BRUSSELS, March 1, 2014 (PPI Magazine) - Metsä Board has recently celebrated its 60 years' presence in China. The firm established its first office in Beijing in 1953, and now runs offices in Shanghai and Hong Kong as well. However, its first exports to China could be dated back to almost a century ago in the 1920s.
The firm has long been attaching great importance to sustainability and high quality, which was also repeatedly emphasized by its CEO Mikko Helander during a recent interview in China with PPI.
The firm currently operates nine mills in Finland, Germany and Sweden, boasting a combined capacity of 935,000 tonnes/yr of folding boxboard, 500,000 tonnes/yr of coated and uncoated white-top kraftliners, 700,000 tonnes/yr of coated and uncoated fine paper as well as close to 2 million tonnes/yr of chemical and mechanical pulp grades. Although the world economy undergoes a slow recovery and demand growth for consumer goods has been very slow in the key markets, Metsä Board‘s paperboard deliveries in the first three quarters of 2013 have risen by nearly 10% year-on-year.
The firm increased its folding boxboard capacity by 20% in 2011-2012, and its whitetop kraftliner capacity is targeted to almost double to 700,000 tonnes/yr within the next few years. The firm is marketing its 100% wood fiber-based folding boxboard and white-top kraftliner in Asia, mainly in China. And the basis weight ranges for the two grades made by the company are 170-380 g/m² for folding boxboard and 125-250 g/m² for white-top kraftliner.
Metsä Board has firmly upheld its strategy of sustainability. When elaborating this, Helander says that wood raw materials used by the firm are sourced by its mother company Metsäliitto Cooperative, which is owned by approximately 125,000 Finnish forestland owners. And those forestland owners control about half of Finland's forestland. Meanwhile, the origin of wood materials in Finland is traceable, as more than 98% of its forests are certified, while fewer than 9% of forests are certified globally.
To address its commitment to the environment, the firm has been offering each customer a Paper Profile document, which enables them to trace energy consumption and emission data, carbon footprint, as well as the wood resources of Metsä Board products.
Metsä Board has also made a great effort to reduce the weight of its products, for lightweight means that fewer raw materials are used and less energy and water are consumed during production. This contributes directly to sustainability.
And light weight also helps customers cut costs. A Metsä Board customer based in China tells PPI that it is now using 175 g/m² white-top kraftliner from the firm to make the top layer of its box, which has a total of five layers. Board for the other four layers is supplied by a local recycled containerboard producer.
According to the Chinese firm, the performance and printability of Metsä Board coated white-top kraftliner is much better than that of the top-layer board it previously used.
"The unit price for Metsä Board white-top kraftliner is more expensive, but it can replace domestically made board with higher grammage. And we find that the use of Metsä Board product now is a cost-saving measure for us," explains a source from the Chinese company.
PPI: China now has huge boxboard capacity and we know market competition is intensifying. There are some worries about oversupply; what's Metsä Board's market strategy in China?
Helander: Due to huge investments, overcapacity is now here in China. But we should remember that the total demand for packaging board is steadily growing in the Chinese market. And because of that, we are not worried about the supply-demand balance in the country. It is certain that overcapacity is a temporary issue.
We are strongly focusing on high-quality folding boxboard and white-top linerboard products, and we do not see so much competition in these segments. Again, we will work to decrease weight and improve sustainability, and we continue also to further improve printing properties. I‘m very glad that in the future we will maintain our position as the most responsible paperboard supplier for Chinese customers.
What do you think the market trend in China is? What are your main customers here in China?
It is very obvious that the Chinese market is getting more and more similar to the European and North America markets. Demand for sustainable and safe packaging materials is growing heavily. High-quality packaging boards are replacing low quality grades. Sustainability is crucial, and it is also one of the main drivers in the Chinese paperboard market. That's good for us, because we are definitely the leader in this area.
Our main customers in China are leading global brand owners, merchants, converters, and printers as well as producers of cosmetics, pharmaceuticals, food and cigarettes.
How do you develop your local customers in China? Does Metsä Board have any new business plan in China?
We have plenty of local customers in China, not just big global customers. Merchant companies are also our customers and these merchants serve a lot of small companies and offer a comprehensive portfolio of Metsä Board products.
I don‘t call it a new business plan, but definitely, as I have said, we have a strong focus on sustainability and high quality.
Sustainability is Metsä Board's strength, but what's your challenge in China?
Tough competition. Chinese customers are very demanding, and Chinese competitors are also very challenging. But I confirm that Metsä Board can manage the challenges and tough competition and we are very well prepared to compete successfully in China.
Price is of course a sensitive issue, and it is important that Metsä Board and other paperboard makers are well prepared to serve all different types of customers.
Our experience is that all our customers really want to improve business sustainability and promote a responsible business approach. They are also ready to invest in high quality and safety. Due to that reason, I do not feel that price competition is such a big issue for Metsä Board. Our strategy is very clear: we focus on high quality, safe and sustainable packaging board.
What kind of measures have you taken to ensure that you can abide by your commitment to the environment?
The most important thing is our light weight strategy. Now we have very advanced fibers. For many years, we have put a lot of effort into developing fiber technology. And this offers us wonderful opportunities to produce lightweight folding boxboard and whitetop kraftliner products.
Today, our paperboard products are up to 30% lighter than those from competitors, and that also means the environmental impact of our products is also much smaller than that of paperboard from other companies. It also means that we need many fewer resources and much less energy to manufacture our products. This is the most important measure and we will continue along this path.
We have also achieved great developments at our mills to improve energy efficiency and cut CO2 emissions. Our target is that by 2020 we will improve our energy efficiency by at least 10%, and reduce CO2 emissions by 30%.
Another very important fact is that wood is our main raw material, and it is certified and traceable. Thus, all our products are certified.
How do you made your products so light?
Firstly, this lies in our perseverance in product development, and for a long time we have put a lot of effort into reducing weight because the lower weight means better sustainability.
Secondly, we have integrated the product development with our systematic development in board making processes.
Thirdly, fiber technology is very important. We fully control our raw material bases, and there are very few board makers who have full control of their fiber. This means that we have state-of-the-art pulp mills and many years research into fiber development. Without owning high quality fiber and pulping technology, you could never produce lightweight paperboard successfully.
Finally, Nordic forests produce high quality fiber that is very strong.
It is the combination of all these factors that leads to our achievement. It is not easy, and we believe that there are not too many companies in China that can offer the same beautiful and sustainable paperboard that we can do.
When did you start to provide your Paper Profile? What's your Chinese customers' response to this?
We have been strongly promoting our Paper Profile since 2007, but we started offering it more than a decade ago. It is quite unique, and not many paper and board firms now can provide such documents or files to trace their products.
At first, Chinese customers were not familiar with this, but now they have started to appreciate the measure. There are three customers, including one from China that have won major packaging awards by using Metsä Board products, sustainability being one of the main reasons for success.