Monday, February 11, 2013

‘‘Japanese domestic market has reached to near saturation”

Satobumi Taguchi, Deputy General Manager (Paper Trade Dept.), Overseas Division, Nippon Paper Group, Japan, talks to B&E’s Gyanendra Kumar Kashyap & Ashutosh Harbola about Nippon’s vision 2015 and its overseas expansion.

B&E: What prompted Nippon to integrate four mills in the Hokkaido region? Is it about improving the cooperative structure or just a strategic move?
(ST): Well at present, there are four plants, and Nippon Paper Industries decided to integrate three mills, namely Asahikawa Mill, Yufutsu Mill and Shiraoi Mill operated by the company in the Hokkaido area.There was only one manager who was managing the whole facility at the respective plants. Subsequently, it became a problem as we had to focus on different plants, too. And through this integration move, the managers now can share information between each other. In addition, it’s becoming profitable for us and we are certainly leveraging from it.

B&E : In 2008-2009, there was a drop in demand of paper coupled by digital documentation. How will the paper industry cope it?
(ST): The market is shifting from the holistic music players to scratch iPod or iPad. However, the best part for Japan is that the economical condition is slightly better than the general ones. The import paper also comes to Japan. That’s why Microelectronics Technology Inc. (MTI) has a holding and this trend can’t stop. Our goal is to move beyond domestic market by 2015. Despite having a big market outside, the domestic demand was not there earlier. We want to expand our overseas plans, and India is certainly the high growth potential market. Unfortunately, there are not many manufacturers of paper from small to medium market.

B&E: What is your 2015 vision and what figures are you looking to boost your business?
(ST): The Japanese domestic market is near stauration. Our main focus will be to become one of the top five players in the global pulp and paper industry by accelerating our overseas business development to achieve growth. Also, we would aim at 30% of our revenues coming from the overseas market compared to the present 10% level.

B&E: What kind of investments are you looking outside Japan?
(ST): We have already spread our wings in Australia, China and Taiwan. As far as India is concerned, we do not have any expansion plans right now, but within a year or two we look forward to expand our business. India is an important market for us, it is a high potential growth market. In addition, it is one of the fastest growing market and has a lot of potential and the paper domain is very strong here. There are not many producers, but the demand is comparatively high.

B&E: Do you have any plans to tie up with the local players like the Savant group to enter in the Indian market?
(ST): Looking at the current industry dynamics in India, tieups would certainly make a lot of sense. And lots of debates are going on the issue. But to cater to the needs of Indian market and to be counted amongst the formiddable players in the growing Indian market, we will have to think of partnering with local players sooner or later.

B&E: Digital process outsourcing are digital in nature. Don’t you feel such processes are a threat to the paper and pulp industry?
(ST): The use of such process is increasing among the business fraternity. But you need a leaf of paper as a proof of any document and that’s where you take a print for the same. Globally, numbers show a rise in the consumption of paper, even when there are CD-ROM and hard disc. So, I won’t consider it as a possible threat.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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