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Int'l paper producers strengthens presence
By Mo Fan and Wang Jing (China Business Weekly)
Updated: 2004-06-21 14:39
[The authors Mo Fan and Wang Jing are industry experts and contributors
to China Business Weekly.]
Foreign paper producers are investing billions of dollars in new factories
and production in China as they try to stay a step ahead in the race for a slice
of the world's fastest-growing major paper market.
China has become the world's second-largest paper consuming nation, after the
United States. It accounts for more than 14 per cent of global paper
consumption.
As the world's largest net paper importer, China spends up to US$7 billion,
in hard currency, each year on its imports of cardboard, paper pulp, waste paper
and paper.
China's paper consumption will reach 50 million tons next year. Its domestic
output capacity, however, falls short of 40 million tons, leaving a huge gap of
about 10 million tons.
Another 10 million tons of imported paper pulp and waste paper are needed.
Currently, China's paper consumption per capita is a mere 30 kilograms, which
lags behind the global average of 56 kilograms.
China's consumption of paper, per capita, lags far behind other
nations. That means there is tremendous potential in China's paper industry.
The huge demand and relatively laggard per capita consumption push
international paper-making giants to forge ahead in recent years.
Finland-based Stora Enso Oyj, one of the world's leading paper manufacturers,
invested US$150 million in its 150,000-hectare plantation. The site is located
in Guangxi Zhuang Autonomous Region.
"Global paper giants have been accelerating their steps to invest in the
tree-rich region in southern China, hoping to enter into the retail paper
market," said Wu Jian, an economist with the Guangxi Academy of Social Sciences.
Golden Eagle Co, a Singapore-based paper producing company, recently invested
US$500 million in its raw material base in Jiangsu Province.
APP, one of the world's top four paper producers, began its tree-planting
campaign in 1995. The firm has grown 2 million mu (667 square metres) of forest
in China's Guangdong and Hainan provinces and Guangxi Zhuang Autonomous Region.
"Based on our research, there are many places in Guangxi, Guangdong and
Hainan suitable for planting broadleaf trees," said APP (China)'s Luo Xin.
The Chinese Government has developed some preferential policies involving the
pulp, afforestation and paper and chipboard production industries.
Besides the huge market demands, preferential policies extended by the
Chinese Government to localized paper production also push foreign paper
producers to invest in the country.
In the 1990s, when high-quality, low-cost imported paper flooded China, the
country had to launch an anti-dumping campaign against newspaper and coated art
paper.
China, at that time, raised the import tariff on paper, but maintained the
zero tariff on imported pulp. That prompted several giant global paper producers
to build plants in China.
After that anti-dumping investigation, Japan-based Prince Paper Co
established a plant in China.
"All trade problems will be resolved smoothly through local production," said
a senior official with the Japanese firm.
Foreign producers must face challenges posed by domestic players.
Last December, Shandong-based Quanling Group announced its plans to raise its
paper output volume to 1 million tons.
Some listed companies -- including Anhui Shanying Paper Industry Co Ltd --
have raised financing by offering convertible bonds or A shares to strengthen
their performance in the capital market.
"The most competitive companies are always domestic companies, because they
are familiar with the domestic situation," said Cao Zhenlei, president of the
China National Pulp and Paper Research Institute.
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