To meet the growing demand in China, increasing domestic supply alone is not enough. The size of China's wood deficit requires foreign supply. In 2006, more than 92% of China's softwood, otherwise known as industrial wood, came from Russia. Altogether, Russia supplies 69% of China's total import of roundwood. In 2007, Cathay Forest extended its reach of operations into Russia and became a multi-national forestry company.
In Khabarovsk, the Far East region, our Russian joint venture subsidiary owns natural forests that consist predominately of larch, with spruce and pine as minority species. We prudently employ selective cutting methods to allow for sustainable forestry through natural regeneration. Our practices comply with all of Khabarovsk's environmental regulations and guidelines.
In addition to maintaining our reputation for fine forestry practices, we continue to strengthen our relations with regulatory authorities in both China and Russia. This support is crucial to the continuous expansion of Cathay Forest's Russian portfolio, which is a vital component to our growth strategy.
