Vanishing in the wild, incense trees flourish again in Hong Kong as Chinese seek heady scent

HONG KONG – On land deep in Hong Kong's lush green northern suburbs near the border with mainland China, farmer Koon-wing Chan is working to keep a legendary scent alive in the city known as the Fragrant Harbor.

Chan runs Hong Kong's last commercial plantation of agarwood trees, prized throughout the centuries for aromatic resin used to make incense, perfume and medicine.

He has no hope his sons will carry on the labor intensive business and also faces an increasing threat from Chinese poachers. But the tree's rich history that intersects with the lives of his forefathers gives Chan a sense of mission. And the trade in the wood and oil is seriously lucrative.

"It's very special. There's no one else that plants these trees," said Chan, 55, who returned to Hong Kong in 2009 ago to revive the plantation after nearly a decade spent working in Northern Ireland.

"In all of Hong Kong there's only one place. This place," he said proudly as he stood among hundreds of seedlings waiting to be planted, wearing a T-shirt that said "Money does grow on trees."

Agarwood, also known as aquilaria sinensis, was once grown in plantations across its native southern China, including parts of northern Hong Kong, as far back as the 960-1279 Song Dynasty to provide the raw material for joss sticks shipped as far afield as the Arabian Peninsula.

(Frankincense, one of the gifts carried by the three wise men from the East to baby Jesus in the New Testament's Nativity story, comes from a different tree native to the Horn of Africa.)

The trade died out as Hong Kong's economy modernized and the city became a center for finance, not fragrance.

However, China's economic boom has brought new life to the market, with demand from newly wealthy mainland Chinese especially strong for bracelets and ornaments carved from the incense tree's dark, resinous heartwood.

Surging prices are also driving an increase in poaching from Hong Kong's protected parks. Experts predict that the most sought-after specimens, big trees as old as 200 years, are in danger of disappearing from the wild in a matter of years.

"They are the cream of the stock, so if you systematically take away the best trees, the strongest trees, the local incense trees decline not just in numbers, but also in terms of genetic quality and that is bad," said Chi-yung Jim, a tree expert at Hong Kong University.

Mainland Chinese syndicates typically hire people to cross into Hong Kong and pose as hikers to search for trees, Jim said. The poachers often indiscriminately slash the trees to get their precious sap running, then return later to cut them down, usually in the dead of night, and smuggle the illicit haul back to mainland China.

The Aquilaria species is listed under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, which restricts its legal trade. At least 340 people have been arrested since 2005 for illegal felling of incense trees, according to the Hong Kong government, which is planting 10,000 saplings a year to help the species survive.

After Chan appeared recently on a television news report, thieves stole a hefty piece of agarwood thought to be 80-100 years old and worth an estimated HK$4.2 million ($542,000) from his home.

Prices for a liter of the oud oil, meanwhile, have risen to as much as $80,000 on the open market.

Chan returned to Hong Kong to revive his late grandfather's plantation and a desire to help save the agarwood trees from disappearing from the territory.

"When I was a young lad, I would follow my grandfather up the hillside as soon as I got off school," said Chan. "I would climb up the mountain with a saw in my hand. Even when I was small I was cutting down trees."

He eventually hooked up with Singapore-based Asia Plantation Capital, which manages forestry plantations in Asia, Africa and the United States, and they began collaborating last year.

APC provided funding so that Chan can hire more workers — he now has five — as well as technical assistance to bring his farm up to the company's standards. For example, they advised him to spread the trees farther apart and plant ginger in between to keep the land fertile. He now has 10,000 trees on his 10,000 square meter farm.

"Without commercial plantations, it will just become extinct, there's no doubt about that," said Gerard McGuirk, the company's managing director.

The company also helps Chan harvest the trees and extract their precious oil.

Rather than slashing the tree, APC uses its own proprietary inoculation method to cause the fungal infection that over time gives the wood fragrance and a rich brown hue. The wood is then chopped up and steamed in vats to distill the oil, which is valued by perfume companies because it helps the fragrance last 10-12 hours, McGuirk said.

For a minimum investment of 66,000 Hong Kong dollars ($8,500), which buys 25 trees, APC guarantees investors a minimum 60 percent return when they are harvested four years later.

Chan has two sons who he says are unlikely to take over his business. But he's confident that others will eventually join him in harvesting agarwood.

"I won't be the last," said Chan. "There will be others planting these trees."