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From Smuggling to “Made in Zambia”:  Transformation of the Chinese Timber Business

From Smuggling to “Made in Zambia”: Transformation of the Chinese Timber Business

The following article was written by Hezhu Zhang, a fellow at China House Kenya

“Policy is too unstable and is getting stricter, this business has no future”. Mr. Zhou, an experienced Chinese timber businessman said, thinking about what is next for his timber business. When it comes to the difficulties of doing timber business in Zambia, fickle policies which are getting stricter and stricter is the biggest complaint of every Chinese businessman.

Chinese timber business has been in Zambia since around 2005, mostly in exporting raw material in different forms. Log exportation has been prohibited long ago thus most Chinese businessmen export lumps instead of logs as their main business. Since around 2015, lump exportation was gradually banned, therefore businessmen turned to board products. However, since 2017, all kinds of wooden products exportation are gradually forbidden in Zambia.

Currently, most Chinese timber companies more or less are involved with some extent of illegal exportation of timber, mostly because of the changing policies in recent years defined what used to be legal operations as illegal ones, thus they are forced to become timber “smugglers’’ as their fixed cost are too large to give up. Facing this situation, companies are thinking about business transformations so as to avoid risky operations of smuggling. Trying to export processed furniture parts is one way.

David Ji, considered by industry insiders as the very first and only Chinese businessmen in Zambia who runs a completely legal mukula finished products exportation business, used to be one of the Chinese timber businessmen trafficking mukula into China. Getting so tired about all the risks and instability in illegal business, he decided to do every step of the business strictly according to all kinds of regulations, producing only finished furniture parts to export to China. He spent more than half a year negotiating with certain luxury furniture workshops and companies in China to convince them to try finished wooden products made in Zambia, which had never happened before, as Chinese furniture workshops has much more advanced producing technics than in Zambia. Then they registered a company, employed more than 40 local workers with social welfare and invested largely on relative machines.

However, to David Ji, frequent policy change is still a big challenge that impedes his business and also, other businessmen’s entrance into this field.

Although they got full permission from relative government department, his products still got obstructed on the way of exportation, detained by the custom for more than 2 months, leading to an extra transportation fee of more than 20,000 dollars per month. Currently David is indicting a certain government department for detaining his products without a proper reason.

“The demand of curved wooden furniture parts is huge and really promising right now. But if the policies continues to be fickle as such, there’s no way I can enlarge the scale of my factories and hire more people. The chance I’ll lose money is too big.”

At the same time, others are trying to take a totally different path and leading a new potentially trend in Chinese timber business.

In Zambia timber industry, only the middle part of a tree, usually no more than 2.5 meters, of the tree trunk will be used and processed into lumps and boards. Because the bottom and top parts of the trees are very irregular in shapes and with low use-ratio after process, they are left in the forest causes a huge waste.

When Mr. Wu, who is the owner of a big Chinese furniture collection factory owner and his friends Mr. Wang, who runs antique and woodcarving art crafts business in China took a tour in Zambia, they found countless dead wood, wasted tree parts and root piles are left abandoned in the forests, some naturally dead and others are wasted parts of timber industry. Mr Wu and Mr. Wang, as connoisseurs of Chinese woodcarving, sensed that these wasted parts can be great resources for woodcarving art crafts industry.

Much like the art tradition of redwood furniture, woodcarving art has long history in China. The designs of these crafts are often closely combined with the natural shape of a certain piece of wood or roots, taking advantage of its natural shape, texture and veins and carving it into a statue or a scenario with cultural connotation. Although amounts of highly skilled and experienced artisans are available for Mr. Wang in China, the limitation of woodcarving crafts industry in China is the huge lack of naturally shaped wood parts. Finding a piece of interestingly shaped wood is very hard. However, countless wasted wood pieces which are mainly tree crowns and roots left by timber business can all be the raw material for woodcarving crafts. Therefore, Mr. Wu and Mr. Wang registered “HHcompany” in Zambia, mainly using Zambian timber as raw materials for producing woodcarving art crafts in Zambia and sell them both in domestic market and China.

This path could create a very different model of Chinese timber business in Africa. Because when investigating Zambian art and cultural tourism market, they found that except limited number of museums and low-price art craft market, few choices are left. Sensing the vacancy of a high level art craft market and cultural tourism, HH company intends to combine Zambian timber industry together with both Chinese and African woodcarving culture, creating a high-end cultural industry including woodcarving sell, exhibition, workshop tour and an African artisan community.

Currently their factory is in construction on a 20,000 square meters site in the suburb of Lusaka, an openly shown workshop, where tourists can watch the carving process and a exhibition room for completed crafts are included. Completed woodcarving crafts will be on exhibition and sell publicly. They plan to hold woodcarving salon regularly, attracting artists and Zambian public who are interested in art crafts to come. Local artisans could come and apply to join as fellow artisans and they will offer them workshop places, some tools and technic supports. Hence, they plan to employee about twenty well-educated Zambian youths to be administration staff and tour guides to elucidate woodcarving skills to tourists, organize meetings and salons and doing administration works, etc.

Right now they are recruiting 10-20 experienced Chinese artisans who worked with them in China to come to Zambia, although the procedures of their working visa might be a problem. At the same time, they are seeking Zambian artisans to join their team. Through investigating Zambian art craft market, Mr. Wang and Mr. Wu found the existence of some local artisans who make woodcarvings with African tradition statues, animals and scenes. But these products are made in very small scales and most of them, although made of expensive material, were crafted roughly and sold at a low price. HH plans to hire these Zambian artisans and train them, so that they could produce African style crafts with high quality, transforming ordinary Zambian woodcarving crafts into high-end art collection, as exquisite representative of Zambian culture, which can be served as souvenirs instead of illegal animal products.

 

HH company’s plan avoids the bottleneck of furniture industry in Zambia. First, woodcarving crafts industry involves little investment on heavy machines. Second, woodcarving crafts produced in Zambia, if sold in local market, will be sold as luxury collection aiming at high-class consumers and rich tourists. Even though the market size is limited, high profit will be earned through each craft. And when it comes to export, Zambian government offer zero tariff treatment to these finished products. Woodcarving crafts have huge demand in Chinese art craft market and Mr. Wang has stable clients.

 

But apparently, this new business model of Chinese timber business also faces numerous uncertainties. For example, the actual market size of high-end woodcarving crafts in Zambia will remain unknown until the business actually begins. Up to now, No one knows the future.

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