The partner perspective

​General trading company Itochu provides a uniquely well-informed point of view on the Asian market for Metsä Fibre's offering.

TEXT: IAN FENTON, PHOTO: JUSSI SÄRKILAHTI AND VELHOT / JACK TAYLOR


Itochu's pulp experts discuss the prospects for Metsä Fibre's sales in Asia. (L-R) Tatsuro Kimura, Fumihiko Yamada, Daisuke Soda, Tsutomu Yamauchi.


Metsä Fibre relies on a network of expert partners to distribute pulp in various markets around the world. In Asia, this task is handled by the pulp division of Itochu, the second-largest "sogo shosha" (general trading company) in Japan, which also possesses an ownership stake in Metsä Fibre.

The two companies have been collaborating in various capacities for decades, sharing resources and pooling complementary strengths in different markets. With this in mind, the company's sales force may be the single best resource on the Asian pulp market and its complexities. We asked them to share their thoughts on the current climate in Asia and the opportunities it presents for Metsä Fibre.

ALL ROADS LEAD TO CHINA

Itochu are under no illusions about the state of the world's pulp markets, and locate the most meaningful signs of growth in Asia, particularly China and the South-East Asian countries. Tatsuro Kimura, deputy manager of the company's Overseas Pulp business section, provided a summary of their view.

"Pulp for paper in the so-called first-world countries is not enjoying huge growth at the moment," he points out, "at best sustaining current levels if not actually declining. So the growth is primarily in the Asian markets, particularly China."

A presence in China is almost essential for any pulp producer or trader - there is no doubt about it. -Jin Asada, CEO, Itochu Fibre Limited

Jin Asada, CEO of Itochu Fibre Limited in London, concurs. "Nowadays, the demand for market pulp worldwide is over 50 million tons per year, of which China represents close to 30 per cent. A presence in China is almost essential for any pulp producer or trader - there is no doubt about it."

Some have commented that growth in Asia is stalling. Kimura takes this into account, but remains enthusiastic about the area's possibilities. "Yes, the growth level has not been the same as, say, five years ago, but we still see pretty strong growth there. The demand definitely exists, especially in the tissue paper sector. We see huge potential there."

ÄÄNEKOSKI IS CRITICAL

When huge potential is mentioned, a natural follow-up question might relate to how this potential can be addressed. Itochu's pulp specialists, however, need no such prompting, and are quick to bring Metsä Fibre's new ÄÄnekoski bioproduct mill into the conversation.

"I think that the upcoming project in Äänekoski will arrive with perfect timing to accommodate the new demand we're talking about," Kimura enthuses. "First of all, it is the single largest softwood pulp mill in the world. And when its additional capacity is added to the current volumes, Metsä will be the largest supplier by far to the Chinese market. That's going to change the pulp game quite a bit."

Daisuke Soda, general manager of Itochu's China Pulp department, explains precisely how this extra volume will affect the company's endeavors. "With the additional volume," he says, "we now have the option of exploring new sales possibilities, whereas in the past we had to limit ourselves to a certain number of customers. Our foremost strategy at the moment, not just for China but for the whole of Asia, is to expand our customer base, and we now have the volumes to do so."

THE FINNISH CONNECTION

With various Chinese industries tending towards overcapacity, pulp included, it might be tempting to ask why supply is needed from a small European country in the first place. Why is Botnia Nordic pulp still an appealing prospect on the Chinese market?

"It's a good question," laughs Asada, "but there is a perfectly logical explanation." He goes on to explain how the dynamics of pulp export have developed in the past few years.

"With Botnia Nordic pulp, we can differentiate in terms of quality." -Daisuke Soda, General Manager, China pulp, Itochu

"If you look at the various regions of the world in terms of softwood, the US and Canada used to be the mecca of softwood for the Asian market, but producing pulp in North America is getting more and more difficult by the day because of the environmental issues. Cost issues play a role here also: wood procurement is getting more difficult and the labor costs are among the highest in the world."

Soda elaborates: "In China, we need to compete with other softwood pulp suppliers and quality is one of the most important issues. For example, we are now trying to expand our sales to the tissue and hygiene sectors, and here, quality is the most important issue. Fortunately, with Botnia Nordic pulp, we can differentiate in terms of this need."

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SERVICE WITH A SMILE

According to these representatives of Itochu, it isn't just quality that sets Metsä Fibre's offering apart in China and the other Asian markets.

"It's important to point out," says Kimura, that Metsä Fibre's products are well suited to all applications. They don't limit themselves to any single use in particular."

This property provides partners such as Itochu various options to approach selling them. Where Chilean pulp may be marketed exclusively for board making or Canadian product sold on the basis of high strength, Metsä Fibre's Botnia Nordic pulp is adaptable, with a flexibility allowing it to match the customer's specific industry or individual needs.

In addition, he points out the advantage of years of pulp and papermaking expertise, which permit Metsä Fibre to assist its customers with unique technical services.

"Their strong technical customer service team - which we can actually utilize in Asia - can have in-depth conversations with customers who require specific technical assistance."

With a team actually based in Shanghai sitting together with Itochu personnel, as well as the experts based in Finland, fruitful conversations and discussions with the customer are simple to arrange.

"We're still trying to make our penetration into markets where local suppliers already have a strong presence," Kimura points out. "In order to make that work, technical customer service is actually one of the key points in terms of being able to persuade our customers of the benefits of using Metsä Fibre's pulp."



SHARED VALUES

Like the best salesmen, Itochu's pulp division certainly know their product, along with the most persuasive arguments needed to convince Asian customers to take it into use. But there appears to be a deeper synergy at work, one that even the decades of collaboration with Metsä Fibre they have enjoyed may not wholly explain.

Kimura tries to nail the elusive properties of this partnership down: "Over the time I've worked with Metsä Fibre, I began to realize that we have similar values. We share a very sincere approach, and we're both basically dedicated to long-term business relationships."

"There is a strong team spirit between us," he continues, "and this obviously has to do with the company itself, but also perhaps the nature of our two nations as well."

There may well be something to this. Could it be that the cultural associations of Finland and Japan complement each other in terms of perceptions of commitment, trustworthiness, and quality? It would certainly be no disadvantage to either party in their activities if this were the case.

Either way, this is certainly a unique collaboration: a Japanese sales force representing a Finnish company in China and elsewhere, providing a bridge from Europe to the far-flung Asian markets, rich in potential and hungry for expert guidance.

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