Lower-cost wood producing regions are challenging traditional Canadian pulp and paper suppliers. While still well positioned to produce premium products such as northern bleached softwood kraft (NBSK) pulp, the competitive advantage that Canadian companies used to enjoy in commodity grades has begun to shift to emerging low-cost regions such as South America, Russia, India, and other parts of Asia. These markets grow plantation wood quicker with cheaper labour, and have access to the same advanced manufacturing technology that most Canadian mills struggle to afford.
To compound the problem, Canadian forestry companies feel the decline in demand from their largest market, the US, thanks primarily to the the country’s housing slump, along with a gradual decline in North America’s demand for newsprint.
Despite weakening requirements for Canadian building materials, the global paper and pulp industry continues to grow thanks to demand from emerging markets such as China, the world’s second largest market for paper and paperboard. Capitalizing on these emerging market opportunites will be a challenge for Canadian companies since competing suppliers in South America, Russia and other parts of Asia may be able to service these markets more cost-effectively due to lower transporation and other costs.
Canadian companies that want to expand globally by taking advantage of these emerging markets should assess the potential risks, growth opportunities and logistics of conducting business in these regions. They must understand the government and regulatory hurdles in the emerging markets they’re about to enter, and the business partners they choose to work with.
How we can help
Our Forest, Paper and Packaging team offers a range of services, from strategic planning, due diligence and sourcing advisory for projects in China, Asia, Russia and other emerging markets. We can help you develop an emerging market strategy that will find new global opportunities and help you stay competitive.
As well, our financial, operational, strategic and structuring professionals work with a global network of tax, mergers and acquisitions, valuation, IT and environmental professionals. Access to our global network results in local knowledge and contacts for your global business deals.