Small City, Big Business-Linyi Wood Industry

Posted on March 14, 2025

Linyi, a city in Shandong Province, is known as China’s “Panel Capital,” a title awarded by the China Forest Industry Association. The city is home to approximately 13,000 enterprises involved in the wood panel industry, including plywood, veneer panels, and engineered wood, forming a complete industrial chain. Every year, Linyi generates an industrial output of over 300 billion yuan (about 41.37 billion USD), making it one of the most important centers of wood-based manufacturing. In 2021, China accounted for 37.06% of the world’s total wood-based panel production, and Linyi alone contributed over 40% of this national output, further solidifying its position as a powerhouse in this industry.

The development of Linyi’s wood industry began in 1976 when its first fiberboard factory was established in Fei County. This marked the start of an industry that would later become the backbone of the local economy. In 1987, the city saw the founding of its first composite board factory in Tanyi Town, followed by its first plywood factory in 1993, also in Tanyi. Over the course of more than 30 years, Linyi transformed from a small town with limited wood-processing capabilities into a thriving industrial hub. Today, it has a comprehensive system that integrates timber processing, panel production, and furniture manufacturing as its core industries. In addition, supporting industries such as adhesives, woodworking machinery, product testing, biomedicine, and new materials have also developed to enhance the city’s competitiveness.

During the 1980s, as China’s economic reforms accelerated, Linyi started expanding its wood processing industry. The early development mainly focused on plywood production, a crucial material for construction and furniture. By the 1990s, improvements in transportation and logistics significantly boosted the timber trade, allowing for greater access to raw materials and broader market distribution. The local government played an essential role in supporting this development by introducing advanced production technologies, encouraging investment, and fostering an environment conducive to industrial growth. The city also expanded its product range, increasing production capacity and improving efficiency. However, as the industry flourished, challenges began to emerge. The industrial structure was somewhat narrow, with a heavy reliance on plywood. Moreover, there was limited investment in research and development, restricting innovation and technological breakthroughs. Environmental concerns also became more pressing, as rapid expansion led to deforestation, increased emissions, and waste management issues.

To address these challenges, many local enterprises began transforming their production models. What started as a traditional wood panel manufacturing base evolved into a center for high-end wood products and furniture manufacturing. Companies increasingly shifted from basic plywood production to intelligent home furnishing solutions that integrate design, customization, manufacturing, installation, and sales. The goal was to move beyond traditional manufacturing and embrace a more innovative and technology-driven approach. As a result, the variety of wood products made in Linyi expanded significantly. Today, the city produces over 200 types of products across nine major categories, including plywood, veneer panels, engineered wood, medium-density fiberboard (MDF), particleboard, and construction templates. Other key products include flooring, furniture, and custom interior materials. This diversification has enabled Linyi to strengthen its market position both domestically and internationally. The total industrial output of Linyi’s wood industry has exceeded 120 billion yuan (about 16.55 billion USD), reflecting its growing influence.

According to the Linyi Statistical Yearbook, large-scale enterprises in the city produced 30.95 million cubic meters of plywood, 370,000 cubic meters of fiberboard, 3.2 million cubic meters of particleboard, and 79,000 cubic meters of blockboard in 2021. Notably, the production of particleboard has been increasing rapidly due to its cost-effectiveness and environmental benefits compared to traditional plywood. This trend aligns with the global push toward more sustainable and high-performance wood-based materials. The continued expansion of production and adoption of new technologies suggest that Linyi’s wood industry will remain highly competitive in the coming years.

One of the factors contributing to Linyi’s success is the presence of key industrial clusters, particularly in towns such as Yitang and Tanyi. Yitang Town, located west of Linyi’s urban area, has benefited greatly from its proximity to the Lunan Logistics Center, which has provided significant advantages in raw material transportation and product distribution. The wood industry in Yitang began developing in the early 1990s, driven by the rapid growth of logistics and trade networks. Today, Yitang is home to over 4,000 wood-related enterprises and employs more than 200,000 people, including over 100,000 migrant workers. Every year, the town processes around 30 million cubic meters of wood, producing a wide range of products such as plywood, veneer panels, and engineered wood. The presence of a well-developed supply chain, including upstream and downstream industries, has allowed Yitang to become a key player in the region’s wood industry.

Tanyi Town has also emerged as an important production base for the wood sector, with a strong focus on veneer manufacturing, furniture production, and construction materials. The town’s wood industry employs around 125,000 people and has developed extensive export markets, with products sold to over 30 countries, including Japan, South Korea, and the United States. As more companies invest in research and development, Tanyi has positioned itself as a center for high-quality, innovative wood-based products. These industrial clusters have helped Linyi maintain its dominance in the sector and ensure its continued growth.

Looking ahead, Linyi’s wood industry is expected to undergo further modernization and optimization. With increasing global demand for eco-friendly and sustainable materials, local companies are investing more in green technologies, including the use of recycled materials, environmentally friendly adhesives, and energy-efficient production methods. In addition, automation and digital transformation are being integrated into manufacturing processes, further improving productivity and quality control. While the industry still faces challenges, such as stricter environmental regulations and competition from international markets, Linyi’s strong industrial foundation and adaptability position it well for the future. As companies continue to innovate and expand, Linyi is set to remain a major player in the global wood industry for years to come.