Save your supply chain for quick access to risk data in the future. You will also receive notifications about changes in the risk profile of countries in your supply chain. You will need to create a supply chain for each country of origin that you source from.
As the world’s manufacturing hub, China is the biggest importer and consumer of wood products. Over 60 percent of tropical logs on the global market are imported to China. Much tropical wood comes from species and origins which could be considered specified/ high risk for illegal harvesting or trade. A large proportion of the wood China imports is processed and then re-exported (NGFA, 2019). According to the most recent figures from NGFA, China imported $ 83.72 billion and exported $815.6 billion of wood products in 2018, including imports of 59.67 million m3 logs and 36.74 million m3 sawn timber.
It is noticeable that approximately 17.5% of total imported logs to China by volume and 45% of total imported sawn timber by volume were from Russia in 2019.
However:
• China had no regulations relating to timber legality Due Diligence in the past. <on 1st July 2020, the new forest law came into force in which the article 65 is being unofficially interpreted to require due diligence of companies, although it is yet to be seen how the amended law will be implemented. Detailed requirements for this article are expected in the coming implementing regulation of the new forest law and other judicial interpretations.
• As a result, at present time, China has only developed non-mandatory guidelines for Chinese enterprises to implement green supply chain management measures for overseas sourcing. This leaves a lot of Chinese companies in the middle of supply chains in a difficult situation, when supplying into regulated markets for timber legality. Some level of risk exists in relation to the forgery or manipulation of documents, in order to meet buyers demands, where companies struggle, or are unable to obtain information on the origin or legality of their timber sources.
• In 2015, the UK National Measurement and Regulation Office conducted tests into plywood coming from China. Results show that of the 13 samples tested, nine did not match the species of wood declared (SGFA, 2020).
• In 2016 and 2017, ninety-eight percent of Russia’s total exports of oak logs and eighty four percent of Russia’s total exports of oak sawn wood lumber were destined for China, which together represent almost exclusively the types of oak product that Russia exports. While there is a legal supply of oak exports from Russia to China, discerning legal from illegally harvested and traded oak can be challenging, especially once the wood from multiple Russian exporters is mixed in Chinese log yards. Commercially available Mongolian oak is endemic in, and available from four provinces in the Russian Far East. The species is potentially the most valuable hardwood in the region, which increases the risk of fraudulent activity. Even though Chinese-origin Mongolian oak (Quercus mongolica) is not listed CITES listed, Mongolian oak is CITES III listed by Russia. The potential risk exists that Chinese-origin oak is mixed or substituted by Russian-origin oak within a Chinese mill, either deliberately or accidentally. China has been implementing a commercial logging ban on natural forests nationwide - including those in North-eastern China - citing the need for the cessation of commercial harvesting from these forests to allow forest health and stock status regeneration. The resulting diminished supply of Chinese-origin Mongolian oak will likely have increased demand for Russian-origin Mongolian oak and may have generated incentives for some mills to substitute Russian oak for Chinese oak without proper due diligence measures and legality checks (WWF, 2018).
• In recent years, China government and forestry business have been making good efforts to combat and reduce the illegal timber flowing to China. However, China’s timber processing sector is characterised by many middle and small-sized companies. As a result, many companies have little or no-procedures in the areas of wood traceability, due diligence, or the identification of illegal timber. Additionally, supply chains are usually complex which adds to the difficulty of tracing the origin of timber and identifying potentially illegal timber sources. So, it is unsurprising that some proportion of timber-supplies into the Chinese market are of unknown or potentially illegal origin (SGFA, 2020).
• Local expert consultations indicate that a majority of Chinese companies – and particularly smaller-sized enterprises – have no traceability or segregation system in place. It is likely that timber from different sources is mixed within their facilities, as long as they have the same or similar qualities that can meet clients’ needs and product standards. This includes the mixing of non-certified material with certified, in the production of certified products.