Asia: Cut-Size Paper Future –

Is the “Paperless” Office Just Around the Corner?

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OBJECTIVES

This multi-client study is to present an assessment of the likely development of the Asian

cut-size paper market up to 2025.

This report focus on:

Recommendations for

Value Chain Players

Market Overview &

Development

Value Chain Analysis

Driver Impact Assessment

Product Life Cycle

Analysis

Cut-size Paper Demand

Forecast

• To review the market overview and development

• To provide an understanding of the cut-size paper value chain with its

competing value chain and hence potential impact on paper demand in Asia.

• To examine the various drivers affecting cut-size paper and their impact on

the competing value chain and hence potential impact on paper demand in

Asia.

• To examine the product life cycle of paper and its implications

• To construct a base case scenario of the most likely development of cut-size

paper in the region

• To give recommendations on how the industry needs to adapt to the current,

emergent and future value chains.

CONTENTS

The key elements of the study are:

•Executive summary

•Introduction to cut-size paper

•Introduction to cut-size market

•Macro-drivers & Geographically bundling

•Market Trends

•Cut-size paper supply

•Value-chain analysis

•Cut-size paper value chain

•Value Chain Dynamics

•Decision making criteria

•Value chain competitiveness

•Driver impacts assessment

•Paper function/value/driver analysis

•Technology Drivers

•Legal & political drivers

•Business Drivers

•Demographic & Social Drivers

•Product lifecycle assessment

•Outlook for cut-size paper

•Recommendations and conclusions

Geographical market coverage is focused in the

Asian region, with an in-depth review of:

•China

•India

•Indonesia

•Japan

•Malaysia

•Singapore

•Thailand

India

China

Indonesia

Malaysia

Singapore

Thailand

Japan

Pöyry is a global expert in consulting and engineering. We offer our clients in-depth industry expertise, innovative solutions and lifecycle engagement. Our knowledge extends across hydropower, oil and gas , power and heat, renewable energy, pulp and paper industry, chemical process industry, transportation, water and environment , and construction services.

METHODOLOGY

PRIMARY DATA COLLECTION

• Primary data collection through in-depth interviews and site visits to complement the already vast pool of proprietary Pöyryknowledge

STRATEGIC ASSESSMENT

• In-depth analysis of the primary input and strategic assessment of the key questions for the cut-size paper markets and industry.

EXPERT REVIEW

• Evaluation of the findings by an industry-leading panel of Pöyryexperts in all the key regions.

CONCLUSIONS AND OUTLOOK

• Strategic conclusions to be presented in a graphic-rich document. The analysis will deliver the Pöyryperspective on the future availability, players and competition.

4

This study will be the first-ever presentation of a comprehensive, in-depth and strategic review of how technology affects the cut-size Asian market and industry.

5

PREFACE

Pöyry Management Consulting has been actively following the developments in cut-size paper, and is

one of the most authoritative sources of knowledge regarding the future forecasts of paper demand

globally.

Asia today is, by far, the fastest-growing region in terms of cut-size consumption. We expect this to

continue for at least the next few years but the long-term future remains unclear. Pöyry has therefore

decided to provide what is probably the first comprehensive strategic review of the future of cut-size

paper in Asia to determine the most likely demand forecast by 2025, and the underlying reasons behind

this. We have also set out to answer two main questions: When will cut-size paper consumption in Asia

begin to decline?, and is the ”Paperless Office” around the corner?

Throughout the summer of 2010, Pöyry interviewed more than 1 200 respondents, and conducted over

50 face-to-face interviews across the region, to try to answer these questions. Our key experts within

pulp and paper have also analysed macro-economic factors, key drivers, end-uses, the product

lifecycle, and the competing value chains.

We trust this study will provide useful background and a point of reference, and invite you to contact us

if you would like to investigate further business opportunities in the cut-size paper value chain.

Pöyry Management Consulting

Singapore, November 2010

ASIA: CUT-SIZE PAPER FUTURE: IS THE “PAPERLESS OFFICE” JUST

AROUND THE CORNER?

SAMPLE PAGE

6

CONTENT PAGE

Preface 3Objectives and Methodology 6List of Abbreviations 8Key Messages 9

1 Introduction 182 Market Overview & Development

2.1 Macro-economic Drivers and Geographical Grouping 242.2 Market Trends 392.3 Cut-size Paper End-uses and Functions 462.4 Uncoated Woodfree & Cut-size Paper Supply 57

3 Value Chain Analysis

3.1 Cut-size Paper Value Chain 653.2 Value Chain Dynamics 733.3 End-user’s Decision Making Criteria 823.4 Evaluation of Competing Value Chains 883.5 Impact of Drivers to Value Chain Competitiveness 91

4 Driver Impacts Assessment

4.1 Technology Drivers 1004.2 Legal & Political Drivers 1144.3 Business Drivers 1184.4 Demographic & Social Drivers 123

Page

SAMPLE PAGE

7

CONTENT PAGE (CON’T)

5 Product Life Cycle Analysis

5.1 Technology Development 1335.2 Cut-size Paper Life Cycle in Developed Markets 1365.3 Cut-size Paper Life Cycle in Selected Asian Countries

1466 Cut-size Paper Demand Forecast in Asia

Demand Forecasts 1547 Recommendations for Value Chain Players

Overall Summary 163

Appendices

A Country Profile

A.1 China 170

A.2 India 184

A.3 Japan 197

A.4 Southeast Asia 204

B Asia Poyry Panel 216

C Key Supplier Profile 236

D Macro-economic factor 241

E Capacity Expansion 254

F Legislation 256

G Data Source 260

H Glossary 263

Page

SAMPLE PAGE

KEY MESSAGES – ASIAN MACRO ECONOMY

Source: UN Population Prospects

China

India

IndonesiaJapan

Rest of Asia

0

1000

2000

3000

4000

5000

1990 1995 2000 2005 2010 2015 2020 2025

Million

8

7

6

5

4

3

Real GDP growth

until 2025, %/a

5.2

4.8 4.64.2 4.2

7.4

1.3

Ø 4.7

Share of GDP in 2009, %0

1

2

7.6

Source: Concensus Forecast,

Pöyry

IndiaChina

IndonesiaOther Asia

MalaysiaSingapore

Thailand

Japan

• Macro-economic factors such as economic growth, population growth, increasing literacy and increasing usage of technology have direct influence on the consumption of cut-size paper. The impact is mainly positive.

• The population grows at an average rateof 1.2%/a through 2025.

• Japan and China are the biggesteconomies, whereas India and Chinaare expected to have the highest growth.Long-term GDP growth rate is expectedto average 4.7%/a.

• However, in more developed regions,cut-size paper consumption per capitahas shown to decouple from GDP. Thisphenomenon is also expected to happenin the studied region, but peaking at alower consumption per capita. This isdue to the competition from electronicdevices.

Forecast GDP growth

Forecast population growth

8SAMPLE PAGE

KEY MESSAGES – CUT-SIZE PAPER END-USES AND FUNCTIONS

• Cut-size paper is mainly (60-65%) used for

office (photocopying included) and home

printing. Other end-uses are copying in copy

shops, invoices, e-tickets and manuals.

• Main end-users of cut-size paper are

government offices, multinational and large

corporations and small and medium sized

companies.

Cut-size Paper End-use Segments

• Main functions of cut-size paper are archiving

(copies for record purposes), sharing

(documents for reviewing) and learning (prints

for creation and reading).

• The most used function for cut-size is archiving

(~40%), then sharing (~35%) and learning

(~25%).

• Digitalisation will have different effects on each

cut-size paper function but archiving is

expected to experience the largest impact in

the next 15 years.

• Learning and sharing of documents in print

format will decline slower because of the

current consumer preferences. Especially

sharing of information will increasingly move to

electronic format during the next 15 years.

• In the learning purposes, paper still has good

functional properties for writing and drawing.

9

Government offices (incl.

govt. schools and

health centres)

37%

MNC/ Large Corporations

34%

Small/ Medium

enterprises14%

Individuals/ SOHO

5%Printing/ Copying shops10%

SAMPLE PAGE

KEY MESSAGES – VALUE CHAINS

• Cut-size paper and digital solutions are the

alternative value chains in fulfilling the need for

archiving, sharing or learning purpose.

• In the solution selection, the most important

decision-making criteria are access, legal

requirements and economic benefits.

Functionality is also important. Environmental

benefits or brand image are not considered as

significant.

• There is no big difference in decision making

criteria between countries.

• In Asia, the access to paper solution is much

easier than for the digital solution but in the

future, this will slowly change along economic

and social development, developing legislation

and price erosion of devices. The difference in

solution accessibility between developing and

developed countries is big.

• According to our research, printing technologies

and devices have a positive impact on current

paper consumption. The research also showed

that there are solutions that influence cut-size

consumption negatively. Such solutions include

e.g. PDF, scan-to-email software and e-readers.

• In order to have a major impact on current cut-

size consumption patterns, the competing

solutions need to be accessible, functional, cost

effective, and legal in use.

End-user

Paper Mill

Merchant

Retailer

Wholesaler

Paper Value Chain Digital Value Chain

Hardware

Provider

Software

Provider

Content

Provider

Distributor

End-User

10SAMPLE PAGE

KEY MESSAGES –PRODUCT LIFE CYCLE ANALYSIS

• Cut-size paper in the developed market is in the

maturity stage of the product life cycle whereas

in Asia, cut-size is in the growth stage.

• Cut-size paper consumption in developed

regions was growing modestly in the 2000s.

The high demand until 2005 can be explained

by economic growth, a slow learning

curve/costs of digital archiving and current

consumer preferences.

• The main reasons for a decline in demand in the

USA after 2005, have been consumption trend

changes due to the growing impact of electronic

media and changes in economic activity and non-

farm unemployment.

• In Asia, the economic growth, increasing business

activity and population growth are much faster

than in the developed countries. The growth is

estimated to continue strong next 15 years.

• However in the future, access to technology, new

technology platforms and above all, the adaptation

to the new technologies is expected to be much

faster in Asia than in the developed countries.

Thus, this development will start to have faster

negative impact on cut-size paper consumption

and the regional maturity stage is reached around

2025.

• There are differences between countries as

Japan’s market is expected to move to declining

stage already in the coming years but Indian

market is foreseen to grow beyond 2025.

Time

Infancy Growth Maturity Decline

Cut-size

Asia

Cut-size Paper Product Life Cycle

2010

2025

Cut-size

USA

2005

11SAMPLE PAGE

ORDER FORM

ASIA: CUT-SIZE PAPER FUTURE – IS THE “PAPERLESS” OFFICE JUST AROUND

THE CORNER?

Contact: Peter J Kahn or Ryoko See

Pöyry Management Consulting (Singapore) Pte Ltd

50 Raffles Place #38-05, Singapore Land Tower Singapore 048623 Tel: +65 6733 3331, Fax: +65 6734 6198

E-mail: peter.kahn@poyry.com; ryoko.see@poyry.com

To order, please complete and

return the below form.

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Management Consulting

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#22-01 Springleaf Tower

Singapore 079909

Account number 5004851902

Swift Address: NDEASGSG

Multi-client Study – for

all subscribers (1 hard

copy and pdf. File):

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