The Segezha Group, Russia’s largest forestry and wood‑products company, will now formally establish a manufacturing and logistics cluster in Shanghai’s Lingang Special Economic Zone, a move that marks one of the most significant expansions by the Russian timber giant since the West hit the industry with sanctions in the wake of the Ukraine war.
In a statement to Russian media, Segezha said it plans to build converting facilities for consumer packaging, along with a manufacturing and distribution centre for birch plywood and planed products. The cluster, to be located inside the fast‑growing Lingang zone, is intended to strengthen the company’s foothold in China and the wider Asia‑Pacific region.
Wood Central understands that the project would help reduce logistics costs, streamline international payments and position Segezha closer to its largest remaining export market. As it stands, China has become a critical outlet for Russian timber products since 2022, absorbing volumes once destined for Europe and North America.
“Our holding manages colossal forest resources and is prepared to mass‑export high added‑value products,” Segezha president Kirill Arsentyev said in the statement. “China, meanwhile, has the largest sales market, possibilities to quickly adapt our products to the needs of end customers and modern logistics. Lingang for us is a strategic point of growth in the Asia‑Pacific region.”
Segezha has long relied on China for a substantial share of its export revenue. In the first nine months of 2025, the company earned 34 per cent of its paper revenue, 77 per cent of its lumber revenue and 38 per cent of its plywood revenue from the Chinese market. By contrast, 92 per cent of its paper packaging sales remained inside Russia, with the rest sold in neighbouring CIS countries.
The new cluster comes as Russia’s forest‑based industries continue to reorient toward Asia following the collapse of traditional Western markets. Analysts say the shift has forced companies to rethink supply chains, invest in new processing capacity and compete more aggressively in China, where domestic producers already dominate.
Russia’s timber braces for 30% slump as sanctions bite hard
Last month, Wood Central reported that Russian timber is bracing for a sharp downturn as sanctions tighten, interest rates remain elevated, and the ruble stays strong.
Speaking before a Federation Council committee, Mikhail Yurin, Putin’s Deputy Industry and Trade Minister, said the industry has entered a “downward trend,” with the worst‑case scenario pointing to a 20 to 30 per cent drop in output in 2026 before adding that production, already falling this year, could continue to decline into 2027 if geopolitical conditions deteriorate further, according to comments reported in the Moscow Times. Russian timber exports have dropped by more than 20 per cent since the war with Ukraine, dropping from $12.5 billion in 2021 to just $9.8 billion last year, whilst logging volumes are expected to hit a four‑year low of 182 million cubic meters.
- Segezha did not disclose the cost of the Lingang project or the expected production capacity of the new facilities; however, it did reveal that construction of the new hub is slated to begin in 2026.
