UPM Kymmene, one of the world's biggest paper manufacturers, has further enhanced and diversified its presence in China by pouring 324 million yuan (US$40 million) into its Raflatac labelstock business.

"The investment highlights our ambition to become the preferred supplier of pressure sensitive labelstock in the world," Heikki Pikkarainen, president of UPM's labelstock business, told China Daily yesterday. "As one of our key markets, China will see strong growth for pressure sensitive labelstock in the coming years, driven by both the strong export industry and the quickly developing domestic consumer goods market."

Lablestock is labelling materials.

To tap into the fast-growing labelstock business, UPM is building a world-class pressure sensitive labelstock production facility in Changshu, adjacent to UPM's existing paper mill in East China's Jiangsu Province. The factory is expected to start production in early 2007.

"As a demonstration of our strong, long-term commitment to the Chinese market, our new facility will form an excellent basis for us to provide top quality products and top-notch service in order to help our Chinese customers expand their businesses," said Jussi Vanhanen, senior vice-president of Raflatac Asia Pacific.

The new investment in Raflatac is part of the company's strategy to make China into a production and sales centre for the Asia Pacific region.

With an annual turnover of 107.9 billion yuan (US$13 billion), UPM has invested more than US$1.1 billion in paper manufacturing and paper converting facilities in China.

"UPM will further strengthen its business in China because it is a market of global importance," said Jussi Pesonen, UPM president and CEO.

As one of the largest global investors in China's paper industry, UPM has three production facilities in the country, with a fourth under construction.

UPM's largest ongoing investment worldwide is its plant in Changshu. With a first-phase investment totalling 5.2 billion yuan (US$623 million), the plant can produce 350,000 tons of uncoated fine paper annually. And it has just finished the second-phase investment, totalling 3.8 billion yuan (US$470 million), making UPM the biggest producer of uncoated fine papers in China.

"We are continuously considering new investment opportunities in China, in line with the strong market growth," said Pesonen.

Strong demand is the underlying force luring foreign investors, according to Cao Zhenlei, dean of the China National Pulp and Paper Research Institute.

Official statistics show China has become the world's second-largest paper consumer after the United States.

Consumption nationwide this year is expected to top 50 million tons. Domestic output accounts for 40 million tons, leaving a shortfall of about 10 million tons, which is attracting international paper-making giants to China.

Despite rapid domestic expansion, Pesonen stresses his company's business model focuses on ecological, social and economic sustainability.

(China Daily September 14, 2005)