40.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

* These investment figures are indicative

(1) Private sector development: Continued investments from IFC in successful and scalable companies like Fenglin contribute to the development and consolidation of fragmented forestry and wood panel industries in China, particularly in Guangxi Province, a frontier region where the local economy depends heavily on the industry. Fenglin would continue adopting good practices and high standards for its business practices, such as implementing a laser measuring system for scrap woods delivered to its gate, which allows a more objective and prompt way to compensate its suppliers; introducing higher value-added and innovative products to the market using its in-house R&D work; and adopting international standards and systems in its operations, thereby setting a demonstration effect for the industry as a whole. (2) Farmers' reach and local economy: The Project would procure at least around 363,000 tons of scrap wood per year directly and indirectly from local forestry farmers in Guangxi Province. This helps to stimulate economic activity among local forestry households, create additional income for them and directly improve their livelihoods. In addition, the Project will procure about 90% more chemicals, such as formaldehyde and urea from local SME suppliers, providing them with more business opportunities. (3) Environmental impact: The Project would help to raise the industry environmental standards in China through the use of advanced technologies for particle board production including a new air emission system. The new plant would have capability to produce boards with formaldehyde free adhesive on a large scale and continuous basis when the market demands such products, which is currently rare in the industry in China. The Project would also help productively utilize scrap wood that would otherwise be burnt for cooking, thus reducing greenhouse gas emissions. The Project is a sustainable solution to resolving the issues of diminishing wood supply and scrap wood waste, and creates a positive impact on the local forestry industry. The Company's commitment to the highest national and international environmental standards sets an example for the industry.

(1) Long-term partnership: IFC has been a consistent supporter of Fenglin through two rounds of investments in the past 12 years. IFC will continue to support a competitive and standard-setting client investing in a frontier region in China. (2) Long-term financing: IFC would provide long-term funding in USD that is not readily available to Fenglin and matches with the needs of the Project to improve the Company's production facilities. (3) Global knowledge: IFC can provide assistance to the Company in exploring overseas and/or South-South expansion opportunities in the next stage of the Company's growth by introducing other clients in such markets.

This proposed investment is anticipated to have limited environmental and social impacts which are expected to be site-specific. These impacts can be avoided or mitigated by adhering to recognized Performance Standards (PS), procedures, guidelines and design criteria as described in the Environment and Social Review Summary. Thus, this is a Category B project in accordance with International Finance Corporation (IFC) Policy on Environmental and Social Sustainability (January 1st, 2012). The project is designed to avoid, minimize and manage Environment and Social risks and impacts in compliance with Peoples Republic of China legal and regulatory requirements, IFC’s PSs and applicable World Bank Group General and Sector specific (Forest Harvesting Operations, Board and Particle Based Products) Environmental, Health and Safety Guidelines (2007).

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.