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THIRD ASSIGNMENT

Course Title: BUSINESS ENVIORMENT

TOPIC:- PESTLE AND SWOT ANALYSIS OF


PAPER INDUSTRY

SUBMITTED TO: SUBMITTED BY:


Mr. Bhavdeep S.kochar Ram Awadh B40
Vikas joshi B39
Vineeth nair B36
Dipendita B38
INTRODUCTION

The Indian paper industry has been historically divided on a three dimensional matrix
identified by size, grades manufactured and raw material utilized. Generally, tariff
rates have protected smaller units utilizing “unconventional” raw material. Over the
years, the growth of various segments, investments levels in specific segments,
technological changes, industry fragmentation and intensity of competition have been
significantly influenced by the Government tariff policy. The present Excise duty on
Paper is 12 %. The Government of India from time to time has given some benefits to
small industries in order to protect them i.e. the first 3500 tones produced by a mill is
chargeable only @ 8 % and thereafter it is @ 12 %.

The three main grades of paper manufactured in India are :-

1. Newsprint

2. Writing and printing.

3. Industrial Variety ( Craft paper and Duplex Board )

Over 550 players currently populate the industry and the estimated capacity is about
7.00 million Metric Tones Per Annum (MTPA). Fragmentation is severe in the
“industrial” (packaging) grades, which rely on “unconventional” raw material such as
waste paper and partly agro residues. This division generally comprises of units with
an average size of about 10000 MTPA and contributes to 45% of the output of paper
and paper boards in the country. Although the other divisions in the Indian paper
industry are also fragmented by international standards, the degree of fragmentation is
less severe. “Newsprint” till about 1995, was the sole preserve of large public sector
units and was well protected by high import tariff barriers. Nevertheless, imports
contributed to about 50% of the domestic consumption. Since then, new domestic
capacity with private investment has been allowed to be created. This growth has
relied namely on De-inked waste paper as a source of raw material. Currently import
duty on newsprint is about 5% and domestic manufacture of newsprint is exempted
from excise duty. This tariff structure for newsprint has seen Indian newsprint price
closely mapping international prices. Imports still constitute about 30% of
consumption and newsprint contributes about 10% of the total production of paper and
paperboards. The number of players in the newsprint segment is relatively limited and
manufacturing capacities are larger than in the packaging grades segment.

The Indian Paper industry is going through substantial changes. Global demand for
paper is expected to grow by about 4% p.a. over the next 5 years. The domestic
demand is expected to grow at about 8% which will result in increase of demand by
30 Lakh tones approximately over the next 5 years. It is expected that customs duty on
import of paper will decrease from the current level to the level of 10% over a period
of time due to WTO compulsions.

The import of raw material for paper including pulp, waste paper and news print is
likely to increase by at least 15% to 20% in 2005-06 to keep up with growing demand
for paper in the domestic market. Despite to the constraints like over crowded market
and limitation in procuring the desired quality of waste paper, there are indicators of a
revival in the Indian Paper Industry. In the current year, selling price has marginally
increased and enabled the industry to partially offset the rise in cost of inputs, fuel &
labour.

Stimulate industrial growth of the country.

FUTURE PROSPECTS

The globalisation of Indian economy has lead to a healthy growth of 6 to 7% industry


and that is growth happening in all the sectors. Moreover the Per Capita consumption
of paper in India is going up with the advent of packaging in the food industry. Due to
environmental concerns, the use of plastics is likely to be banned by the Government
of India within a short span of time. Hence within 2 to 3 years we will be witnessing
an explosive growth of packaging in India mainly in food, textile and export
segments.

The exposure to foreign packaging technology and the need to satisfy the export
customers has led to a drastic change in the industrial packing sector. The corrugators
have started using high BF, high GSM paper instead of the regular grades and shifting
from 7 ply and 9 ply boxes to 5 ply and 3 ply boxes. The above change has resulted in
more aesthetic and cost effective packing solutions. There is a very good potential
market developing for such grades of paper in India. The market of high quality Kraft
paper is now catered only by few manufactures from western and northern parts of the
country. With the above changes in the industry it would be in the best interest of our
company to put up a Kraft paper plant of 100 MT per day producing high B.F., higher
GSM paper and exploit the emerging market situations better. The company envisages
the following advantages by going for such a plant as follows:

l) Most of the existing paper mills in South India operate with single wire machine,
which can produce up to 24 BF only, whereas the new plant intended to be set up by
SSPML is a twin wire machine which can produce high quality Kraft paper of 24 BF
to 40 BF which is sold in the market at a premium. l By making high end paper in
south India the company stands to gain a lot in terms of logistics costs when compared
to the competition. l SJPML got the advantage of cost benefit while importing raw
materials and exporting finished product. l The possibility of exporting substantial
quantity of the production to near by countries like, Sri Lanka and eastern African
countries is also bright. This may also be substantiated from the fact that paper exports
have risen at a CAGR of 14 % pa from 105000 tonnes in the year 2000 to 179000 tons
in the year 2004. As a strategic measure to expand the international operations of the
company, the company has already started a new business division – International
Business Unit to handle the international marketing operations of the Company.

2) The company intends to manufacture the paper by using Twin Wire Technology
and also plans to incorporate all latest equipments to have a cost effective production.
The twin wire technology employs two wires drawing pulp stock from two separate
head boxes. The arrangement is in such a way that the wet webs come into contact
before going to the press.

3) At present the Company is employing single wire technology wherein the pulp
stock flows from the head box and gets distributed uniformly for further dewatering,
pressing and drying to form a sheet of paper.

The twin wire technology is superior than the single wire technology due to the
following factors:

1. Improves formation of paper.

2. Improves strength properties of paper namely, Burst factor, Tear

Factor, Tensile strength and Ring crush test values.

3. Reduces Cost of Production.

The company will be able to derive the synergies of the existing plants and position
itself as a largest Kraft paper manufacturer in south India by the installation of the
plant. The market expectation for the increased production

Demand and Supply gap in Paper Industry

Indian paper industry is the 15th largest in the world and provides employment to
1.3mn people in the country contributing Rs.25bn to the Government. The industry
has recorded a volume growth of CAGR of 5.47% over the last 3 years. In 2003-04, it
recorded a volume growth of 6%, in line with the GDP growth. Indian paper industry
has a 1:1 correlation with the economy. The demand for paper is linked to the GDP
Growth. The government is planning to target a GDP Growth of about 10% in 2-3
years. With this increase in the GDP growth the paper sector is expected to record a
similar growth rate.
The Indian paper industry has an installed capacity of 6.7mn tons while, the effective
capacity is estimated to be lower at 6.15mn tons. The industry produced 5.26mn tons
of paper in 2003-04. Newsprint capacity in India is estimated at 1.12mn tons however,
domestic production is only 0.59mn tons, while consumption of newsprint is 1.1mn
tons. Favourable demand - supply scenario to keep prices firm

The demand for paper is influenced by various macro-economic factors like national
economic growth, industrial production, promotional expenditure, population growth
and the Government’s allocation for the educational sector. Domestic demand for
paper is expected to grow at a CAGR of 6-7%. India’s paper demand is expected to
touch 8mn t.p.a by 2010. A leading global paper industry consultant projects a
shortage of about 0.7mn TPA by 2010.

AVAILABILITY OF DOMESTIC WASTE PAPER

The probable sources of waste paper collection are as under:

Waste Paper Examples


Source
Domestic refuse Newspaper, magazines, board cartons.

Industrial refuse Corrugated boards, duplex & other packaging board, paper
sacks etc.
Office refuse Ledger files and papers from Govt. offices,

Universities & large business organizations.


Trade refuse Boards trimmings from converters & packaging manufactures,
paper savings from printers
Road Sweeping Newspapers and magazines are usually recycled directly as
wrapping and packaging papers by the grocers and pretty
traders and therefore they are not available for mills in their
first rejection. Other fibrous domestic refuse probably find
their way as road sweepings.
PESTLE ANALYSIS OF PAPER INDUSTRY

PESTLE stands for “Political, Economic, Sociological, Technological, Legal and


Environmental” factors. The questions to ask are:

 What are the key political factors likely to affect the industry?
 What are the important economic factors?
 What cultural aspects are most important?
 What technological innovations are likely to occur?
 What current and impending legislation may affect the industry?
 What are the environmental considerations?

Political Factors
The Political factor refers to the governmental policies which are much
influenced by the economic situation in a country. It is a macro aspect of analysis
which deal with major changes to the government policies of a country. It has great
influence to the business outlook and confidence. Political factors often comprises of
- Current taxation policy
- Future taxation policy
- The current and future political support
- Grants, funding and initiatives
- Trade bodies
- Effect of wars or worsening relations with particular countries

Economic factors
The Economic factor is an area where macroeconomic environment can affect
the outlook and competitiveness of any business sectors in the country. Economic
factors comprises of

- Overall economic situation

- Strength of consumer spending

- Current and future levels of government spending

- Ease of access to loans

- Current and future level of interest rates, inflation and unemployment


- Specific taxation policies and trends

- Exchange rates

Social factors
The Social factor refers to the cultural aspects of the country. Social factors
comprises of:

- Demographics
- Lifestyle patterns and changes
- Attitudes towards issues such as education, corporate responsibility and the
environment
- Social mobility
- Media views and perceptions
- Ethnic and religious differences

Technological factors
Technological factor is more tangible and easy to validate. It includes
ecological and environmental aspects, technology incentives such as Research &
Development incentives, automation reinvestment, high capital setup and rate of
technological change in certain business. The technological factors include:

- Relevant current and future technology innovations


- The level of research funding
- The ways in which consumers make purchases
- Intellectual property rights and copyright infringements
- Global communication technological advances

Legal factors
Legal factors often comprised of:

- Legislation in areas such as employment, competition and health & safety


- Future legislation changes
- Changes in European law
- Trading policies
- Regulatory bodies
Environmental Factors
Environmental factors includes:
- The level of pollution created by the product or service
- Recycling considerations
- Attitudes to the environment from the government, media and consumers
- Current and future environmental legislative changes.

PESTLE ANALYSIS IN PAPER INDUSTRY

POLITICAL FACTORS AFFECTING THE PAPER INDUSTRY


Policy
India’s pulp and paper sector has been protected by government policy for
more than three decades. Controls on production, distribution and prices impeded the
growth of the industry substantially. During the paper shortage in the 1970s and
further on in the 1980s the government actively supported the venture into the paper
sector in providing financial incentives to technocrats and entrepreneurs through
financial institutions (Datt and Sundharam, 1998). To protect the rising small paper
mill industry and ensure their existence along with larger, more economic paper mills
the government gave a variety of excise concessions and reliefs. In 1974, the
Government of India enforced paper manufacturers to produce white paper and supply
it at a concessional rate to the educational sector and to the governmental departments.
Fiscal levies accounted to as much as 35%-40% of the selling price adding to the
already high-cost based prices of paper. The government additionally established high
import duties on imported paper and paperboard to reduce import dependency. Export
of paper was banned during the whole period. (1998)
The Government of India reacted on the lasting stagnation and financial
problems of the sector in the 1980s in removing price and distribution controls on
white printing paper in 1987. This allowed the paper industry to receive profitable
returns on paper products and thus provided incentives to increase capacity utilization
and establish new capacity. Also, the Government of India exempted paper units from
excise duty, provided they used 75% of non-conventional raw materials for
production. However, this exemption was abolished again in the 1990s. The concept
of broad-banding has been extended to paper products since 1985-86. This implies
that firms now experience the freedom to manufacture any variety of paper within the
overall limit of licensed capacity (1998).
Since 1992, the government has taken further measures to improve the situation
of the paper sector. They include excise rebate to small units, abolition of customs
duty on the import of paper grade pulp and wood chips, removal of statutory control
over production, price and distribution of white printing paper and provision of
infrastructural support by increased allocation of coal and wagons.
ECONOMICAL FACTORS AFFECTING THE PAPER INDUSTRY
Pulp and Paper Production in India
Although per capita paper consumption in India is very low compared to other
countries the paper industry holds a considerable share in manufacturing production.
Today more than 380 small and big paper mills produce a variety of different paper,
paperboard as well as newsprint products. Cultural paper constitutes the biggest share
in production with 41% (in 1991), followed by kraftpaper with a share of 27%,
paperboard with 17%, newsprint with 12% and specialty paper at 3% . Installed
production capacity increased substantially from 0.77 million tonnes2 in 1970-71 to
3.95 million tonnes in 1994-95. Production, however, has not increased accordingly.
While in 1970-71 production ran at almost full capacity, in 1994-95, only 2.51 million
tonnes of paper and paper board were produced. Capacity utilization had decreased
from 99% in 1970-71 to a low of 60% in 1992-93 and slightly increased again to 64%
in 1994-95.

Therefore, they are highly polluting industries contributing substantially to the overall
level of emissions and environmental problems.
Demand for paper and paper products has continuously been increasing over
time. Consumption of paper and paper board equaled 1.2 million tonnes in 1980-81
and increased to 2.6 million tonnes in 1994-95. This trend is expected to be
maintained in the future. Per capita consumption of paper, in 1995, was one of the
lowest in the world. Nevertheless, production today as in the past could not meet
demand. Imports accounted for about 7% of consumption in 1980-81. With the
increase of capacity through small mostly agro-based paper mills in the early 1980s,
imports of paper and paper board decreased to only 2% of consumption in 1985 and to
less than 1% in 1990-91. In 1994-95, however, they reached up again to over 10%.
Shortage of newsprint has been even higher both in the past and today. On average,
about 0.2 million tons of newsprint (about 40% of consumption) had to be imported in
the last few years.
Meeting this rising demand will provide a major challenge to the Indian pulp
and paper sector. The industry will have to undergo significant modernization and
expansion processes. Medium agro/recycled fibre-based mills are expected to possess
cost effective potentials for both modernization and expansion. Similarly, large
integrated mills have a high potential to undergo the needed modernization and
expansion restructuring. Expansion, however, can only be based on forest material to
the extent of 25% according the guidelines issued by national forest policy in 1989.
They will thus need to mainly be based on recycled fibers, purchased pulp or
dedicated forest management.

SOCIAL FACTORS AFFECTING THE PAPER INDUSTRY

Linked to the economic factors above social changes have significantly


impacted the paper industry in relation to changing demographics in terms of the
customers it targets. As such then changes in customer’s needs and preferences for
quality paper products and changing preference towards the paper rather than fiber or
plastic has increased the pace of the demand in terms of meeting these needs.
Increased globalization arguably has led to customers demanding faster responses to
their needs creating much more competitive business fields attempting to satisfy these
desires. The industry is not only about technology but about pictures illustrating the
industry attempt to relate to the lifestyles of consumers. This is because customers
have become more environmental sensitive as well as technique and quality orientated
as a result of higher educational levels and income levels creating much more
discerning customers in relation to these.

The sociological context of human resource has been a major influence.


Flexibility in terms of labour in Indian paper industry has been mainly achieved by
enlarging the scope of tasks and a relaxation of organizational boundaries within the
business industry. As a result It provides employment to nearly 1.5 million employees
in India to meet the growing demand for paper. Paper manufacturers are producing
white paper and supply it at a concessional rate to the educational sector and to the
governmental departments as well as per regulation given by the government.

TECHNOLOGICAL FACTORS AFFECTING THE PAPER INDUSTRY


Currently, governmental as well as sector initiatives focus on overcoming the
acute raw material constraints, implementing and adopting better technologies,
increasing production, productivity and efficiency, expanding to economies of scale
and decreasing environmental effluents. Various new technologies are entering the
Indian market that support these movements.
Presently, large paper mills are more efficient, using better and more modern
technologies and appropriating economies of scale. Additionally, they provide
chemical recovery facilities which reduce both emissions and external energy
requirements. However, the large paper mills also face severe basic problems such as
high production costs, raw material constraints and low productivity. Overall
performance has been best in medium size firms with regards to average profitability

LEGAL FACTORS AFFECTING THE PAPER INDUSTRY


The abolishment of customs duty on imports of paper grade pulp and wood
chips was accompanied by a sharp rise in international prices of wood pulp and waste
paper in 1994 that escalated the costs of production considerably. Many, particularly
small paper mills cannot compete in the market any longer and have to either reduce
production or go out of business.
Indian paper industry has been de-licensed under the Industries (Development
& Regulation) Act, 1951 with effect from 17th July, 1997. The interested
entrepreneurs are now required to file an Industrial Entrepreneurs' Memorandum
(IEM) with the Secretariat for Industrial Assistance (SIA) for setting up a new paper
unit or substantial expansion of the existing unit in permissible locations. Foreign
Direct Investment (FDI) up to 100% is allowed on automatic route on all activities
except those requiring industrial licenses where prior governmental approval is
required. Environmental regulations have been set up following increasing
environmental impacts in the line with rapid industrialization as well as greater
awareness of environmental protection and ecological balances. The Environmental
Protection Act was implemented and a Central Pollution Control Board established to
set up discharge standards that should be enforced by State Pollution Boards. The
standards have become more stringent over time. Since 1989 even small paper mills
have to follow discharge standards in the form of minimal standards regulating liquid,
air and solid waste discharges.

ENVIRONMENTAL FACTORS AFFECTING THE PAPER INDUSTRY


Raw Material Constraint
Regarding the use of raw materials in India one can categorize three types of
mills: forest based mills, agro waste/residue based mills and recycled fiber based
mills. In 1992, forest based raw materials account for about 49% of total raw material
inputs for paper, paper board and newsprint production, while the share of agricultural
residues and wastepaper amount to 29% and 22% respectively (Sharma et al., 1998).
The consumption share of forest based materials has been declining over time and is
expected to further decrease to 47% by 2000. The share of agricultural residues shows
a steadily increasing trend from 1980 to today and is expected to further rise in the
future. At the same time wastepaper use which has risen from 13% in 1985 will
approximately hold its share. The small paper mills set up in the early seventies
almost exclusively use agro waste/residues as raw materials for paper production.
Large mills, so far, have mainly been based on forest material for paper production.
This includes bamboo, hardwood and eucalyptus. While agro waste/residues such as
rice straw, wheat straw, etc. are relatively short cycled regenerative and abundant, the
availability of forest based raw material is rather limited.
Reduction of forest material consumption:
With the implementation of central and state government policy towards forests
protection and forestation, pulp and paper mills now have to take responsibility for the
reduction of forest material consumption and forestation efforts. The government is
encouraging the industry to create plantations on degraded forest and waste land
(dedicated forest program). The overall constraint of raw materials will force the
paper industry in future to rely more and more on imports of pulp or final paper
products. To overcome the raw material shortage the government has liberalized the
import of raw materials and given excise concessions for the use of non conventional
raw materials.

Environmental Impact
The pulp and paper industry is a chemical process industry with major impact
on the environment. The potential pollutants from a pulp and paper mill can be
classified into four categories: (1) liquid effluents, (2) air pollutants, (3) solid wastes
and (4) noise pollution.
The environmental problems faced by large and small paper mills are entirely
different. Pollution control is more difficult for small and medium size agro-based
units. Chemical recovery in these units is not economically viable and therefore black
liquor and lime sludge are not being burned for heat recovery. It is estimated that a 30
tpd small paper mill 10 can be almost three times as polluting as an integrated paper
mill of 200 tad.
For the same reason as wastepaper production requires substantially less energy than
other processes its environmental impact is also much lower. As shown in Sharma et
al. (1998) water pollution in the form of wastewater is up to 90% lower compared to
wood and agro-based production. Solid waste from wastepaper production is shown to
amount to only a tenth of that from agro-based production. The type and quantities of
solid waste generated differ considerably across mill types.
Stricter environmental regulations added to the constraint on raw materials. As
mentioned above programs such as the dedicated forest program were implemented
implying increasing costs for firms to ensure sufficient availability of raw materials.
Furthermore, environmental regulations regarding air, water as well as solid waste
effluents forced many small paper mills to close down. Small and medium size pulp
and paper mills very often cannot economically provide chemical recovery facilities.
They therefore suffer from higher emissions as well as higher external energy
requirements since recovered chemical and waste products can effectively be used for
cogeneration of steam and electricity. The decomposition analysis allows to gain
further insights on the contribution of both input factors and productivity change to
output growth.

EXAMPLE:- FUYANG PAPER INDUSTRY


OF JAPAN
Swot analysis of fuyang paper industry

STRENGTH

(1) It is located in Fuyang City, Zhejiang Province, northwest of Shanghai-


Hangzhou-Ningbo 'golden triangle' intersection point is the first approved by
the State Council, opening the coastal counties (cities) is one. Fuyang City,
adjacent to Hangzhou city, 32 kilometres away from Hangzhou city center,
traffic condition is convenient, 320 State Road, Hang-Xin Jing (Hang 1000)
05,23,19,14 and so a number of highways and provincial roads throughout the
north-south from the Hangzhou Railway Station , Hangzhou Xiaoshan
International Airport are all within half an hour's drive. Advantageous
geographical location, traffic conditions, is very conducive to papermaking raw
material inputs and finished goods transport.
(2) In order to achieve economic development and environmental
protection 'win-win' goal, two major initiatives proposed by Fuyang decision-
making: First, 'Yijiangdaibu' to eliminate all obsolete equipment, process
backward, high energy consumption, pollutant emissions can not be
compliance the production line, effectively implement the guidelines
formulated by the state energy-saving policies to achieve the paper-making
industry, Fuyang a dramatic decline in overall energy consumption. The
second is the establishment of Fuyang town, big source of the town, three
paper-Ling Town Industrial Park, in the industrial park adhere to water,
electricity, gas, pollution control four unity, in the land requisition, levying and
collecting taxes, loans, etc. to the and preferential policies for the development
of paper industry gathered to create a favourable environmental conditions. To
this end, China's largest sewage treatment plant has been put into operation,
Fuyang City, Zhejiang Province, is expected to completely change the local
paper industry and the harm caused to the environment.
(3), Fuyang paper industry has a long history and is known throughout
the country's 'paper town', with the advantages of industrial clusters.
Industry cluster structure will help the enterprises in clusters through the
joint use of public facilities to reduce the decomposition of the layout of the
necessary additional investment (ie the combined effect); help enterprises
compete with each other, imitate each other, through the dissemination of
knowledge throughout the cluster to improve labour productivity (that is,
knowledge spillover effects); in Fuyang imported waste paper, pulp, paper and
sewage treatment to form an organic industrial chain, enterprises have formed
a relationship of interdependence of industrial linkage and a common
industrial culture, relying on each other to promote the development (business
rooted in effect); in industry clusters, the backward easier to imitate a variety
of advanced business enterprise, advanced enterprise in order to maintain a
competitive advantage will be more to innovation, thus benefiting the whole
industry chain, to drive the improvement of the competitiveness of industry as
a whole (ie, chase and pull aside effect) .

WEEKNESS

(1) Fuyang paper more than the number of enterprises, small scale, lack of
innovation.
At present, paper-making enterprises, 90% of Fuyang concentrated in
the Spring River and spiritual bridge, large source area. The size of most
enterprises are still below the national average. As of 2006, Fuyang City, the
paper industry in the number of enterprises above designated size paper for
the 328, accounting for 35.31% total number of enterprises.

(2) Species not complete, low-grade products.


Subject to historical conditions, resource conditions and technical
conditions of constraints, Fuyang paper's main product is white board paper.
Lower than the international market for the hundreds of kinds of paper
products, paperboard products that difference was not significant, relying on
low prices to win. Currently fewer varieties of Fuyang paperboard, low-tech, its
product structure, low-grade products.
(3) The raw material structure is irrational.
Paper-making companies operating chain can be decomposed into the
sale of waste paper, pulp production, paper making, paper production, paper
sales until the end-users. For the paper industry in terms of Fuyang, the
upstream industries as paper trading, downstream industries, compared with
paper production. According to statistics, Fuyang City, paper making
enterprises more than 300 years, million tons of waste paper processing,
accounting for about 10% of the amount of waste paper each year. However,
due to variety of domestic waste paper mixed supply, inconsistent quality and
so on, can not meet the needs of paper industry in Fuyang, Fuyang paper
makes the right has a strong dependence on imported waste paper (90%
reliance on imports), in the current international economic situation and
changeable, especially in the domestic foreign trade policy continuously
adjusted, the paper will no doubt bring a lot of paper production and
management of uncertainty. As in January 2008, the State Environmental
Protection Administration issued Notice No. 61. Documents clearly pointed out
in 'an annual output of 10,000 tons and below, there is excessive emission of
bad records, a small grant to build more capacity, there are three cases
mentioned above, one of the businesses, countries have issued a ban on
imports of waste paper for approval. 'However, Fuyang has an annual output
of 10,000 tons and below, more than 250 paper-making enterprises, approval
of the ban on imports of waste paper, waste paper will mostly rely on imports
for raw materials, paper-making enterprises face in Fuyang' without food
'crisis.
(4), Fuyang part of the paper-making enterprises exists between the
more serious the phenomenon of lower prices to compete.
In 2006, the Fuyang scale paper-making enterprises 328, since the
market mechanism, competition among enterprises is inevitable. Moreover,
differences in the quality of paperboard is relatively small, so price competition
intensified in the inter-enterprise. Rising raw material prices and intense
competition within the industry, making paper profits of an enterprise Fuyang
thinner.

OPPORTUNITIES
(1) Market has been expanding, foreign capital investment to increase.
From 1991 to 2006, China's per capita consumption of paper and
paperboard production increased by almost 3 times (as shown in Figure 1). It
is estimated that by 2015, China's consumption of paper and paperboard will
be around 80 million tons. Therefore, the paper market potential is huge. With
the continuous improvement of per capita GDP, per capita consumption of
paper and paperboard also show increased year by year trend.

(2) Industrial upgrading and economic development cycle of recycled paper


manufacturing industry a broad development prospects. At present, the
country's industrial-oriented policies and environmental protection measures
combined by arranging discount on technological renovation loans and
discount loans for pollution control and other means to promote the
papermaking raw material structure, enterprise restructuring, innovation of
production processes, to achieve industrial upgrading. Fuyang paper to
paperboard manufacturing, with its output above the national production of
paperboard 1 / 2, and 90% of Fuyang paperboard made of waste paper raw
material. Statistics show that 1 ton of recycled paper can be recycled out of
800 kg a good paper, the equivalent of a small cut 17 trees, saves 3 cubic
meters of landfill space, less soda ash 240 pounds, reducing the pollution
emissions of 75 paper %, saving paper consumption 40% -50% of energy.
Therefore, the development and escalation of Fuyang paper that is conducive
to doing masterpiece Fuyang paper stronger, you can also steadily Fuyang
'circular economy' development.
THREATS

(1) 2005-2015 years, China's paper industry demand for raw materials will
significantly increase competition for raw materials increased, if the supply of
raw materials can not be synchronized growth, and will directly affect the cost
of paper making enterprises in Fuyang, competitiveness and even a virtuous
circle of trade and sustainable development. Waste paper, paper industry, as
Fuyang, the most important raw materials, mainly depends on imports.
According to statistics, in November 2007 the country imported 1.95 million
tons of waste paper, amounting to 3.94949 billion U.S. dollars, the average
unit price for waste paper 202.537 U.S. dollars / ton, and the same year in
February 157.7136 U.S. dollars / ton compared with the price, up nearly 50
U.S. dollars / ton than the beginning of 2006, up 75 U.S. dollars / ton, or
increasing. However, paperboard sales price fluctuations are very small.

(2)Guangdong, Fujian and other places the past two years has been
successively built large-scale paper-making enterprises, Fuyang paper sales
market in these two areas have been greatly compressed. Compared with the
Guangdong paper, paper-making business near Fuyang target market, the
advantages of abundant raw materials have been weakened; on the whole a
smaller scale, technology and equipment than the old product categories
monotonous, the lack of a similar Vinda Paper Guangdong, China Shun Paper
Industry giants such as paper.

CONCLUSION
We analyzed the India’s pulp and paper sector from various angles. We
developed economic as well as engineering indicators for technological change and
political, social, legal and also the environmental factors. We discussed our findings
within a broader context of structural and policy changes in the sector. The economic
analysis showed that productivity has decreased over time with a bias towards
increased use of material over labour and capital inputs. The decrease was mainly due
to the increased number of small and less productive units that were set up following
the acute paper shortage in the early 1970s. In the sub period of 1982 to 1990 along
with the establishment of larger plants as well as first liberalization measures
productivity showed increasing though fluctuating trend. Yet, since 1990, the sector
has suffered a tremendous downfall in accordance with overall economic recession.
The paper sector has been marked by continuous shortages in supply of various
products, especially white printing paper and newsprint. Meeting future demand,
which is expected to increase considerably, will continue to be a challenge as major
expansion and modernization efforts would have to be undertaken while raw materials
scarcity prevails and price development on international markets is unfavourable to
the industry.
Future production has to be economically viable and environmentally sound
and needs to be more efficient in terms of resources use and production. As major
policy changes have been implemented in the 1990s to overcome the acute problems
in the paper sector. We further pointed out low cost potentials for reducing
environmental pollution and improving overall plant productivity. However, the
implementation of initiatives towards energy efficiency is being hampered by barriers
both of general and process specific nature occurring at the macro and micro level of
the economy. Lack of information about potential savings and existing technologies
are among the barriers. Energy and environmental audits could substantially help
overcome these barriers. The analysis reveals that energy policies in general and
price-based policies in particular are efficacious for overcoming these barriers in
giving proper incentives and correcting distorted prices. Through the removal of
subsidies energy prices would come to reflect their true costs, while environmental
taxes could be imposed to internalize the external costs (including environmental
costs).
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