Asian Paper 2002: the curtain opens on Asia and the spotlight is focussed on China

Asian Paper, the show that every two years calls the international paper industry to Singapore, was held from 24 to 26 April 2002. 258 exhibition companies, 4205 visitors, 3 conference cycles.

Two of these conferences were technical, the CMM Asia Technical Conference and the New Applied Technology Conference, and one, the Senior Management Symposium, dedicated to the economic and market aspects of Asian pulp & paper. During the Symposium, China was once again the industry's protagonist and catalyser of its interest.

Cristina Bernardini

It's no secret to anyone that the paper industry is looking more and more towards the East. Stagnation in demand for paper and cardboard in western markets and the relative over-production have for some years shifted the attention towards the emerging countries of the Far East. Asia as a whole, with a total demand of about 104 million tons and a production capacity of around 91 million tons, is responsible today for circa one-third of worldwide paper consumption and production, just like North America and Europe. From 1985 to 2001, excluding the difficult two-year period '97-'98, the average annual growth rate of Asian demand was 6%, against a world annual growth average of 3%. The drawing force: China, promised land for anyone in the paper business.

The demographic factor plays a fundamental role in all emerging countries, but in China - differently from India, for example - it is accompanied by constant growth in the gross national product. Dividing the Chinese GDP by its population, we find that if in 1990 the per capita figure was 339 dollars, today it is over 853 dollars, with an average annual growth rate of over 10%. This translates into a national paper consumption growth expectancy that for the next three-year period promises an increase of +79% per year. It is therefore not surprising that most of the conferences held during the Tissue Management Symposium of Asian Paper Singapore were dedicated to the People's Republic, to its forthcoming entrance into the WTO and to the prospects that are open to foreign companies.

In the 1990s the main foreign investments in China were made by the Indonesian groups April and APP, the latter presently involved in a complex financial moment that has been at the center of economic news headlines, but that nonetheless does not prevent it from announcing new investment plans. The other world giants like Stora Enso or Norske Skog, to cite a few, have preferred the more cautious route - and one rather pleasing to the Chinese government - of establishing joint ventures with local state-controlled companies. In this way, western capital contributes to modernize government-controlled facilities with state-of-the-art technology and to introduce the technical know-how necessary to compete on an international level.

The Chinese government, on the other hand, facilitates credit access of Chinese companies investing in technology, supports low interest rates on loans through the issuing of treasury bonds, promotes or supports vast forestry and industrialization programs in the special economic zones and promises a further decrease in tariffs on raw material imports.

RAW MATERIALS ARE THE SAD NOTE WHEN SPEAKING OF THE DEVELOPMENT OF THE PAPER INDUSTRY IN CHINA. Forestry programs and the projects for new plantations south of the country have medium to long term fruition plans, so the tariffs imposed on wood and recycled fiber imports represent a crucial point in the shorter term supply. Today, import duties minimally effect raw materials (wood and paper for recycling) and effect cellulose by 1% while - to protect the national industry - weigh between 5% to 10% on finished paper and cardboard and by 16% on communications and copy paper. Use of recovered fibers is in constant increase: in 2001 China utilized more than 13 million tons of waste paper and imports signaled a +72% increase with respect to the previous year. In constant growth is also the use of fibers of various nature not derived from wood: hay, bamboo, non-wood fibers or scraps coming from rice or sugar cane processing. The results in terms of quality are often surprising, but converting these alternative materials in fibers adequate for paper production poses several interrogatives regarding the environmental impact of the processes and the chemical substances involved.

Among the afforestation programs, the pilot project of a new eucalyptus plantation that the Oji group is creating in the region of Guangxi is arousing great interest. In Singapore, Oji's General Manager, Takeo Inoue, has presented the development plans of this Japanese giant that with a yearly production of over 7 million tons ranks n.8 among the top 10 world producers of pulp&paper. Oji has announced an investment plan for the next ten years for over one and a half billion dollars aimed at the acquisition of new production capacity outside Japan and at becoming a pan-Asian reality. Main objectives of the expansion plans: China and Thailand, but also Vietnam and Indonesia if the necessary bases for political stability are created. Aims: to produce outside Japan more widely consumed papers on which production costs have a greater effect and maintain the production of more sophisticated papers with higher technological content within the country.

AND TISSUE? In Singapore not much was said about tissue paper. This industrial field has not felt the crisis that has hit the paper industry in the rest of the world and maybe here the questions regarding the future seem less pressing. However, we would like to venture that at the next Asian Paper show, greater space will be given to tissue within the conference cycle.

Today, Asia as a whole is responsible for just under one-quarter of the world's production.

With the exclusion of Japan, demand is growing stably almost everywhere, even if not always at the desired rate. Expansion projects in production capacity concern above all China, while in other areas no significant investments have been made after the race for production increase that took place at the end of the 1990s. The interest towards Vietnam is growing, where the recent start-up of two new PMs admits the possibility of consumption growth. Nothing to be noted in India, a country where the economic and social situation does not supply great hopes for demand development.

SO EVEN IN TISSUE, THEN, THE PEOPLE'S REPUBLIC OF CHINA REMAINS THE PROTAGONIST. China has five years to adapt its structures and infrastructures to the parameters requested by the World Trade Organization and open itself up to the international market. During this period, will national or in any case Chinese companies (Taiwan number one), pan-Asian groups or large overseas multinationals be the main players? For machinery and technology suppliers, the game is open on all fronts. The technology requested by this market is now in any case perfectly aligned with international quality standards and it will probably be the capability of guaranteeing their services, assistance and know-how that will cause a shift in the balance.

For this reason Perini has decided to further reinforce its presence in China and to join the other companies of the Körber group to create Körber Engineering Shanghai Co. Ltd., Located in the Free Trade Zone of Waigaoqiao, just outside Shanghai.

Körber Engineering Shanghai is born

At Körber Engineering are located the three divisions of the Körber group: Körber Paperlink, paper and tissue technology, Hauni, tobacco processing technology and Schleifring, tooling machines.

Born of the desire to supply the Chinese market with all the resources necessary to develop the respective fields, the new entity can count on a team of 35 people and an overall space of 3240 square meters to ensure:

-Technical consultancy

-24-hour customer assistance service

-Spare parts warehouse

-Invoicing in local currency

-Machine assembly

-Space for machine demonstrations and product testing

-Training and specialization courses

Fabio Perini China, active in the new facilities since May of this year, is scheduling an Open House for the upcoming month of November, when Shanghai will host the next edition of China Paper, the most important Chinese trade show dedicated to the paper industry. During the Open House, a toilet roll converting line, complete with a Casmatic packaging section, assembled in China, will be on demonstration.

For further information, please contact:

Körber Engineering Shanghai Co. Ltd.

Section C, Building 411, 418 Hua Jing Road

Shanghai Waigaoqiao Free Trade Zone

Shanghai - P.R. China

Postcode 200131

Tel. (++86) 21 5046 2933 - Fax (++86) 21 5046 2303


Web site: www.perinichina.com

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