China's overseas shipments of doors and windows are expected to exceed US$1 billion in 2006. Exports from January to May have crossed US$447 million, soaring 50 percent over shipments in the same period last year. The impressive growth is likely to continue for the rest of 2006 as demand from foreign markets increases steadily and more suppliers move away from the fiercely competitive domestic market to concentrate on exports.

The steep growth in exports is driven primarily by shipments of security doors.

The following are some of the key trends we see in China's doors industry:

• Many suppliers will be raising prices through 2007 because of escalating raw material costs. Most, however, will be limiting adjustments to within 10 percent to remain competitive.

• In anticipation of increased demand, most suppliers will be expanding or upgrading their factories in the next 12 months. Others will be improving their QC systems to reduce wastage and lower defect rates.

• Many suppliers are aiming to increase exports, particularly to Eastern Europe, Asia, the Middle East and Africa.

• New door models made of environment-friendly materials or those that offer a higher level of protection will be released in coming months as part of suppliers' efforts to boost export business.

This report covers security, engineered wood and solid-wood doors, the three biggest door categories produced in China.

The Products & Prices section details the construction and composition of each door category, and the factors affecting their prices and market positioning.

Product development efforts for engineered wood and solid-wood doors are geared toward the use of more environment-friendly materials, while the enhancement of protective features is the priority for security doors. These are discussed in the R&D/Design section of the report.

The main processes to produce security, engineered wood and solid-wood doors are discussed in the Manufacturing section. The production capability and equipment of small, midsize and large suppliers of doors are compared in this section as well.

China's estimated doors supplier base of 3,400 consists primarily of companies that concentrate on only one product type. This is because the materials and equipment used to make security, engineered wood and solid-wood doors vary greatly.

However, there are some that offer two or even all three categories. Most of these companies are large and can afford to purchase the machinery needed to make all door types.

Industry Overview

Suppliers in China produce doors primarily for the domestic market, catering to strong demand from the country's construction industry.

Exports, which account for 30 percent of China's output, nevertheless are on the rise. Combined export revenue for doors and windows has grown by more than 40 percent in each of the past two years. In 2005, shipments soared 46 percent to reach nearly US$900 million. Most of this came from exports to the US and Japan.

Figures for the first five months of 2006 indicate another strong year as exports already exceed US$447 million. This is 50 percent higher than shipments in the same period last year.

Many China suppliers, particularly midsize and large companies, are stepping up exports in an effort to reduce their dependence on the domestic market. Price competition in the local market is fierce because of the large number of makers in the industry and the low level of product differentiation.

Most of those planning to start or boost export business have set their sights on the developing regions of Eastern Europe, Asia, the Middle East and Africa. The growing economy of Russia is particularly attractive. Exports to this market soared more than 100 percent in 2005 and again in the early months of 2006.

Some companies offering upscale doors with high security ratings or made of top-grade materials plan on increasing exports to the US and the EU. These suppliers see high growth potential in both markets since few makers in China are currently capable of exporting there because of stringent product and building requirements.

A handful of high-profile suppliers have established sales centers or offices in their target markets to strengthen their presence. Hubei Yonghean, for instance, has representative offices in Russia and Dubai for business development and customer service. Dongguan Free Space is looking to establish sales centers in the Middle East to promote its in-house Free Space brand.

China door suppliers are keeping a tight rein on prices despite surging production costs. In an effort to offset higher material costs, many have invested in computerized production systems to facilitate various processes and reduce defect rates. Consequently, while door production remains labor intensive for most suppliers, there are several midsize and large makers already operating technology-intensive plants with fully automated machinery.