Jinying Paper Co. Ltd. – a joined venture between Dongguan Jintian Paper and Dongguan Chengying Industrial Investment Co. Ltd. - held a groundbreaking ceremony for its 2.5 million/mtpy recycled fiber based packaging paperboard project in Xiangshui, Jiangsu on May 29th, blowing the horn of march for a speedy expansion from a mid-size company to a mainstream large company in the industry through a new model of "strong-strong alliance" with financial companies for better survival and growth.
Founded in 2003, the Dongguan Jintian Paper began on recycled fiber based duplex board production and sales in its early days and expanded to baby diapers and corrugating medium through years of efforts thereafter. And from Dongguan, Southern China, new mills were built in Sichuan on the Southwest. Jintian Paper started working on the Xiangshui project several years ago, with an initial plan to RMB2 billion to build 3 production lines to launch in April, 2021. Although the plan was delayed, Jintian Paper was able to partner with Dongguan Chengying Industrials to form Jincheng Paper Co. Ltd. in July, 2020 to raise more funds necessary for a solid foundation for capital investment and on-going operation of the project. By leveraging the fund raising and managing expertise of Chengying Industrials on the one hand and Jintian Paper's production and sales capabilities on the other, Jinying Paper plans to install 10 production lines with supporting facilities including pulping and warehousing at the total investment of RMB7 billion. After the completion of Phase I scheduled in September 2022, involving the construction of 4 linerboard and medium production lines at the cost of RMB3.5 billion for a combined production capacity of 1 million/mtpy and commercial running thereafter, the company projects to realize annual sales revenue of RMB4 billion and RMB200 million taxes. This will also contribute to the industrial upgrades and economic improvement in Xiangshui and the neighboring area.
Guangdong is the leader of paper and paperboard production in China. In 2020, output of the province totaled 24.36 million/mt, up +2.5% from the previous year and accounted for 21.63% in the national production. However, the Province has limited fiber resources and the industry is highly consolidated. Today, there are 6 companies - including such industry giants as Nine Dragons and Lee & Man - whose individual production capacity goes beyond 1 million/mtpy, among the 42 companies with individual capacity over 100,000/mtpy in the Province. Being a producer larger than normally mid-size producers, Jintian Paper needs to have a breakthrough to become a “tier-one producer”, so as to stay steady for better survival and growth. This becomes more critical in view of the new changes in energy, environmental protection, recovered paper supply and logistics services, which have posed new issues, not to speak of the outbreak of pandemic last year that has since then caused greater uncertainties in transportation, raw material cost and product demand. Performance of mid and small companies have confronted rising pressure and earnings slipped. It is therefore a good strategy for mid-to-large size companies to join hands with resourceful financial institutions to build new projects in areas with more favorable government policies, rich resources, better access to markets and logistics to make a "breakthrough" and embark on a new smooth path!
