China Paper Corp's factory in Yueyang to expand to Africa

Papermaker has big plans for expansion in Africa, drawn by ample natural resources and labor .

In the face of increasing demands on manufacturing capacity and rising costs, more Chinese paper producers are considering expanding to Africa in an environmentally friendly and sustainable way.

"China's papermaking has expanded greatly over the years, so inevitably there are difficulties with its limited pulping sources," says Zhang Qiang, vice-president of China Paper Corp, based in Beijing.

(Workers at China Paper Corp's factory in Yueyang, Hunan province. The company is one of China's paper producers that are considering expanding to Africa. Provided to China Daily)

With the added pressure of surging costs, Chinese paper producers have become dependent on imported pulp, he says. New investment destinations are seen as a way of overcoming blockages to growth.

"Strategic reform is greatly needed," Zhang says. "We are hoping to use the Belt and Road Initiative as a good opportunity to explore a new development path by exporting capital and technology, to optimize our resources."

China's Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, which would use trade and investment to boost ties along ancient trade routes and elsewhere. Chinese firms hope favorable financing and policies will be made available to help with global expansion.

Zhang says Africa is full of opportunities for growth. While China has become the continent's largest trading partner, there remains space for more comprehensive engagement, he says.

"China and Africa both have economies that will be important for the world in the future. But Africa still needs more infrastructure, factories and all-round investment.

"So we hope our potential investment will create more jobs for locals, develop local economies and promote industrialization in the region."

As an influential paper producer in China, high standards and sustainability have been at the top of the company's plans for growth.

The company owns 133,000 hectares of woodland in China, and its annual capacity for pulping and papermaking has reached more than 3 million tons. Its annual revenue has reached about 20 billion yuan ($3.1 billion).

"We have more than 10 factories in China and our sales network is spread all over the country. And our products can satisfy most kinds and the highest standards of demand from the market," he says, adding that the company's products include pulp, coated cardboard, liquid packaging board, cigarette packaging board, printing paper and specialty paper.

"We also have many well-known brands that sell to overseas markets like Hong Ta, Guan Hao and Yue Yang Lou," he says.

Africa, a vast market with great promise, is a new potential investment destination for the company. Gabon and Mozambique are the first choices, but other destinations such as Ethiopia, Nigeria and Cameroon are being considered as next stops.

"In Gabon, we hope to establish a full processing chain of wood locally to make the best use of its natural resources and local labor advantages. Also, the final products would be aimed at the global market, rather than an individual one," he says.

"We are also trying to secure a pulpmaking project in Mozambique to update and optimize the country's manufacturing capacity."

The company has been updating its technologies to cut pollution. This means cleaner production from the very first step and rationalizes the use of resources to reduce the generation and emission of pollution in all procedures, Zhang says.

He says he is confident of the company's ability to cope with environmental issues in overseas markets, given its experience. Complying with local regulations and laws is the best way to ensure green production methods.

Zhang says the company has worked to satisfy new government pollution-reduction regulations in China, such as in July last year, when several factories struggled to meet criteria that required an immediate change in the production process.

"The most pollution-heavy processes include removal of sulfur and nitrogen compounds and dust when making paper," he says. "We improved all procedures through new technologies and additions to our existing equipment, which had a satisfying result."

Sulfur and nitrogen oxides can produce smog and acid rain if discharged into the air in heavy quantities.

In the dust removal process, the company added a new type of wet static de-dusting machine, while replaced the old belt conveyor with an air conveyor to carry dust, which greatly reduced emissions of dust and smoke.

According to the company, all pollution was reduced to meet the standard, especially emissions of nitrogen oxides, which were reduced by 1,512 tons a year, while smoke and dust emissions were reduced by 226.8 tons.

"It's clear that the local air and environment has been preserved and improved with low-cost updates and innovation. And also it has generated quite promising environmental and social profits for us," he says. "We believe this kind of change can be applied in Africa from the very beginning and will be continued during our production there."

However, Zhang says concerns and challenges in a new location mean that the company needs to learn step by step.

"In a natural resources-related industry, inconsistent national policies sometimes may pose challenges to our operation. Also, we need to familiarize ourselves with whole new sets of policies and procedures in quite a short time."

In addition, financing in an overseas market can be a major concern because many Chinese companies are unfamiliar with international financing management rules and don't make the best use of international financing means, Zhang says.

"Drastic currency exchange rate movements in some African countries also are a potential challenge we need to address," he adds.

There have been reports of labor disputes in Chinese companies in Africa because of a lack of understanding of local laws. But this must be avoided, he says, by researching the business environment and regulations in a comprehensive way to ensure employees' salaries, welfare and related benefits.