Chinese Investment in Canadian Forestry is Soaring
Recent trends indicate that there have been significant growths in Canadian forestry from Chinese investors.
After several miserable years of mill closures and redundancies totalling up to 1,000in a single month, Canada is now looking forward to a brighter future for its forestry industry.
The major surge in the desire for Canadian timber from China has marked a turn-around for Canada, whose forestry industry suffered greatly as a result of the U.S. property slump and the impact of the global recession.
Anthony Johnson, an analyst partner as Alternative Asset Analysis (AAA), said that there are several factors that prompted major investments from China in the Canadian forestry industry.
China’s traditionally sourced its timber from Russia, but the decision by Vladimir Putin in 2008, to apply 25 per cent log wood tax on exports resulted in inevitable changes. Although this was intended to increase investment in Russia’s domestic forestry industry, instead it drove China’s business buyers elsewhere.
Johnson claims that it was Canada’s timely move to launch major trade delegation in late 2008 that won Canada’s its new business.
Not only did this decision made such an impact on Canadian forestry, but China had the misfortune of suffering from a major earthquake in the Sichuan Province in May 2008. This saw many of the area’s buildings demolished to the ground, and they obviously required rebuilding.
Mike Richmond, an analyst from Canada’s Salman Partners Inc, explained, “The wooden homes held up a lot better (than structures built with other materials) during the earthquake, so I think Chinese officials took a look at this and gained a more favourable view of lumber.”
As a direct result of this new found respect for timber, the building codes in Shanghai were altered and the demand for timber soared.
Anthony Johnson with many years experience as an investor in the alternative asset classes agrees that Canadian forestry is on the edge of a resurgence as investments in timber is steadily increasing from all over the Asian continent, prompted by initial interest from China.
“These are exciting times for forestry investors,” said Johnson. “Canada has seen exports to China double in the past year, while its reliance on the U.S. market has reduced considerably,”
Another forestry market worth talking about according to Johnson, is Brazil, which has seen plantation managers such as Greenwood Management, reap the benefits of legislation primarily intended to protect native forests.