Paper Industry in Crisis... Facing Competition from Overseas Firms Amid Economic Downturn

Paper Industry Files Anti-Dumping Complaint Against Japanese Firms
Indonesian Company Acquires Domestic Firms
Price Undercutting Expected... "Acquisition Approval Must Be Reconsidered"
Many Paper Companies Turned to Losses in Q3

The domestic paper industry is in crisis. Following the recession and rising raw material prices, competition with overseas companies has intensified, and many companies turned to losses in the third quarter. With no proper measures in place, the industry has started tightening its belts.

According to the industry on the 18th, domestic corrugated base paper companies such as Asia Paper are filing anti-dumping complaints against Japanese paper companies Daio Paper and Oji Paper.

Domestic corrugated base paper companies including Asia Paper, Taelim Paper, and Korea Paper plan to file anti-dumping complaints with the Trade Commission of the Ministry of Trade, Industry and Energy against Japanese paper companies Daio Paper and Oji Paper as early as this month, or by early next year at the latest.

Paper mill factory view.

The paper industry views the act of Daio Paper and Oji Paper selling products to other countries at prices lower than their domestic selling prices as dumping. After the COVID-19 pandemic, as consumption declined due to the economic downturn in China, Japanese companies began targeting Korea and have now reached a level that threatens the domestic base paper industry.

It is not only Japan. This year, the giant Indonesian paper company APP officially entered the domestic market by acquiring domestic hygiene paper manufacturers Monalisa and Ssangyong C&B. Although APP has not yet revealed specific plans on how it will manage Monalisa, the industry believes there is a high possibility that it will dominate the market with a low-price offensive starting next year.

In response, the Korea Paper Association sent an official letter to the Fair Trade Commission this month titled "Objection to Corporate Merger Approval and Request to Prevent Unfair Competition." The Fair Trade Commission approved APP's acquisition of the major shareholder MSS Holdings of Monalisa and Ssangyong C&B last month after reviewing the corporate merger. The association requested reconsideration of the approval, citing concerns about potential unfair competition. APP is Asia's largest pulp and paper producer and has expanded its market globally through low-price offensives.

The industry is on edge due to the aggressive market entry of overseas companies. Demand for paper is declining amid digital transformation, and competition has become fiercer. Some small and medium-sized paper companies have started to close. Yuhan-Kimberly, the top domestic supplier of hygiene paper (toilet paper, facial tissues, etc.), also accepted voluntary retirement this year. Many companies have returned to losses. Hansol Paper, Moorim SP, Clean Country, and Taelim Packaging all posted operating losses in the third quarter.

Amid heightened tension, each company is focusing on strengthening financial stability and solidifying their foundations. Hansol Paper appointed Vice President Han Kyung-rok as the new CEO. The new CEO is a financial expert with a background in economics from Seoul National University, a master's degree in financial engineering from Carnegie Mellon University, and experience mainly in global finance and investment at foreign financial firms and Korea Investment Corporation. He is expected to focus on profitability enhancement.

Clean Country has appointed Executive Director Lee Dong-yeol as the new CEO. This is interpreted as a move to overcome the paper industry's recession through structural reform. The new CEO is a financial expert who worked for about 22 years in accounting and finance at LG Display and LG Chem. Since joining Clean Country as Chief Financial Officer (CFO) in 2022, he has focused on strengthening financial stability through fundraising and investment strategies. This appointment is seen as an effort to improve poor performance through structural reform.

An industry insider said, "With rising raw material and maritime freight costs and the impact of the recession causing profitability to drop significantly, the full-scale offensive by overseas companies has begun, putting the domestic industry in a precarious situation," adding, "Next year, voluntary retirements at each company are expected to continue, bringing a cold wind across the entire industry."