Japan’s top paper maker Oji Holdings and sixth-ranked Mitsubishi Paper Mills will join hands to make household products such as tissues and toilet paper, aiming to meet demand lifted by tourists visiting the country.
The companies will invest $43.8 million to construct a plant on the grounds of Mitsubishi Paper’s Hachinohe mill in Aomori Prefecture that will come online in April 2019. Oji subsidiary Oji Nepia will invest 30%, while Mitsubishi Paper will put up 70%. The factory will make 18,000 tons of Oji’s Nepia- and Mitsubishi Paper’s Nacre-brand tissues and toilet paper annually for sale mainly in Japan’s northeastern region.
The factory will help Oji streamline shipments of household paper to the northeastern Tohoku region, since the distance between existing mills and the region had been an issue. Mitsubishi Paper will benefit by broadening the lineup of goods made at the site from printing paper. After the tie-up, Japan’s paper market will be more heavily dominated by two heavyweights, Oji and Nippon Paper Industries.
Mitsubishi Paper wanted to take on industry giants Oji and Nippon Paper by creating a third major player. But its hopes were dashed when talks with Hokuetsu Kishu Paper and Daio Paper fell apart in 2015. Mitsubishi Paper has since grown closer to Oji, which holds a roughly 2.3% stake in the company, and plans to jointly operate a biomass power plant at the Hachinohe mill as early as 2019.
As over demand for paper falls due the aging population and the shift to electronic media, the market for cardboard boxes and household paper goods is growing thanks to rising e-commerce and more tourists visiting Japan. Domestic demand for such paper products is expected to climb for the second straight year in 2017 to a record, according to the Japan Paper Association and The Japan Corrugated Case Association.
Against this backdrop, companies are speeding up investments and mergers. Nippon Paper kicked off joint production and sales of cardboard box paper with Tokushu Tokai Paper in 2016, with plans to construct a new mill with Kasuga Paper Industry in 2018. Daio Paper also bought Nisshinbo Holdings’ household paper business for 25 billion yen in April, and aims to begin operating a new mill in Ehime Prefecture next year.