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Building a sustainable business in China

Stora Enso is a global company producing publication paper, fine paper, packaging, and wood products, and is a world leader in forest industry sustainability, with products that offer a climate-friendly alternative to many non-renewable materials and have a smaller carbon footprint. One of the countries accounting for an increasing proportion of Stora Enso’s business today is China.

Stora Enso’s growing focus on China is being driven by the country’s rapidly expanding paper and paperboard market, which offers massive potential for the company’s products. Domestic demand for paper and paperboard in China is expected to grow by around 4% a year until 2025, when the country is set to become the world’s largest market for these products.

The local employees in Stora Enso’s Guangxi plantations typically have little awareness of social, environmental, and health and safety issues before they start working for the company via local contractors. Promoting greater understanding of these and other matters is a central priority for Stora Enso to ensure that forestry really makes a positive contribution to the local economy and environment.

Stora Enso’s operations in China today benefit from experience in the region dating back to 1985, when a sales subsidiary was established in Hong Kong. The company acquired a majority holding in the Suzhou fine paper mill in eastern China in 1998, and the mill there continues to produce 240,000 t/a of coated fine paper for the domestic market.

A joint venture was established with Shandong Huatai Paper in Dawang in 2008 to produce 200,000 t/a of super-calendered (SC) magazine paper. In addition, Stora Enso also owns two coreboard plants, at Hangzhou in eastern China and Foshan in south-east China.

Plantations in Guangxi

Stora Enso began establishing plantations in Guangxi in southern China in 2002 to serve as a foundation for integrated pulp and paper or board production in the province based on a local renewable natural resource. The goal is to establish 160,000 hectares of sustainably managed plantations by 2011.

The mill planned there would be located on the coast near to port facilities with easy access to major regional markets in China and other ASEAN countries. The project fits very well with Stora Enso’s focus on cost-efficient, plantationbased pulp, vital to meeting the world’s paper and board needs in a cost-effective and sustainable way.

Contributing to the local economy

Guangxi is one of China’s less-developed provinces, and combating poverty and encouraging new development across the region are top priorities. The regional government is keen to develop forestry in Guangxi because the climate and local population density offer unique opportunities for this type of industry and can bring valuable investments and employment to the area.

Guangxi’s hot, humid summers and cool, dry winters make it well-suited to forestry. Food production is always the first priority for land, however, and Chinese law requires that any change of use covering land currently growing crops must be approved by central government. The land offered by the local government to Stora Enso for plantation purposes is strictly defined for forestry usage, which ensures that the company never uses land intended for food production or residential use.

To reinforce its positive contribution to the local environment, Stora Enso has applied for several internationally recognised certificates, such as FSC (Forest Stewardship Council), ISO 14000, and OHSAS 18001 for its operations in Guangxi. In addition, China’s National Forest Certification scheme is using Stora Enso’s plantations as a pilot site, and Stora Enso is taking part in the development of an FSC National Initiative and a national forest management certification standard for China.

China is expected to become the world’s largest market for these products.

Stora Enso is also working with the World Bank’s International Finance Corporation (IFC) to consolidate benefits to the local economy and local society by cooperating with groups of small and medium-sized enterprises to promote the type of environmental and social principles and technical and management standards that Stora Enso stands for.

Resettling some 1,200 local people displaced by the 250-hectare mill site in Guangxi is another important issue for Stora Enso, although the number of people involved is relatively small compared to the 40,000 requiring resettlement as a result of the state’s industrial plan for the Tie Shan Gang Industrial Zone.

While the local authorities are responsible for managing the resettlement process, Stora Enso is monitoring it together with the Nanning Institute of Social Science and a social scientist to find the best way of supporting families affected. Stora Enso is also committed to supporting the restoration of the local livelihoods of people who lived at the site by supporting training and re-education.

A foundation for the future

These initiatives will provide a good base on which to build future operations in the Guangxi region. Implementing modern forestry operations and sustainable practices represents a major challenge for all involved, but is critical for building a better tomorrow. Acting transparently and fairly in the environmental, financial, and social domains will be central to the success of Stora Enso’s project in Guangxi and the company’s overall presence in China.

> Lauri Peltola
(Published in HighTech Finland 2010)