EU's new regulations this month, China's furniture export price advantage weakened

The "sports force" furniture industry that just emerged last year has come to the test. Yesterday, news came from the Municipal Foreign Trade and Economic Cooperation Commission that the EU has recently issued a new certification requirement that all wood products exported to the EU must have FSC certification (forest certification). In the interview, the reporter of the Business Daily learned that due to this influence, the furniture export enterprises in our city are facing a substantial increase in production costs, narrowing profit margins and weakening the price advantage.

Dynamic: EU new regulations implemented this month

In this EU-issued directive, the mandatory regulations have been established to further curb deforestation, encourage legal timber trade, promote sustainable forest management, regulate the participation of EU markets in timber trading companies, and so on.

It is mentioned in the Directive that wood-based wood products require 100% legality or FSC certification. Entering the timber and wood products of the European Union, all manufacturers on the production, processing and sales chain must submit basic information on the legality of the timber source, such as the source of the wood, the country and the forest, the volume and weight of the wood, the name and address of the supplier of the log, etc. The scope is mainly applicable to wood and wood products produced in the EU and imported from countries outside the EU.

"The order is actually the deepening and refinement of the EU Wood and Wood Products Regulations officially adopted by the European Parliament and the Council of the European Union in 2010. For export enterprises, it is also a new "green barrier." Li Chengda, secretary-general of the Chongqing Furniture Industry Association, said in an interview with the Commercial Daily that from a global perspective, only about 10% of FSC-certified timber is available, and in the domestic market, less than 1% of the certified wood is on the market. “Another problem is that the metrics proposed by the EU do not mutually recognize each other in other countries, which makes it difficult for companies to obtain legitimacy.”

It is understood that Chongqing furniture enterprises have always been dominated by the domestic domestic market. In recent years, some enterprises have begun to accelerate “going out” and put their eyes on overseas markets, which was particularly evident in the past year. The Commercial Daily reporter learned from the Chongqing Customs yesterday that there are currently about 10 enterprises involved in exporting in the Chongqing furniture industry, but the growth rate is rapid. According to statistics, in 2012, Chongqing's furniture exports increased sharply. The annual export of furniture and parts reached 2.18 billion US dollars, a year-on-year increase of 7.5 times, mainly exported to Europe, America, Southeast Asia and other countries and regions.

Impact: Corporate price advantage weakens

What is the impact of the EU's new directive on the city's enterprises? In the interview, many insiders told the Business Daily reporter that this new "environmental protection directive" will directly lead to a substantial increase in production costs, narrower profit margins, and weaker price advantages, which may lead some companies to leave the EU market.

Tan Ganrong, the person in charge of Takada Industry and Trade Co., Ltd., calculated the account for the reporter of the Commercial Daily: "For the wood with certification, the company will usually open two different prices. Usually, the price difference of environmentally friendly materials is about 5%. If it is solid wood. For materials, the spread is generally above 10%.” He said that according to the new certification requirements, the company will bear the cost increase of 5%~10%. "This part of the increased cost of the enterprise will be internally digested. If it can't be digested, it can only be passed on to the end market, which in turn weakens the price advantage of the company."

Tang Tao, the head of another furniture exporting company, believes that after the implementation of the new EU regulations, the raw materials that pass the FSC forest supply certification are relatively small, which will lead to increased procurement costs and additional certification costs. “This is a significant price advantage for us.” He said that the company is currently looking for partners in Southeast Asia to cultivate new growth points in the market.

"The implementation of the new directive means that the threshold for export of wood products such as furniture and flooring will be greatly increased. This is not optimistic for companies interested in exploring export channels." Li Chengda believes that wooden home export enterprises are especially Small-floor exporters will bear the brunt, and may even force related companies to withdraw from the European market.

Response: open up the market and reduce risks

The relevant person in charge of the Municipal Foreign Economic and Trade Commission said that the implementation of the new regulations and the tendency to set trade barriers is greater. The source said that for export companies interested in deepening the EU market, suppliers of raw materials should be flexibly adjusted as soon as possible, and raw materials that meet the certification requirements should be re-selected to meet the new standards.

The person also suggested that due to the financial crisis, the recovery of international trade is weak, protectionism has re-emerged, and the risks faced by exporting enterprises are more complicated than in the past. If they are to be invincible in the international market competition, they should be the most In addition to striving to maintain key export markets and expand traditional markets, it is necessary to vigorously expand emerging or potential markets, optimize the structure of export markets, and increase the added value of products.