Timber to Taiwan

(Last updated: 21 Nov 2011)

Trends and opportunities

The market

Taiwan is a small island country covered by almost 60 per cent forest. Despite its large reserves of forest, due to over harvesting, environmental regulations, low import prices and rising labour costs, the majority of wood materials used in Taiwan are now imported from overseas.

Taiwan imported the following wood products in 2010:

(C = coniferous, NC = non-coniferous, NC.T. = non-coniferous tropical)

(Source: International Tropical Timber Organization, Annual Review Statistics Database)

Wood materials import into Taiwan

The most common wood materials imported into Taiwan can be classified into four types: log, lumber, veneer and plywood.

Based on an estimate by the Taiwan Lumber Association over half the imports of second-grade spruce, pine, and fir (SPF) lumber are used in wooden pallets.

Low grade pine lumber is still used to make wooden pallets in the market due to its low cost, despite the fact that Taiwan’s humid climate and termite problems make wood a less than ideal material. Damaged wooden pallets are not generally repaired due to Taiwan’s relatively high cost of labour. Wooden pallet scrap is either recycled as support/repair material or disposed of.

Taiwan’s Top 5 imported wood items in 2010

(Source: Taiwan Directorate General of Customs)

For other imported wood items, please search the online trade statistics provided by the Taiwan Directorate General of Customs.

Australia is the sixth largest wood import country for Taiwan in 2010.

The leading wood import countries for Taiwan in 2010 (Unit : Amount - US$)

(Source: Ministry of Economic Affairs, Taiwan)

Sandalwood

In 2010, Australia was the second largest sandalwood import country for Taiwan. Taiwan is a major sandalwood wholesale market in Asia and has a large market of sandalwood joss sticks. A lot of sculptors use sandalwood to make art pieces for temples or to make Chinese furniture and landscapes. Australia was ranked the third largest supplier of extracted sandalwood flour and oil for Taiwanese manufacturers to make joss sticks or sandalwood related products. 

(Source: Ministry of Economic Affairs, Taiwan)

Global timber shortages

Timber shortage is fast becoming a global problem, and one of the solutions is for factories to increase their timber utilisation rate (ie. the amount of timber and timber by-products used without wastage). The higher the utilisation rate the lower the production costs. The wood utilisation rate in most factories in South East Asia and Mainland China is approximately 40–50 per cent, whereas in Taiwan it is more than 60 per cent, some manufacturers amazingly can reach up to 90 per cent. Under the trend of globalisation, Taiwan obviously has comparative advantages in the field of wood processing in the world market.

Being a small island, timber shortage is one of the major problems facing Taiwan’s wood processing industry. Although Taiwan imports wood materials from other countries, it is difficult to maintain a consistent and stable supply because of regional political issues resulting in trade obstacles.

Opportunities

Although darker tropical hardwoods have always been more popular in Taiwan; availability, rising prices, and recent fashion has seen a trend towards lighter, brighter wood colours such as Tas Oak or Vic Ash.

Major opportunities in the Taiwan timber industry include:

• Low grade radiata pine timber
• Hardwood and softwood logs or timber
• Camphor timber or logs
• Douglas fir
• Sandalwood timber, logs, powder

Competitive environment

In Taiwan, the price tag is frequently the driver in purchasing decisions. Therefore, Australia’s competitiveness in the market has recently decreased because of the strength of the Australian dollar.

Taiwan importers tend to be familiar with the range of wood products available and major supplier countries. End-users typically rely upon importers for such information. This makes the importer the principal ‘gatekeeper’, determining what type of wood to promote and the suppliers to purchase from.

Competition to supply traditional market segments (such as logs, plywood, veneer, furniture, decorative, etc.) focuses heavily on relationship-building and price negotiations due to the strength of Taiwan importers and Taiwan’s open trade policies. 

In new product areas, such as wood frame housing and wide-span structural (glulam) wood construction, education and promotional efforts not only present opportunities to develop significant new export revenue but are absolutely essential to address local market constraints including architect/builder unfamiliarity with wood construction principles and consumer concerns regarding the longevity and safety of wood frame vs. concrete structures.

Tariffs, regulations and customs

Eco-labelling

While there exists future potential for selling premium-valued wood products based on eco-labelling/environmental concepts, these will require significant up-front investment in brand development.

The government does not have an active certification or labelling program to recognise wood harvested from well-managed sources. To date, the international home products chain B&Q (UK) is the only supplier of wood products (ie. lumber, outdoor furniture, parquet floor tiles, etc) into the market reportedly requiring suppliers to certify that wood used is sourced from well-managed forests (as certified by the Forest Stewardship Council – FSC). Their success with sales to date is believed attributable as much to their unique position in the marketplace (the only DIY superstore) as to consumer preference for the FSC label.

Quarantine requirements for wood packaging material (WPM) used in imported commodity

Effective from 1 January 2009, all shipments with WPM entering Taiwan must comply with the ISPM #15 standards. Shipments are subject to inspection by the Taiwan Quarantine Bureau. In cases where WPM are not properly treated and marked, port authorities are permitted to re-export, have it treated or destroyed at the importer’s expense.

It is the shipper’s responsibility to comply with these requirements and insuring that all wood packaging utilised for exports to Taiwan (as with other countries that are meeting compliance with ISPM #15), understanding that any expense for failure to do so will be passed along as required.

Additional information regarding this regulation/requirements can be reviewed at www.baphiq.gov.tw/public/Data/08209412671.pdf, or please contact Austrade.

Tariff rates on wood products

Tariffs on wood products have continued to drop since Taiwan’s accession into the World Trade Organization in 2001. Additionally, Taiwan is continuing to phase out additional taxes and fees on imports. However, importers are still required to pay four small fees:

• A value added business tax of five per cent.
• Quarantine and inspection fees equal to 0.1 per cent of the cost, insurance and freight price of the goods.
• Small customs service fees.
• A small harbour fee (the harbour fee is around US$16.50 for regular 40' containers of lumber, but varies by product content and degree of manufacturing of the imported products).

For the most up-to-date tariffs visit http://web.customs.gov.tw/rate/rate/esearch.asp.

Marketing your products and services

Market entry

In the timber industry, most Australian suppliers (including manufacturers, trading companies, brokers) tend to sell directly to buyers including factories or processors.

In Taiwan, trading companies act as buyers and normally provide services to Taiwanese furniture manufacturers in Taiwan, China or South East Asia. Trading companies also play a product sourcing role in the industry. Only a few of Australia’s largest pine timber sawmills assign agents in Taiwan because of the regular and high demands.

Trading companies tend to source different types of timber products for their customers, but the demand and quantity differs greatly depending on what products are popular in the market at any one time.

Other considerations when entering the Taiwan market include:

• Meeting the market price of the respective timber and the buyer’s specifications and requirements.
• Obtaining phytosanitary certificates from AQIS.
• Providing the correct scientific (botanic) name of the wood to meet import requirements.
• Ensuring the wood you export is sourced from legal forest and you can provide certification to prove it.
• Understanding and meeting Taiwan quarantine standards.
• Preparing literature in complex not simplified Chinese characters (if possible).
• Participating with your agent in key trade events such as the Taipei International Building Materials and Furniture Exhibition.
• Carefully selecting your agent or distributor and checking on their financial status and reputation.
• Being sensitive and responsive to trends in colour and material.
• Ensuring that all samples provided are of high quality and are properly packed and presented.
• Directing people to an up-to-date company website or providing high quality brochures.
• Allowing flexibility to negotiate (even though this sector is price sensitive).

Links and industry contacts

Government, business and trade resources for Taiwan

Directorate General of Customs – http://web.customs.gov.tw/rate/rate/esearch.asp
Taiwan External Trade Development Council – www.taiwantrade.com.tw
Taipei County Wood Association – www.home-diy.tw