a lot in the department of forest. Zambian government is quite optimistic and ambitious about the forthcoming transformation of Chinese timber industry into a deep-process industry, basically furniture industry in the background of regulating raw material exportation strictly while conducting preferential policies on finished products at the same time.
Bottleneck effect in furniture industry
However, the bottleneck effects of developing a deep-processed timber industry are felt and complained by almost all Chinese timber companies. “We could never make furniture here. Never. It’s not about time. It’s just impossible to profit. ” In general, producing finished products in Zambia cost extremely high while local market is too small for these high-price products. Whereas in Chinese market, made-in-Zambian products would not be competitive at all due to the limited processing technologies and thus, low quality. Hence, finished products in Zambia fall into a dilemma. Specifically, three main reasons for the difficulties of producing finished timber products in Zambia are referred by most of Chinese businessmen.
First, the infrastructure construction in Zambia is not mature enough to support a modern deep processing industry such as furniture industry. For example, poor transport construction and unstable electricity system often cause huge problems in furniture production, which requires constant transportation of materials and electric machines.
Second, a deep-processed industry such as furniture industry requires a series of relative industries, such as spare parts of machines and tools, which are lacking in Zambia. Once machines need maintenance, all spare parts required need to be imported from abroad and production work will be hold in abeyance, which cause huge loss to companies.
Besides these objective limits, there are other important reasons Chinese companies refuse to develop deep-processed industry. The biggest reason and challenge for Chinese investors is the unstable policy condition. Almost every one of Chinese timber companies complains heavily about the fickle policies about the license, export, legal products, etc. And these instabilities bring a lot of risks to their attempts of enlarging their investment.
Intrinsic hardwood carving skills in China
The core difficulty of adding value to timber industry in Zambia is that the process technology of Chinese furniture industry is intrinsic in China as part of its traditional culture, hence is hardly possible to be transferred into Zambia. Timbers exported from Zambia and other African countries are all used in the manufacture of traditional Chinese style hardwood furniture, which involve numerous intricate hand carving. The value of a piece of Chinese luxury hardwood furniture is decided on both the quality of material and the artistic carving skills as two indispensible characteristics that supplement each other. That is to say, high quality material is only the prerequisite of a fine piece of hardwood furniture. How it is processed and hand-carved is its value.
Chinese workers in hardwood furniture industry often have inherited centuries of family traditions of woodcarving skills and run family owned workshops, carving skills as their core competitiveness. Even through a long period of training, Zambian workers cannot reach the level of Chinese workers in furniture manufacturing.
Apart from Chinese traditional carving skills, general process of furniture cannot be as good as in China, either, due to the limit of advanced machines and workers’ immature skills. The gap is quite hard to fill in a short time.
Failed experiments in localizing furniture production
These factors strictly limit the types of furniture that produced in Zambia. SK Wood, as the one and only Chinese timber company that produce finished furniture in Zambia and sell in domestic market, produce furniture of brief-style instead of complex carvings. Because the material of SK furniture is often authentic hardwood, prices are only affordable in a quite small high-end market. At the same time, domestic market does not have a preference to hardwood furniture as in China and thus makes SK’ s business even harder to continue. On the other hand, SK’s furniture would not be competitive in Chinese market at all due to the limited process technology in Zambia. According to insiders of the industry, SK is having quite a hard time currently due to the stagnant market and difficult to continue operating.
“If making furniture is profitable, trust me, all these Chinese businessmen would be doing that already.” Mr. Lu, founder of YL timber commercial company said so. YL timber company, one of the earliest timber trade company in Zambia, used to produce wooden doors for domestic uses as a pilot project of their long term plans of producing more complicated furniture. However, it turns out to be a total failure. Doors produced by YL were handmade by carpenters and sold to local medium and high-end market. The main reason for the failure was that local market was too small. The affordable prices for local market were too low and little profits could be made. On the other hand, if exported to China, manufacturing wooden doors with same quality there cost much less because of mature assembly line and process technics, and hence sell at a lower price, leave doors produced by YL no competitiveness in Chinese market at all. Therefore, YL didn’t try to produce other wooden products to sell and in later years remain doing unfinished timber exportation business.
Apart from all discussions above, another most important reason for Chinese timber businessmen refuse to develop deep-processed industry is that they do have obvious favoritism on business that require little investment while making profit quickly, which is referred to as “short, stable & fast” business. This is also why numerous “profiteers”, who exist in Zambia timber market, continually distorting and worsening the overall situation.