China is getting stuck with paper?

While providing epidemic prevention assistance to overseas partners, Chinese companies have also contributed to a stable supply of raw materials for China, the factory of the world.

Under the limitation of many objective factors, how to promote paper safety in our country? The market is always the smartest, looking at some companies in the industry, or comparing the development of foreign countries, we may be able to find some answers.

With the complete landing of the ban on waste in China, the foreign waste pulp quota of paper enterprises is zero, which makes the gap of paper raw materials increase, the price of domestic waste paper is also rising, and the contradiction between supply and demand is deepening, but the domestic waste paper production actually has a lot of room for growth.

According to Statista statistics, Japan's paper recovery rate in 2020 is as high as 85%, and the average recovery rate has been above 80% in the past decade. According to the 2019 Monitoring report published by the European Waste Paper Recycling Council (EPRC), the overall paper recycling rate in Europe has reached 72%. In contrast, China's waste paper recycling rate in 2019 was only 49%.

Some people say that waste paper is a forest resource in the city, because the recycling of 1 ton of waste paper can produce 0.8 tons of recycled paper fiber, and the waste paper from high-quality paper making materials will produce better pulp quality. In addition, paper recycling can also save space in landfills, while saving more than half of the energy used to make paper.

The relevant departments can also help paper companies achieve carbon neutrality by adjusting domestic waste paper quotas and achieve the effect of rapid industrial concentration.

The maturity level of an industry depends not only on the number of enterprises in the industry, but also on the degree of industrial concentration to a large extent.

Tianyan data show that there are more than 216,000 papermaking related enterprises in China. Among them, 46% are individual industrial and commercial enterprises, 45% are limited liability companies, and most of them belong to small and micro enterprises.

Looking at the entire domestic paper industry, in 2019, the top 10 enterprises accounted for 45.67% of the market share, while the US paper industry experienced environmental legislation to reduce capacity and industry mergers and acquisitions, the top 10 enterprises accounted for about 90% of the market share. In the same year, the top four enterprises accounted for 28.88% of the market share, which was comparable to the paper industry data of the United States in 1984.

If the industry is not concentrated, it will bring about problems such as weak bargaining power of upstream and downstream, difficult to avoid inefficient competition, and insufficient motivation for research and development.

The leading international paper company in the U.S. paper industry, originally formed from the merger of 17 pulp and paper mills in the United States, has operations in more than 20 countries, and also has extensive plants in Europe and Brazil.

At present, there are also individual leading enterprises in China trying to promote upstream and downstream business expansion, and to overseas countries rich in forest resources to lay out production capacity.

Nine Dragons acquired two paper and pulp mills in the US and built 1.6m tonnes of paper production capacity in Vietnam. Mountain Eagle Paper has acquired or controlled a number of pulp/paper mills in Sweden, Norway, Finland, the Netherlands and the United States. In Laos, which is rich in forest resources, Sun Paper has built a new paper and pulp plant and laid out 100,000 hectares of pulp forest projects to ensure the supply of raw materials.

Objectively speaking, the rising tide of papermaking raw materials is also a tide of using market mechanisms to eliminate backward and inefficient production capacity. If leading enterprises can seize the opportunity to expand market share, form scale effects to improve profitability, they can also drive the benign development of the entire industry.

While increasing the source of foreign raw materials, we must not forget to improve our own raw material supply.

In addition to the tree planting and forestry that the state has been advocating, the paper industry has also been advocating the "forest and paper integration" operation that takes into account environmental protection and benefits.

Brazil Suzano Pulp and Paper Group combines afforestation, forest operation, logging, pulping, paper making and sales to build a fast-growing and high-yield raw material forest base in various forms, forming a virtuous cycle of industrial chain.

At present, only a few enterprises such as Chenming Paper, Nine Dragons Paper, Sun Paper and Liansheng Paper have really begun to promote the "forest and paper integration" operation, and the first "forest and paper integration" project of Nine Dragons Paper, the domestic leader, is also determined to settle in Guangxi Beihai at the end of 2020.

The reason is fundamentally back to the problem of industrial concentration and scale effect, "forest and paper integration" project at every turn tens of billions of investment on the capital requirements of enterprises is very high threshold, so this theoretically feasible model, but very slow in reality.