(I NTRAFOR NEWS CENTER FOR INTERNATIONAL TRADE IN FOREST PRODUCTS AAAAA AAAAA AAAAA AAAAA Volume 13 Number 2 Autumn 1998 Developing a Marketing Strategy to Introduce and Market Lesser-Used Timber Species CINTRAFOR News is also available on the web. Or. Ivan Eas/in, Associate Director, CINTRAFOR and David \JVright, Consultant, Hartman and New Hope, Bellevue, WA As the price of traditional timber species in North America and the tropics increases and the quality declines, manufac- turers and producers Me beginning to look to species that were previously ignored. Attention toward lesser-used species (LUS) in tropical areas is also gaining attention as environmental groups boycott tropical hardwoods as a way to reduce deforestation and non-sustainable forest practices. While LUS have the potential to substitute for species in many markets, forest products traders c1nd manufacturers still appear somewhat reluctant to cKcept LUS as substitutes for traditional species. This reluctance can be attributed to concerns about reliability of supply of LUS, manufacturing characteristics of LUS, and in-service performance of LUS The challenge of promoting LUS lies in developing an effective marketing strategy to introduce LUS as new industrial materials. Developing an effective marketing strategy requires a thorough understc1nding of the interrelationships between the factors that influence end-user acceptance of new species in industrial markets. Exploratory research indicates that the decision to evaluate an LUS is related to the availability of technical information describing appropriate end-use applications, its substitut- ability for a traditional species, its processing characteris- tics, its availability and price, and promotional incentives that reduce the risk associated with trial use of the LUS. To develop a better understanding of the effectiveness of different marketing factors in promoting the acceptance of LLS, five surveys were administered in producing and consuming countries. The sample frame (and sample size) for the firms surveyed were: Ghanaian wood processors (68 fil'ms surveyed), Philippine wood processors (537 firms surveyed), timber importers in the UK and Ireland (38 firms), US tropical hardwood lumber and veneer im- porter/wholesalers (100 firms), and US lumber wholesal- ers (619 firms). The response rate obtained from each of the surveys was 91 percent (Ghana), 4.6 percent (Philip- pines), 62.9 percent (UK/Ireland), 68 percent (US import- ers), and 28 percent (US wholesalers). Results A majority of the respondents in each of the countries reported that they currently use or market LUS to some extent. Over 80 percent of the respondents in the US, 75 percent of the respondents in the Philippines, and two- thirds of the respondents in Ghana use LUS, while just over half of the respondents in the UK/Ireland reported some experience with LUS. Despite their familiarity with LUS, most respondents reported that their customers have been reluctant to try LUS. Obviously, it appears that the challenge for gaining a broader market acceptance of LUS lies in convincing manufacturers and end-users in developed countries to use LUS in place of traditional species. Survey respondents were asked to evaluate the effective- ness of different marketing factors in promoting the acceptance of LUS (Table 1). The survey data indicate that the four highest rated marketing factors were all consid- ered to be very important in promoting market acceptance of LUS. By far, the most important factor was the availability of a reliable supply of LUS The other factors, in order of perceived importance were the availability of technical data, the availability of small trial volumes, and a low initial trial price. Two marketing factors that received lower importance ratings merit additional discussion: availability of a range continued on page 2 1U7V7V.cintrafor.org Table 1. Importance ratings of various marketing factors in promoting the market acceptance of LUS. Ghanaian Philippine US UK/Ireland US Weighted Marketing Factor Manufacturer Manufacturer Importer Importer Wholesaler Mean Reliable supply 615 667 646 667 645 644 Availability of technical information 617 638 536 586 551 566 Availability of small trial volumes 524 5.30 548 590 5.53 549 Low trial price 4.38 571 518 590 540 526 Acceptance of LUS by influential firm 5.32 557 448 5.33 545 5.24 Availability of promotional materials n/a n/a 481 520 526 514 Certification of sustainc1biJity 6.30 525 439 5.52 4.41 481 Money-back guarantee 3.48 452 4.72 4.71 4.30 4.31 Response based 011 a Likert-like scale where: 1= Not important, 4=Somewhat important, 7= Very important.
Transcript
(INTRAFOR NEWSCENTER FOR INTERNATIONAL TRADE IN FOREST PRODUCTS
AAAAA
AAAAA
AAAAA
AAAAA
Volume 13
Number 2
Autumn 1998
Developing a Marketing Strategy to Introduce andMarket Lesser-Used Timber Species CINTRAFOR News is also
available on the web.Or. Ivan Eas/in, Associate Director, CINTRAFOR and David\JVright, Consultant, Hartman and New Hope, Bellevue, WA
As the price of traditional timber species in North Americaand the tropics increases and the quality declines, manufacturers and producers Me beginning to look to species thatwere previously ignored. Attention toward lesser-usedspecies (LUS) in tropical areas is also gaining attention asenvironmental groups boycott tropical hardwoods as a wayto reduce deforestation and non-sustainable forestpractices.
While LUS have the potential to substitute for tr<~ditional
species in many markets, forest products traders c1ndmanufacturers still appear somewhat reluctant to cKceptLUS as substitutes for traditional species. This reluctancecan be attributed to concerns about reliability of supply ofLUS, manufacturing characteristics of LUS, and in-serviceperformance of LUS The challenge of promoting LUS liesin developing an effective marketing strategy to introduceLUS as new industrial materials. Developing an effectivemarketing strategy requires a thorough understc1nding ofthe interrelationships between the factors that influenceend-user acceptance of new species in industrial markets.Exploratory research indicates that the decision to evaluatean LUS is related to the availability of technical informationdescribing appropriate end-use applications, its substitutability for a traditional species, its processing characteristics, its availability and price, and promotional incentivesthat reduce the risk associated with trial use of the LUS.
To develop a better understanding of the effectiveness ofdifferent marketing factors in promoting the acceptance ofLLS, five surveys were administered in producing andconsuming countries. The sample frame (and sample size)for the firms surveyed were: Ghanaian wood processors (68fil'ms surveyed), Philippine wood processors (537 firms
surveyed), timber importers in the UK and Ireland (38firms), US tropical hardwood lumber and veneer importer/wholesalers (100 firms), and US lumber wholesalers (619 firms). The response rate obtained from each ofthe surveys was 91 percent (Ghana), 4.6 percent (Philippines), 62.9 percent (UK/Ireland), 68 percent (US importers), and 28 percent (US wholesalers).
Results
A majority of the respondents in each of the countriesreported that they currently use or market LUS to someextent. Over 80 percent of the respondents in the US, 75percent of the respondents in the Philippines, and twothirds of the respondents in Ghana use LUS, while justover half of the respondents in the UK/Ireland reportedsome experience with LUS. Despite their familiarity withLUS, most respondents reported that their customers havebeen reluctant to try LUS. Obviously, it appears that thechallenge for gaining a broader market acceptance of LUSlies in convincing manufacturers and end-users in developedcountries to use LUS in place of traditional species.
Survey respondents were asked to evaluate the effectiveness of different marketing factors in promoting theacceptance of LUS (Table 1). The survey data indicate thatthe four highest rated marketing factors were all considered to be very important in promoting market acceptanceof LUS. By far, the most important factor was theavailability of a reliable supply of LUS The other factors,in order of perceived importance were the availability oftechnical data, the availability of small trial volumes, and alow initial trial price.
Two marketing factors that received lower importanceratings merit additional discussion: availability of a range
continued on page 2
1U7V7V.cintrafor.org
Table 1. Importance ratings of various marketing factors in promoting the market acceptance of LUS.
Ghanaian Philippine US UK/Ireland US WeightedMarketing Factor Manufacturer Manufacturer Importer Importer Wholesaler Mean
Reliable supply 615 667 646 667 645 644
Availability of technical information 617 638 536 586 551 566
Availability of small trial volumes 524 5.30 548 590 5.53 549
Low trial price 4.38 571 518 590 540 526
Acceptance of LUS by influential firm 5.32 557 448 5.33 545 5.24
Availability of promotional materials n/a n/a 481 520 526 514
Certification of sustainc1biJity 6.30 525 439 5.52 4.41 481
Money-back guarantee 3.48 452 4.72 4.71 4.30 4.31
Response based 011 a Likert-like scale where: 1= Not important, 4=Somewhat important, 7= Very important.
Tile Cellter for IlltematiollalTrade ill Forest Prodllclsaddresses opportunilies andproblems related to tileinlematiollal lrade of woodand fiber products.Emphasizing foresl ecollomicsalld policy impacls,internatiollaimarketilll\,tec/Illology developmellts, andvalue-added forest products,ClNTRAFOR's work resultsill avariety of pllblicatiollS,professional gatherings, andcOllsullalions with publicpolicymakers, illduslryrepresellialives, andcommullity members.
Located in the PacificNorthwest, CI TRAFOR isadministered through theCollege of Forest Resourcesat the University ofWashington under theguidance of an ExecutiveBoard representing bothlarge and small companies,agencies, and academics. Itis supported by state,federal, and private grants.The Center's interdisciplinary research is carried outby university faculty andgraduate students, internalstaff, and throughcooperative arrangementswith professional groupsand individuals.
ClNTRAFOR News Editor:Rosemarie Braden
While signals from the Asian economic criSIS are mixed,there is recent evidence that the economic downturn willdeepen rather than bottom out. The impactofa prolonged and deep recession will have a profound impacton the Pacific Northwest (PNW) wood products sector.Without a strong market recovery, the surplus of woodproducts may continue from the PNW and prices maydecline further After 1990, wood from the PNWcommanded high prices as a result of timber harvest andlog export restrictions More recently, prices havedeclined as Asi,ln buyers have locclted new lower costsuppliers. The demand for high quality wood has playeda significant role in sustaliling the demand for timber fromthe PNW, yet if the Asian market remains depressed thePNW will continue to lose market share to lower costproducers. Primary and secondary producers in the PNWappear competitive now because timber prices are low,yet this competitive edge may be temporary. Timberprices would be expected to incre,lSl' as the Asianeconomy recovers and the region's products from thePW would lose the competitive factor currently mostimportant - an inexpensive raw material supply. ThePNW has already lost market share to Canada, other USregions, and international producers because their rawmaterials were less expensive. The export statistics(featured on page 6) illustrate the impacts of Asianmarkets as well as a continuing decline in the Pl\rw'smarket share.
For those interested in keeping up to date with thechanging impacts of the Asian economic crisis,ClNTRAFOR will be co-sponsoring the 15th Annual JayGruenfeld Associates Seattle Marketing Conference onDecember 7 and 8, 1998 Members of industry andacademia will present information about the outlook forthe international market for wood products, and theimpact of social and pollticaJ change on the forestproducts industry. A complete conference schedule andregistration sheet is enclosed in this issue.
Also featured in this issue is an article about the market
"Markel Sialegy" coulillued jroll/ page I
of products manufactured from LUS and certification ofproducts manufactured from LUS derived fromsustainably, managed tropical forests. Somewhatsurprisingly, survey respondents rated the availability of abroad product line as being only moderately effective(4.51) and it received one of the lowest importance ratingsof all the marketing factors. The second factor, certificationof sustainability received a mean importance rating of 4.81.However, while respondents from the US rated this factoras being only moderately effective (4.40) in promoting theacceptance of LUS, respondents from Ghana (6.30), thePhilippines (525), and the UK/Ireland (5.52) felt that thisstrategy would be very effective in promoting market
acceptance of LUS This suggests that environmental certifIcation of wood products has becomemore accepted within the international forestproducts industry than in the US. The results ofthe LUS survey were used to develop a set ofpreliminary marketing recommendations to helpeffectively market LUS.
Also featured in this issue is an article about the marketpotential for wood frame homes and wood-based buildingmaterials in Korea. As consumer income has increasedwood frame housing has received more attention fromconsumers and potential suppliers. ClNTRAFORresearchers traveled to Korea and completed a marketassessment for the American Forest and Paper Association. A synopsis of the market assessment is included.
Another article appearing in this issue discusses the roleof lesser-used species in wood-based manufacturing.Based on surveys of timber processors from the Philippines and Ghana, manufacturers from the UK, Ireland andthe US, and lumber wholesalers from the US, the articleprovides advice for developing a marketing plan forlesser-used timber species. Another publication relating tofactors that influence product use is titled AdoplionDiffusion, and Subs/itulion of Structural Wood Producls(WP65). The paper presents the results of a multigeneration forecasting model that assesses and forecaststhe influence of successive generations of structural woodpanel products on earlier ones.
Among other newly released publications, Foresl Policy'Ready for Renaissance SP29 is a collection of essays by agroup of scholars from backgrounds in social andquantitative science who participated in a forest management conference that took place in the fall of 1996.Conference participants discussed various aspects of whatvalues are important from our forests, how these valuesshould be achieved, and how multiple or competingvalues can be measured. The essays include a mix ofscientific approaches, legal aspects, economics, andphilosophical debate relating to the field of ecosystemmanagement. CINTRAFOR has also just released thefindings of a research project titled The Role oj Mal/ujacillring Clusters in lile Pacific Norlilwesl Foresl Products Indus In;(WP66). TIle paper presents information regarding howgroups of small firms in the PNW originate and survive inlight of supply and market fluctuations
Abstracts of these and other ClNTRAFOR publicationscan be accessed through the Center's website. Thewebsite includes fact sheets about the Center's researchprojects and current forestry and trade topics,ClNTRAFOR's current activity summary, access to reportsby the Consortium for Research on Renewable rJldustrialMaterials (CORRIM), information about upcomingconferences, links to other research organizations, and thepast and current issues of the CINTRAFOR newsletter.The address of the website is: www.cintrafor.org !
PRELIMINARY MARKETINGRECOMMEN DATlONS
Determine the technical characteristics of each LUS. It iscrucial that the appropriate technical and processlOginformation be presented in an easily understandableformat and distributed to existing and potential end-users.Literature should include not only information about thephysical and mechanical properties of the wood, includingprocessing characteristics, but also procedures to helpprocessors develop kiln drying schedules and preservativetreatment.
Identify appropriate end-uses for each LUS. Technicalinformation should provide the basis for making recommendations about the appropriate end-uses for each LUS.Wh iIe the technica Icharacteristics of a species are goodindicators of appropriate end-use applications, they are notfoolproof To ensure that an LUS is appropriate for aspecific end-use application, it is important that prototypeproducts be manufactured, tested, and evaluated. Theseprototype prod ucts could also be used as demonstration
US EastHardwoods SoftwoodsRed mople E hemlockOsoge-orongeHoneylocuslHickory spp.Gum spp.
US WestHardwoodsBig leof mopleBlolk ookTonookPocifir Modrone
Forest Policy: Ready for Renaissance is availablethrough ClNTRAFOR as SpeciaL Paper 29.
substitute for traditional species that may be higher pricedor in short supply. Finally, the promotional strategy shouldidentify the appropriate outlets and forums for making thisinformation available to manufacturers and exporters.
Develop Iln effective marketing stra tegy for each mllrketsegment. Having developed the information described inthe previous steps, this information should be synthesizedinto a marketi.ng strategy that will maximize the chances ofgaining tl Le acceptance of the LUS in the marketplace. Thisincludes identifying the appropriate product mix andtargeting these products to customers who are most likelyto try an LUS This means establishing a pricing policy thatwill encourage end-users to try LUS in preference to themore established species. It means identifying distributorswho have experience selling LUS or who have demonstrated a willingness to invest the required tlme and effortin promoting these species and their products to theircustomers. It also means effectively integrating thepromotional strategy into the marketing strategy Forexample, this may include exhibiting products manufactured from LUS at international exhibitions and trade shows.
Assist locaL firms in acquirillg reLillbLe market illformation.Not only is market information important in order toidentify appropriate niche markets for each species, it isequally important to identify product/market combinations where a specific LUS may have the greatest chance ofgaining market acceptance. This is true for both thedomestic market and export markets. The process foracquiring market information should be institutionalizedso that it can be used over the long-term, but also includeboth formal and informal channels.
Provide technicaL and marketing support to tile LocllLindustry, importers, and end-users. Having Il1vested atremendous amount of resources in developing information required to effectively market LUS, managers andresearchers should be prepared to assist local processorswho are interested in incorporating LUS into their rawmaterial mix. For example, in Ghana and the Philippinesprograms could be established to provide technicalassistance in transferring new processing teclulologies toindustrial scale manufacturing operations. i
commodity and non-timber values has not broughtinterest groups to a consensus or melded scientific and
philosophical views; rather, the two interestsare still clearly divided. It can be argued thatwe are no closer to a consensus than we werein 1989 when log export bans and cuttingrestrictions were initially passed.
Several scholars of diverse baekgrOLmdsand opinions were invited to the OlympiCNatural Resource Center in Forks,Washington, in the fall of 1996, to debatethese issues and discuss various aspectsof forest policy resulting in a collectionof essays titled Forest PoLicy: Ready for
Renaissance. The conference focused on three questionscentral to forest management. First, "what values do wewant from our forests?" Second, "what are the beststrategies to produce these values?" Third, how aremultiple or competing values measured?" The essaysinclude a mix of scientific approaches, legal aspects,economics, and philosoph.ical debate that in sumrepresent a significant contribution to the debate ofecosystem management. i
Access to information has never been easier. Television,newspapers, and the Internet put everything fromscientific reports to editorials literally right atour fingertips, With all of this information,fully informed decision making should beeasy. According to several forestresource scientists, economists, andpolicy analysts, the decisions aboutforest management have never beenmore confusing. Inundated withinformation, individuals form theiropinions about forest managementfrom a few focusing events, personalexperiences, or groups they associatewith. The issue of forest management has become oneof the most hotly debated issues of our time, partiClIlarly in the Pacific Northwest. Despite the fact thatmore information than ever before is available about theecological and social impacts of harvesting or preservation, it appears that the issue of forest management hasbeen simplified into "forests versus jobs".
Ecosystem management has been proposed as aprogressive alternative to commodity-based management with the ultimate goal to provide a balancebetween sustainable timber-commodity and non-timbervalues, yet it has been interpreted to include a widerange of alternatives. This attempt to balance tirnber-
products at i.nternational and domestic trade shows andindustry exhibitions.
Identify established species for which each LUS can besubstituted. Technical information should be used toidentify traditional species for which an LUS can be usedas a substitute. TIlis information should provide the basisfor encouraging end-users to try an LUS as a substitute forhigher priced traditional species Emphasis should befocused on the fact that the LUS is tech.nically similar to thetraditional species but is available at a lower' price.
DeveLop a reliabLe resource and product suppLy. Nothing ismore frustrating to an end-user than investing a substantialamount of time, energy, and capital in evaluating an LUSonly to find that the species is not readily available It iscritical for the supplier to ensure that a reliable source ofsupply is available before implementing a marketingprogram. Developing a demand for an LUS prior tosecuring a source of supply can undermine the initialefforts invested in developing a marketing strategy.
Identify and target appropriate niche markets, iI/eludingdomestic and regionaL markets. Each LUS possesses aunique set of wood properties, which to a large extentdefine the types of products that can be manufactured. Inaddition, within the wood processing industry is a segmentof manufacturers who are innovative and therefore morewilling to try LUS. In order to maximize the chances forsuccessfully introducing LUS into the marketplace, it isimportant that each LUS be promoted, al least in.itially, tothose manufacturers who would be most likely to try anew species
DeveLop effective promotionaL materials. While tecJulicalinformation should be a component of the promotionalmaterial, the basic function of the promotional materialshould be to encourage processors to try the LUS.Promotional material should include general informationon each LUS including the volume of the availableresource, basic wood properties, a summary of thetechnical information, and a listing of the appropriate enduse applications. Where appropriate, the promotionalmaterial should emphasize the ability of the LUS to
The Korean Market for Wood Frame HousingRosel1larie Bmden, CINTRAFOR nesearch Analyst alld Bob Tichy, PriJlcipallnvesligalor, Washing Ion Stale University
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In recent years, the South Korean (Korea) market for wood frame haL/sing andbuilding materials has gained increased attention from us manufacturers andexporters. The Korean economy has demonstrated strong growth since the end ofthe Korean War and is now the eleventh leading economy in the world. Prior tothe recent Asian economic crisis, more families were able to purchase single-familyhomes because consumer incomes were rising. Within this sector, wood framehomes are becoming more prevalent. The Korean government has almost reachedits goal of providing a 100 percent housing supply. At tile same time, the i\;finistry of Construction and Transportation (MOCn is redirecting its previoLismission to focus more attention on building and promoting higher quality housmgand more aesthetically pleasing living environments. As such, attention to woodframe housing as an alternative to high-rise concrete construction is increasing.
Domestic Resources
With a land size slightly larger than the State of Indiana(38,031mi2), Korea is populated by almost 46 millionpeople The country is primarily mOLUltainous, withapproximately 80 percent of the country's populationresiding in lowland urban areas By 1998, Korea'spopulation density reached 1,185 people per square milein urban centers.
Limited domestic resources make Korea heavily dependent on imported wood products, importing almost 88percent of the wood it consumes In 1996, Korea imported6.8 million m' of softwood logs, 1.4 million m.1 of hardwood logs, and 366,000 m) of softwood lumber Whilealmost two-thirds of the country is covered by forestland,forestland totals only 1,594,324 acres, or 0.37 acres percapita, one-quarter of the world's average. The majorityof the timber supply is low quality due to earlier overharvesting and forests comprised of slow growingimmature timber, with three-fourths of domestic timberstands made up of coniferous trees between 11-30 yearsold. A lack of intensive forest management, includingpruning and thinning has most likely constrained thequality of reforestation. Small diameter logs (below 30cm) represent 97 percent of total log production.
Because the timber resource quality is low and themajority of trees are small diameter, domestic roundwoodis primarily processed into pitprops, lumber andplywood, and wood chips for pulping. Domestic timberproduction in Korea has been historically low, with justunder 1,200,000m3 of rowldwood produced in 1996.Current domestic production of lumber and otherproducts totals almost 700,000m3 A government imposedcutting restriction also limits domestic harvest to 11percent of the annual timber volume i.ncrease. TIle timberthat is harvested for processing equals only 20-30 percentof Korea's total timber inventory, much of which is lowquality and inferior and pest damaged tree cutting equalsmore than one-half of total harvested timber.
Although logs, lumber, and chips are leading imports, thegeneral trend in import expenditures indicates a decline inprimary products such as logs and chips, and an increasein secondary products such as windows, doors, andprefabricated homes as well as lumber. Revenue from
logs, lumber, veneer, and plywood remainsmuch greater than secondary manufactured
/\ /\ /\ /\ /\ products, however these materials are exhibitingstrong growth. According to Foreign Agriculture Service statistics, logs, particleboard, andfiberboard expenditures have declined since1992, whereas expenditures on lumber, veneer,
plywood, wooden doors and windows, and wood framehomes have increased. Wood frame homes display themost significant growth of all the products tracked, with a1023 percent increase, and expenditures totilling $29.2million in 1997 (Table 1). in terms of revenue growth,veneer imports were followed closely by wooden door ilndwindows, which increased 216 percent and totaled $101million.
US Department of Commerce statistics also show thatKorea is becoming an increasingly important market for theUS The US exported $43.8 million in secondJry processedproducts in 1997, ,1178 percent increase since 1989.According to these statistics, US secondary processed woodproducts and wood-based building materials continued toincrease during the eight-year period. Total primaryproducts, however, have been more volatile during thesame time period and declined from $344.7 million in ]989to $256 million in 1997.
Wood Frame Homes and BuildingMaterials
Concrete formwork is the leading use of wood in Korea.However, the end-use market with the greatest potential forgrowth appears to be the wood-frame residential construction industry. While this sector is small compared to otherwood imports, it has increased significantly from its firstintroduction to the Korean market. The number of westernstyle wooden housing starts increased from 97 units in 1994to approximately 800 units in 1996 and an estimated 1,100homes in 1997 Revenues from homes exported from theUS increased from $2.2 million in 1992 to over $17 millionby 1997 in addition, as indicated in Table 2, floor area forwooden buildings increased 79 percent from] OOm' to179m2 between 1989 and 1997. Single-family homes andtownhomes, also referred to as link or row houses, are alsogaining new popularity These two types of housingrepresented 22 percent of all housing units built in 1996, a 4percent increase since 1992.
Imports
TIle leading suppliers of wooden homes and buildingmaterials to Korea are the US, followed by Canada andNorthern European countries. The US maintains 59 percentof the Korean imported wooden home market, althoughCanada is a strong competitor Canadian governmentsponsored trade delegations, industry sponsored modelhome projects, and trade show participation have had apositive impact on end-user consumption. Revenue homCanadian wood homes increased 649 percent since 1992,totaling $8.6 million in 1997 and representing 28 percent ofthe imported wood home market. Northern European-stylehomes have also become increasingly popular and are mostoften recreation homes or cabi.ns Prefabricated homesfrom Finland, Sweden, and Russia, which were nonexistentin the Korean market in 1992, totaled $1.7 million in 1997
While North America dominates the home industry, thebuilding components used in a wide variety of home andapartment construction projects are more price-sensitiveand are dominated by tropical wood suppliers. Forexample, in 1997 the Korean market for wooden doors andwindows reached $100 million with the US supplying $18.8million or almost 19 percent of these imports. Doors andwindows from Indonesia however, represented 62 percentof the wooden door and window market, followed byMalaysia, which supplied 17 percent of the market. "nlis
Table 2. Building permit floor area by construction material (l,OOOm 2).
and which US suppliers exist. As such, many Koreanhousing companies use multiple suppliers from aroundthe world. In addition, homebuilders, architects, andhomeowners lack understanding of the proper use,storage, and maintenance of wood products. It isimportant that US product literature be translated intoKorean so that Korean builders will understand propermaterial handling, storage, and product use. Whileeconomic recovery is not predicted to begin for at least twoyears, US producers should use this time to increaseawareness of US products in Korea. At the same time,industry associations should be working with the KoreanMOCT to revise their building codes to allow morevarieties of wood frame construction and technologytransfer as a means of insuring that structurally sOLmdhomes are constructed. !
Findings from this study indicate that the consumerperception of wood frame homes is generally positive.Korean people view wood homes and wood in general ashealthy and aesthetically pleasing However, the high costof building materials and restrictive financing limits singlefamily home ownership predommately to the affluent.This is particularly true following the recent Asianfinancial crisis, which has caused the price of importedgoods to double.
One of the most difficult barriers to expanding the marketfor wood frame construction is the Korean building codefor wood frame construction. This code restricts theheight, total floor area, and type of construction materialused. The code limits wood frame construction to amaximum ceiling height of 9m (295ft) and a roof ridgeheight of 13m (42.6ft) It also limits wood frame construction to less than 3,000m2 total area (approximately30,000fe) EqLlaJly as restricting as the code that does exist,are the guidelines that do not exist. TIw absence of acomplete building code allows builders who do not have acomplete understanding of wood frame construction tobuild substandard or structurally unsound homes, whichcan have a negative impact on the entire industry.
Aside from the financial barriers to wood frame construction following the Asian economic crisis, there are severalnon-economic factors that can improve US presence in theKorean wood-frame housing market. While the woodframe construction industry in Korea must overCOme thesame obstacles that it did in Japan, namely the absence of acomplete building code and high cost, there are severalthings that US suppliers can do to improve their marketpresence and success in this market. First, technologytransfer plays a Significant role in the success of woodframe housing in Korea. Since building inspectors do notexist, it is the responsibility of the construction company toprovide safe, high-quality housing. Companies who reportthe highest worker productivity, construction quality, andconsumer satisfaction, also report that they either useNorth American framers or use Korean carpenters whohave been trained i.n North America. Second, advertisingand relationship building are vital in order to educateKorean companies and consumers about US products.Korean consumers are heavily influenced by print andtelevision advertising and home shows, yet there seems tohe a general lack of knowledge among Korean constructionfirms regarding what products and services are available
market is based on price, and the inability of US manufacturers to compete on the basis of price is reflected by itslow market share growth for US doors and wi.ndowsrelative to the prefabricated home market. US marketshare of the Korean wooden window and door market hasshown a 29 percent loss since 1992. Individuals who live inapartments are often unable to afford these higher pricedcomponents. However, si.ngle-family homeowners whoare often Jess restricted by price, frequently select productssolely on quality and appearance. These homeowners aremore likely to purchase interior products made by thesame country that produced their home. For example,Scandinavian homes are often used as cabins or recreational homes. As such, the homeowner often usesScandinavian interior finish work, windows, and doors asa way to maintain a consistent appearance. Wood homeconsumers are influenced primarily by style, appearance,and quality. They are likely to seek interior and exteriordesigns that suit their taste as opposed to the lowest priceavailable. Therefore, while no market statistics existregarding the proportion of US products used in woodenhomes, it is estimated that the US share of the interior andbuilding components used in prefabricated homes issimilar to the US share the wooden horne market in Korea
Leading Pacific Northwest SecondaryExports to Canada, 1997
(US $ millions)
Value and Volume of Softwood Log Exports fromPacific Northwest, 1989-1997
University of WashingtonCollege or Forest ResourcesBox 352100Seattle, WA 98195-2100 USA
Address Correction Requested
!New Publications:
Working Papers
WP66 The Role ofMam1acfuring Clusters in the Pacific Northwest Forest Products IndustryRosemarie Braden, Hal Fossum, Ivan Eastin, John Dirks, and Eini LoweJL 1998 42 pages. $7.50
WP65 Adoption, Diffusion, and Substitution of Structural Wood PanelsSteven Shook, William R. Turner, and Ivan Eastin. 1998 32 pages. $7.50
WP64 Marketing Strategy Effects on Contractor PerceptionsSteven Shook and Ivan Eastin. 1998. 52 pages $7.50
Special Papers and Reprints
SP29 Forest Policy Ready for Renaissance.John Calhoun (editor) 1998. $20.00
RE47 Landscape Management through Integration of Existing Tools and Llllrrging Technologies.James B. McCarter, Jeremy S. Wilson, Patrick J. Baker, Jeffrey L. Moffet, and Chadwick D Oliver 1998. $3.00
NonprofitOrganization
US Postage PaidPermit No. 62Seattle, WA
RE46 Environmental-Performance Research Priorities: Wood Products. Final Report on the Research Plan to Develop Environmental-PerformanceMeasures for Renewable Building Materials with Alternatives for Improved Performance. CORR1M. 1998. $15.00
RE46a Exewtive Summary of the Enviro/1/nental-Performance Research Priorities: Wood ProductsCORRIM. 1998 $3.00
