Why is the most popular European paper enterprise

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At the beginning of the new year 2007, Kari haaraoja, a paper mill worker, knew that this would be his last year at voikkaa paper mill in Finland

UPM Kymmene Oyj, a Finnish paper and packaging company, announced to Mr. haraoja and his 678 colleagues that after 114 years of operation, voikkaa paper mill would shut down at the end of this year. Haraoja, 45, has worked in this factory for more than 20 years. He has a wife and children at home. Now he feels that his future is slim in the face of this situation

there are also those large European paper mills that feel their prospects are bleak. In the face of the strengthening euro and increasing external competition, how will they deal with the challenges? For such a problem, the result is still unknown. With the decline of paper price and demand, coupled with China's emerging status as a major paper country, some paper mills have been struggling since 2001. This list of companies includes Stora Enso Oyj, the largest paper and packaging company in Europe, Svenska cellulosa AB in Sweden, UPM in Finland and M-real Oyj in Finland

in order to cope with this situation, the European paper industry is gradually adjusting itself through layoffs, production cuts, and even factory closures. In terms of paper price, although it is still about 20% lower than that in 2001, it has begun to rebound. At the same time, unfavorable factors still exist: the continuous increase of China's paper exports and the strengthening of the euro against the US dollar have made it more difficult for the overall recovery of the entire industry

Denis Christie is standard poor "s In his view, the European paper mills are beginning to recover, but China's exports and the strong euro have had a negative impact on this process

since China has become the world's second largest oil importer after the United States, the rapid growth of China's economy has led to higher prices of many raw materials, including crude oil

however, paper prices have not gained momentum from the rapid development of China's economy. Since 1990, China's paper production has increased at a rate of about 10% per year. At present, it is the second largest paper country in the world, second only to the United States

with the improvement of China's own production capacity, its dependence on Europe in terms of import has also been reduced. Using the Internet and big data capabilities to boost the requirements for plastics, there are mainly two points: the transformation and upgrading of the unified industry. The Confederation of European paper industries is a non-profit organization in Brussels. According to its data, European exports to Asia fell by 14% in 2005. In fact, China has not only achieved self-sufficiency to a certain extent, but its increased production capacity has enabled it to compete with Europe in the export market. For the United States, the main export destination of Europe, the competition between China and Europe is particularly obvious

for example, according to the data of the American Forest Paper Association, China's paper exports to the United States increased by 22% in 2005, while the data of the European paper alliance showed that Europe's paper exports to the United States decreased by 12%

A spokesman of M-real pointed out that the competitive pressure from Asian competitors is increasing. The company has just appointed a new CEO to lead the restructuring of the company

however, among many European paper companies, the implementation effect of the restructuring plan is also different, resulting in several joys and several sorrows. The restructuring of UPM has achieved initial results, and its net profit increased by 33% in the third quarter. Stora Enso's net profit in the third quarter decreased by 14% due to the one-time restructuring cost of 177.2 million euros ($229.7 million). In addition, M-real had a net loss of 31million euros in the third quarter, and it is expected to include restructuring related expenses of 200million euros in the fourth quarter

at present, about one-fifth of European paper production is shipped overseas, but the increase of China's export scale and the rise of the euro threaten this part of exports

since paper products transactions outside Europe are mainly settled in US dollars, when the euro appreciated against the US dollar (the appreciation rate of the euro against the US dollar was about 10% in 2006), European paper became more and more expensive. On the other hand, the exchange rate of the RMB, which is roughly pegged to the US dollar, will make consumers choose Chinese paper without hesitation, because it is also "good in quality", but it is "cheap" by 10%

rdquo; Dr. bor Jang, CEO and founder of angstron materials, said, however, the situation is not irreversible for European paper makers. In order to restore the balance between supply and demand, European paper companies have reduced their total production capacity by about 5%, or 2 million tons, since 2001. Teemu salonen, a paper analyst at evli bank in Finland, believes that the supply-demand balance of all categories of paper has been improved, except for a high-grade coated paper. For this kind of paper, the improvement of its supply and demand needs to be reduced on a larger scale. Driven by measures to reduce production, paper prices are picking up again

in addition, exporters also see hope. The growing demand in Eastern Europe will help to expand the scale of European exports. Clive suckling, who works for PricewaterhouseCoopers, pointed out that exports to Eastern Europe increased by nearly 7% in 2005, and this growth trend is expected to continue. He also said that Eastern Europe has great potential, especially Russia

Stora Enso's spokesman regarded China's threat to Europe in the export market as a short-term phenomenon. Before 2010, China's domestic demand is expected to grow at an annual rate of about 10%

Stora Enso is the third largest paper and packaging company in the world in terms of sales. The top two are International Paper Co. and Weyerhaeuser Co

the spokesman of Stora Enso said that in the short term, China will have a partial impact on the European export market, but in the long term, the continuous growth of China's domestic demand will make it focus on its own market. Facing the future, he is full of confidence

considering the increasing demand for forest products in China, UPM, Stora Enso and SCA have established branches in China, hoping to profit from them. In fact, with the attention paid to developing economies such as China, Eastern Europe and Latin America, this shift of business focus also explains the reason why UPM closed voikkaa paper mill to a certain extent

like the European paper industry, haraoja, a paper mill worker, is now learning how to survive adversity. He said, "things will get better."

reprinted from: Wall Street

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