Quality: the proof is in the paper

From what you read in the press, you might be excused for believing the paper industry is disappearing fast in the wake of digitization. However, last year’s number show a different reality, with the industry experiencing another year of growth, Certain sectors of the paper industry, such as packages or special application papers are showing great potential. What are the trends that the paper industry is currently experiencing?

You are absolutely correct. Digitalization, especially here in Japan, are greatly affecting the paper and pulp manufacturers. We can notice that the overall production of paper here in Japan is decreasing. For example, in the past couple of years 32 million tons a year of paper was manufactured during the peak. Currently, 26 million tons are being produced, and the main reason behind this drop is digitalization.

The main segment that has been affected by digitalization is the production of newspaper and what we call that “ordinary coated paper”. Because of the Internet, computers and other sources of online information, the need for newspapers are decreasing. Of course, this is not a Japanese problem, but a worldwide problem. At the same time, we can notice an increase in the demand for packaging paper. Luckily for our company, we have never been involved in the production of ordinary coated paper, so we haven’t been affected by the drastic changes of the industry. 

Our company has been involved in producing three kinds of paper. The first one is the industrial paper, the second one is the specialized papers mainly used for packaging, and the third one is household paper, such as toilet paper. Currently, the total amount of annual sales of all three types of papers is 80 billion yen. Our objective for the next ten years is to to achieve the 120 billion yen.

Can you give us an overview of the paper industry in Asia, and particularly in China?

Currently, our vision is to satisfy all clients, as we have a very global approach. Domestically speaking, we have a stronghold in the container board and the toilet paper production, but we don’t really have a particular approach to the Asian market. To be more precise, we have a different approach with each of our segments. For the household products and the industrial paper, we have a very domestic approach. However, for the specialized papers, we are putting great emphasis on expanding our activities to the entire world, and particularly the Asian market. For example, for the Chinese market, we will be launching a new product called “KAMILab”. This particular type of paper is of exceptional quality, and we foresee being a big hit in China. In China, and in many other countries in Asia, they often try to copy our products, however, with this new, original and high-quality product, we doubt that anyone will be able to produce it, eliminating competition

Tokushu Tokai Paper was established in 2007 through the merger of its two parent companies, Tokai Pulp and Tokushu Paper, two century-old corporations who combined their expertise to develop a unique technological model.  Could you tell us how Tokushu Tokai Paper has evolved across all these years?

Our company was the result of a merger between Tokai Pulp and Tokushu Paper in 2007. Tokai Pulp started manufacturing the industrial type of paper while Tokushu Paper mainly produced specialized paper. We can divide these two companies into two distinguished philosophies. Tokai Pulp philosophy was to continuously gain the trust of the customers, while Tokushu Paper was a pioneer when it came to implementing new types of technology for the production of various kinds of paper. These two philosophies are very much present in our philosophy today. Our Logo, which of course stands for “Tokushu Tokai”, also stands for “Technology and Trust.” We put great emphasis on this philosophy, and we truly carry it in our DNA.

The concept of these two companies are important in understanding our current business. Firstly, Tokai Pulp introduced various kinds of products, with the philosophy of lower price but large quantity and variety. Tokushu Paper specialized in producing products at a higher cost, but thanks to their innovative technology, they found niche markets with outstanding quality.

Could you briefly analyse your three segments and tell us which one represents the biggest amount of sales for your company?

The biggest part of the sales comes from the industrial segment, such as container board. Nearly half of our sales, approximately 40 billion Japanese Yen comes from the industrial segment. Around 30% of our sales are the specialized paper. The remaining 20% are the household products. However, the net profit of our specialized paper is about 60%, which explains why we are willing to expand the specialized paper segment.

The R&D department is key for any company and those unable to properly develop it are pretty much doomed to failure. What research approach have you adopted in order to enhance innovation across the company?

Currently, we are investing 1.1 billion yen in R&D. This is necessary to be able to produce specialized paper, and to continue expanding this segment in our company.

Could we dig deeper into this specialized paper, by elaborating for which industry it is applicable, and how it will drive the growth of your company?

Specialized paper has a wide range of applications. For our company, we are focusing on three distinct applications. First of all, the publishing business. I’m sure you have noticed that here in Japan, all books are mostly bound with beautiful and high quality paper, and this is a tradition in Japan. The second field we are focusing is the printing business such as calendars, post cards and posters. Last but not least is the packaging industry. People around the world, but especially in Japan, pay particular attention to the way a product is packaged. For this segment, we are emphasising on the Chinese market.

Both domestically and abroad, your company face markets competition, with industrial giants and local competitors also wanting to get their slice of the pie.
What are the competitive advantages of Tokushu Tokai Paper?

First of all, the quality of our paper is a definite competitive advantage, as it is virtually impossible to copy this kind of product. For example, this particular paper, named “Tanto” is available in 150 different colours, making it impossible for other companies to copy. We also manufacture security paper, waterproof paper, which are all impossible to copy. That is undoubtedly our strength at Tokushu Tokai Paper. It is impossible to copy.

As for functional paper, we also manufacture the purest type of paper that is used when producing liquid crystal for screens of television or smartphones. In Japan, we currently occupy 70% of the market share and supply to major glass manufacturing companies in China, Korea and Taiwan which use our products to manufacture their own end products.

How is your company contributing to creating eco-friendlier solutions?

Firstly, we are using environmentally friendly production processes. When it comes to the specialized paper, we use virgin pulp made of wood which is properly certified. And when it comes to container board, which is our main industrial paper product, it is 90 % made of recycled paper. As for plant energy, we consume only a little fossil fuel, the amount of which is decreasing year by year. It is because we have introduced 4 bio-mass boilers which use recycled materials and wood scrap which would normally be thrown away. This enables us to decrease the level of CO2 emissionsdramatically.

You mentioned you wanted to achieve 120 billion yen sales in the next 10 years, what is your strategy to achieve this objective?

Here, at Tokushu Tokai Paper, we have something called “NaSFA”. The first two letters stand for Nano technology, the S stand for Security, the F for fusion and A for art.  This is the main strategy of our mid-term plan. We are looking forward to the future, and believe we will continue to grow, in line with our corporate philosophy.