Although Papermaking was invented in China, it was industrialized by Western countries and commercialized paper products. At present, China has shown a desire to turn its paper industry into a world centre, and to make unremitting efforts.
In the past 30 years, China's paper production capacity has gone from less than 3 million tons in the early 1990s to more than 100 million tons of rapid development in the end of 2015, making China the world's largest paper producing country. Figure 1 shows the distribution of paper production in various countries by 2016, without doubt, China is occupying more than 25% of its global share and laying its leading position.
But as shown in Figure 2, capital investment in new capacity is shrinking as China's economy slows. Industry leaders such as nine Dragons paper, Riven paper, app China are speeding up investment in improving efficiency and gradually reducing the volume of new capacity. Service providers, such as Voith and Siemens, are also stepping up the market for innovative service concepts such as industrial 4.0, industrial Internet, digital solutions, etc. The industry's giants are exploring the best ways to operate in China's paper mills.
With China's central government's promotion of the "along the way" national strategy, sovereign and local funds and trillions of dollars of China's foreign exchange reserves are stepping up investment in overseas markets. With the Chinese government encouraging Chinese companies to speed up overseas expansion, choosing the best investment direction and investment targets has become the most important issue in the early stages of investment. So, for the paper enterprises overseas expansion, how to consider and choose the ideal standard?
Fig. 3 shows the distribution and distribution of the output of wrapping paper, cultural paper, living papers and special paper in various regions of the world (because pulp production needs sufficient raw fiber supply, pulp enterprises need to be more close to the supply of raw materials to keep the competitive advantage, so we do not consider the commodity slurry). For North America, where less than 400 operating plants have contributed nearly 90 million tonnes of paper and paperboard production, it is not difficult to judge that the North American industrial scale is more optimized than the Asia-Pacific region and Europe.
On the basis of the industry maturity in North America, the dollar exchange rate is strong for the global exchange rate and expects to remain strong for the next few years. At the same time, the challenge of a Middle East refugee crisis and terrorist attacks in Europe has driven risk-averse investors to seek more robust investment direction. North America, based on its geographical location and stable political environment, and taking into account its mature social and legal system, has attracted a large number of Chinese investors, including Chinese paper industry investors. Over the past three years, we have seen many reports of Chinese paper investment flows to the United States, such as the Spring Forest paper Virginia Project and The Sun paper Arkansas Project.
Based on these obvious factors, Chinese capital has good reason to flock to North America. The macro analysis of the North American paper market can reflect the thinking logic behind these investments. Figure 4 shows the distribution of paper production capacity in North America, with a total output of Canadian and American pulp and paper and paperboard nearly 110 million tonnes. In Figure 5, plant equipment assets in North America are relatively old compared to other areas. However, from an overall operational perspective, Figure 6 shows that production costs in North America are lower than in Asia and Europe, mainly due to low fiber costs.