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Research Report

Chinese trade and investment in the Mozambican timber industry: A case study from Cabo Delgado Province

Sigrid-Marianella Stensrud Ekman
Huang Wenbin
Ercilio Langa
Copyright Date: Jan. 1, 2013
Pages: 45
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Table of Contents

  1. (pp. 1-1)

    The Miombo forests stretch across several countries in southern, central and eastern Africa, including Angola, Zambia, Democratic Republic of the Congo, Mozambique, Malawi, Zimbabwe, and Tanzania. Current practices in the timber, mining and agricultural industries are raising doubts about the continued sustainability of the Miombo forests. Increased demand from emerging economies for natural resources are thought to put additional pressure on forest ecosystems (German et al. 2011). Over the past decade, Chinese demand for timber has boomed, not least because China’s domestic supply of timber dramatically decreased due to the logging ban imposed in 1998 (the Natural Forest Protection Program)....

  2. (pp. 2-5)

    China’s demand for timber products has boomed in the past decade, partly in response to its Natural Forest Protection Program, a national logging ban, which was imposed in 1998 to preserve domestic forests, and more importantly in response to China’s growing economy. Between 1990 and 2009, China’s share of global timber imports rose from 10% to over 30% (Farooki and Kaplinsky 2012, 75). Canby et al. (2008) find that despite the increase in Chinese demand for forest products, including timber from resource-rich countries in the South, Africa still only makes up a small share of China’s total imports. For hardwood...

  3. (pp. 6-6)

    The main objective of this report is to give an overview of the timber industry in Mozambique by examining the different stages of the value chain. This will allow us to identify the agents and flows of investment, production, and trade in timber in order to compare the role of Chinese companies’ trade and investments to that of domestic and other foreign companies in the Mozambican timber industry.

    Common perceptions and previous research shaped the hypotheses that were examined during the fieldwork. The main hypothesis was as follows:

    Comparing Chinese timber companies with other foreign and Mozambican companies, there is...

  4. (pp. 7-10)

    A scoping study identifying regions and industries of interest for further research was conducted in 2011 (German and Wertz-Kanounnikoff 2012). The study finds that a geographical concentration of foreign actors (and related impacts) in the forestry sector is shifting from central Mozambique toward the north (German and Wertz-Kanounnikoff 2012). The northern province of Cabo Delgado was identified as a suitable province for in-depth research on the timber industry and its effects on the forests and on national and local economies.

    The study was conducted in partnership with Universidade do Eduardo Mondlane, which facilitated the field research and made available a...

  5. (pp. 11-29)

    In order to identify the relevant agents and stages of the value chain, a functional analysis table was created (Table 3). There are eight main stages in the value chain for timber traded with China: extraction; primary trading — the selling of logs to sawmillers (traders and concession license holders) — as well as illegal export of unprocessed timber to China; primary processing at the sawmills; export to China; two stages of shipping; entry and sale on the Chinese timber market; manufacturing in China; and finally retailing in China.

    A small part of the value chain consists of timber used...

  6. (pp. 30-32)

    The Mozambican timber industry is characterized by fierce competition among and within Mozambican, Chinese and foreign companies that experience squeezed profit margins, especially under the current log-export ban. Sellers of Mozambican timber have little or no control over prices on the Chinese market where Mozambican timber competes with timber from other countries. As China is currently the only viable market due to companies’ inability to meet standards set for import to Western markets, Mozambican-based companies will continue to receive lower prices for processed timber than for logs. The small profit margins incentivize the companies to survive by increasing the quantities...