Industrial clusters in China's wood processing industry can improve product quality, especially for private enterprises. The study used data from China's Customs and Industrial Enterprise Databases to show that agglomeration benefits wood chip, wood product, and wood panel industries, but not bamboo and rattan palm industries. Agglomeration does not depend on trade method and has the most positive impact on wood chip processing quality. The findings suggest that clustering timber processing enterprises, particularly privately owned ones, can enhance product quality and boost the economy.