Opportunities for Swedish Wood Export to China

1、school of businessstockholm universitymaster thesis 10 credits autumn semester 2004 opportunities for swedish wood export to china supervisor author sikander khan bin li abstractthe purpose of this thesis is to explore possibilities for swedish wood export to china.known for its fast-growing economy

2、 and huge population, china is often regarded as a market with enormous potentials. those swedish wood exporters who are motivated to search for new markets and expand their business are as well interested in seeking opportunities on the chinese market. when exploring business opportunities on or in

3、tending to enter the chinese market, it is crucial that swedish wood exporters are aware of and understand the impact that chinas economic, political, legal and cultural variables may have on their export marketing in china. good knowledge of these forces is not only necessary but also a competitive

4、 advantage for those who want to succeed on the chinese market. in addition, swedish wood exporters need acquaint themselves with chinese business culture and try to adapt to it. particularly important in chinese business culture is a network of guan xi. the chinese wood market is huge and complex.

5、although the volume of wood import in china is gigantic, when it comes to opportunities for swedish sawn red pine and sawn white spruce, international competitors from russia, new zeeland and north america do exist there. in china, furniture manufacturing is a large field for wood consumption. more

6、specific, companies manufacturing and exporting softwood furniture can be a most promising market segment for swedish wood export, preferably large-scale private firms or joint-ventures, because of their strong purchasing power. furthermore, guangdong province can be an appropriate region to start w

7、ith when exporting wood to china, on the basis of its economic prosperity, favourable business environment and due to the enormous wood import and flourishing furniture industry in that region. finally, with regards to entry modes to china, direct export entry is considered to be more favourable tha

8、n an indirect one. it is hoped that this thesis has served its purpose of providing an overview of chinese wood market and opportunities for swedish wood in china. additionally, it is wished that this paper has also offered the reader some knowledge of chinese business culture and a guideline of cho

9、osing the right export entry mode for the chinese market. key words: wood, export, china, sweden.forewordalthough the process of writing my thesis has not been always easy, i did get a lot of pleasure from this work. and i owe many people my thanks. first of all, i would like to thank my thesis supe

10、rvisor dr. sikander khan for his advice and guidance i have received from him during my whole working process. special thanks should be tendered to mr. ulf srmark, consul general of sweden in guangzhou, who has commissioned my thesis work. mr. ulf srmark was also head of swedish trade council in tai

11、pei and has played a very important role in initiating and promoting the first swedish wood exports to china since 1996. i also want to thank all my interview respondents who contributed their time and knowledge to my work. it really has been a great pleasure to talk with them. finally, i would like

12、 to thank my thesis opponents alexander, fredrik and karima for those helpful feedbacks i got from them. bin li stockholm, january 7th 2005table of contentsabstract1foreword21. introduction51.1 background51.2 research questions61.3 purpose61.4 delimitations72. methodology82.1 theoretical basis82.1.1

13、 hermeneutic and positivistic82.1.2 inductive and deductive82.1.3 qualitative and quantitative92.1.4 objectives of research112.2 practical approaches123. theoretical framework153.1 macro-environmental forces153.1.1 economic forces153.1.2 political/legal forces173.1.3 social-cultural forces183.2 chin

14、ese business culture193.2.1 influence of confucianism193.2.2 guan xi193.2.3 establishing a relationship203.2.4 attitudes to contracts203.2.5 face213.2.6 holistic thinking213.2.7 speech acts213.3 export market selection223.3.1 export market selection223.3.2 market definition and segmentation223.3.3 m

15、arket niche233.4 export entry modes243.4.1 indirect export243.4.2 direct export254. results - swedish wood export264.1 swedish softwood264.2 swedish sawmilling industry264.3 swedish wood export to china275. results - chinese wood market295.1 forest resources of china295.2 chinas wood import305.3 the

16、 wood import regulations325.4 imported softwood325.4.1 softwood from russia325.4.2 radiata from new zeeland335.4.3 softwood from north america345.4.4 price comparison345.5 wood import and marketing channels355.6 fields of wood utilization in china355.6.1 furniture manufacturing365.6.2 construction37

17、5.6.3 interior decoration375.7 the researched chinese companies385.8 attitudes to swedish wood396. results - guangdong province406.1 general background406.2 foreign trade416.3 foreign investment416.4 consumer market416.5 wood import and furniture industry427. analysis437.1 macro-environmental forces

18、437.1.1 economic forces437.1.2 political/legal forces447.1.3 social-cultural forces457.2 chinese business culture457.3 opportunities for swedish wood in china477.3.1 china needs sawn softwood477.3.2 furniture manufacturers - dimension of product function487.3.3 guangdong province - geographic dimens

19、ion497.3.4 the researched chinese companies507.3.5 a market niche517.3.6 price issue517.4 export entry mode to china528. final discussion558.1 conclusion558.1.1 macro environment558.1.2 chinese business culture558.1.3 opportunities for swedish wood in china558.1.4 direct export entry568.2 suggestion

20、s for further research578.3 discussion about own methods578.3.1 objectivity578.3.2 trustworthiness588.3.3 source criticism58references59websites61interview respondents61list of tables62list of charts62list of appendices621.guiding interview questions on the swedish side622.interview guides on the ch

21、inese side621. introduction in this chapter, i am going to present the background reasons why i chose this research subject. besides, the research questions and purpose of my thesis are declared. finally, the delimitation of my empirical study is clarified in order to narrow the research scope. 1.1

22、background the forest industry in sweden plays a significant role in the swedish national economy. in 2001, swedens forest products accounted for some 15 per cent of total exports, with the value of 110 billion kronor (scb 2001). western europe has been the main market for swedish wood products for

23、years. however, the demand on the european and swedish markets has decreased during the recent years. as a result, it is of great importance for swedish wood manufacturers to look for new markets. on the other end of the european-asian continent, with the worlds largest population of 1.3 billion peo

24、ple and a rapidly growing economy, china offers the world a huge market, enormous business opportunities and has attracted numerous foreign firms from many countries. among the swedish wood manufacturers and exporters, there is also a continuous interest in the chinese market (asplund 2003). taken i

25、ts total area and population into account, china is poor in forests. the chinese government has brought out a great number of regulations to reduce and even stop the felling of the forests ( 2003-11-15). however, the consumption of wood in china is expected to continue expanding in the coming years,

26、 because of the rapid economic development and the improved living standards. therefore, the need for importing wood is increasing. consequently, china is considered to be a huge potential market by wood manufacturers and exporters from many countries. swedish wood exporters also wish to know if the

27、re are opportunities for them on the chinese market. there has been some research on the possibilities to export swedish wood to china which were done from the swedish side; among others, nordic timber council (asplund 2003). information of the chinese wood market and research about the opportunitie

28、s for swedish wood in china is still inadequate. moreover, there is little research conducted from a chinese point of view. these aspects aroused my interest in writing my thesis on the subject of exploring opportunities for swedish wood in china. another very important reason why i have chosen this

29、 subject for my thesis is due to my working experience and my background. in 2002, i worked as project leader at the province administration of vsterbotten in ume on a project named sweden - china wood industry partners. the main aim of this project was to help swedish wood manufacturers develop the

30、 chinese market for their wood products (e.g. sawn red pine and sawn white spruce) and to try to set up a long-term industrial and commercial cooperation between the swedish wood industry and the chinese wood, furniture and construction industry. for the work, i travelled two times to china in 2002

31、and spent totally two months there. i visited the wood markets in guangdong, shanghai, beijing and tianjin. besides, i also interviewed more than 60 persons from wood industrial organisations, wood importers, furniture companies and construction companies, etc. this work was a great experience for m

32、e, which is also why i decided to use the opportunity of writing my thesis to continue the research and conduct a deeper market analysis. in addition, the fact that i come from china has as well made this study more attractive and meaningful to me. 1.2 research questions in this thesis, i am going t

33、o examine the following issues:1. what are the characteristics of the chinese wood market?2. what potential opportunities do swedish wood exporters have on the chinese market? 1.3 purpose the purpose of my thesis is to explore possibilities for swedish wood export to china. in order to accomplish th

34、is objective, it is necessary to also look into two important issues which are directly related to the subject of export to china, namely, chinese business culture and export entry modes. 1.4 delimitations “wood” is a very general concept. wood can be timber, sawn wood, plywood, veneers, panels, fib

35、reboards, wooden floorings, wooden doors and wooden windows, etc. it is impossible to look into all these product types in my research. sweden is the second largest exporter of sawn softwood in the world ( 2003-11-10). in sweden, the forests are dominated by two conifer species; no

36、rdic red pine and nordic white spruce, which belong to the specie of softwood (ntc p.3). therefore, i decided to limit the scope into export of sawn red pine and sawn white spruce from sweden to china. thus, throughout my thesis, “wood” in the phrase “swedish wood export” means sawn red pine and saw

37、n white spruce. on the other hand, it is worth reminding that the word “wood” in the expression “chinese wood market” is a general definition. geographically, china is also a large country, with 23 provinces, 4 municipalities and 5 autonomous regions ( 2003-12-15). in order to narrow down the resear

38、ch scope, i focused on guangdong province, based on my pre-knowledge that guangdong is a economically and industrially most developed area in china and a best representative example of chinas fast growing market economy. for that reason, my empirical research of individual chinese companies and mark

39、et in the micro scope was limited to this region. however, when necessary, some other provinces and areas were looked into as well. 2. methodology 2.1 theoretical basisthe intention of this section is to present the theoretical basis for my research methods. 2.1.1 hermeneutic and positivisticthe her

40、meneutic approach focuses on obtaining a deeper understanding and seeking the meaning of action, while the positivistic approach concentrates on drawing general and universally applicable conclusions (hollis 1992). the hermeneutic scientist illustrates peoples actions from the inside of the research

41、; thus the researcher becomes part of the study. as a result, such research reflects subjectivity to some extent. the hermeneutic researchers use subjective interpretation to gain deeper understanding. research based on positivistic science can be regarded as logical, analytical and objective, since

42、 the researcher has an external relationship with the research object and attempts to explain the causes behind actions from an external perspective. the positivistic approach employs observation as the means of testing hypotheses against reality. (hollis 1992)my research and analysis were based to

43、a great extent on my own interpretation of the empirical data i found. on the other hand, i also tried to observe and analyse the reality as objective as possible from an outsiders view. in this sense, my approach is characterised as being both hermeneutic and positivistic. 2.1.2 inductive and deduc

44、tiveaccording to perry (1998), there are two major approaches to theory development; inductive theory building and deductive theory testing. the differences between these two approaches can be viewed in terms of scientific paradigms. inductive approach represents the hermeneutic paradigm. inductive

45、reasoning is a process of generalisation and involves applying specific information to a general situation or future events. the deductive approach represents the positivistic paradigm. my search for theories took place mostly after the contact with my respondents and after my empirical research. in

46、 other words, my interpretation of the respondents words and viewpoints guided my theory study. in this sense, my research process had an inductive character. perry (1998) also declares that, at interviews some deduction based on prior theory are used, although inductive theory building is more prom

47、inent. interviews usually start with induction, while analysing the records from the interviews will normally become deductive. it is because that, the researcher has some prior theoretical issues in their mind which were obtained from the earlier literature studies and which is inevitably discussed

48、 in the data analysis as the theory testing (perry 1998). thus there is interplay between empirical findings and theoretical studies. when analysing my empirical findings, i did interpret an amount of data on the basis of my pre-knowledge and previous experience, which is deductive inference. theref

49、ore, to some extent, my research was an abductive approach. 2.1.3 qualitative and quantitativea research can be a qualitative approach or a quantitative one, or both. guba & lincoln (1994) examines the differences between them. the concept of quality is vital to the nature of things. on the other ha

50、nd, quantity is elementally an amount of something. quality is related to what, how, when and where. quality research thus refers to the meanings, concepts, definitions, characteristics, metaphors, symbols, and descriptions of things. in contrast, quantitative research refers to counts and measures

51、of things. therefore, in a quantitative research, the questions usually start with how many or how much. (guba & lincoln 1994)in the literature review, the qualitative research is exploratory and the research questions are developed; while the quantitative research is explanatory and hypotheses are

52、developed. in the qualitative research, the paradigm is hermeneutic and interpretive; while the paradigm in a quantitative approach is positivistic. (guba & lincoln 1994)as in bryman (1995), the emphasis in qualitative research tends to be on individuals interpretations of their environments and of

53、their own and others behaviour. while the emphasis on interpretation is much less obvious in a quantitative research, in which researchers normally set the parameters of what is interesting and important to them, rather than to the research subject. quantitative studies tend to give little attention

54、 to the context. according to seymour (1992), in a qualitative market research, the researcher begins with the empirical findings and then draws conclusions. in this sense, it seems that the respondents stories will represent the reality and show a holistic picture of the situation. but the choices

55、of respondents are often few and sometimes only at random. therefore the risk to generalize the situation from the insufficient data will be high. a better method is to use a qualitative approach in the first interview to get the inspiration to carry out additional more comprehensive research. with

56、a combination of the qualitative and quantitative methods, the disadvantages of the latter can also be avoided. seymour (1992) thinks that, the researcher can use qualitative research as pilot studies and develop hypotheses which can be examined with the help of quantitative data. quantitative data

57、will give the answers to “how much, how often”, but not “why”, which qualitative ones can solve. i took seymours suggestion and applied a qualitative approach supplemented by quantitative data in my research. primary methods of collecting qualitative data are interviews, focus groups and case study; while in a quantitative research, the way of collecting data can be survey or experiment (bryman 1995).interviews inter