Cheng Loong Corp (正隆紙業), the nation’s biggest industrial papermaker, yesterday said that a new factory in Vietnam is to start operations in the first half of 2018, with an annual capacity of 300,000 tonnes.
Cheng Loong plans to invest US$240 million in the factory, which is to mainly manufacture industrial paper for clients in Southeast Asia, the firm said.
“We hope to develop a complete supply chain in Vietnam by building up the new plant, as our existing factories in the country are only making downstream products,” Cheng Loong president Tong-ho Tsai (蔡東和) told an investors’ conference in Taipei.
The factory is to be built in Vietnam’s Binh Duong Province, one of the nation’s most industrialized provinces with high economic growth, the company said.
“We have seen strong momentum in the local industrial paper market [in Vietnam], supported by robust demand from manufacturing companies in the province,” Tsai said.
In the long term, the company plans to manufacture diversified products at the plant, with annual capacity expected to reach 1 million tonnes per year, he said.
Headquartered in New Taipei City, the 57-year-old firm operates 12 factories in Taiwan, 13 in China and three in Vietnam.
Industrial paper and packaging paper products are seen as the company’s major growth drivers, accounting for nearly 50 percent and 40 percent of its revenue respectively.
Tsai said the company is considering cutting capacity in China, as Chinese demand for industrial paper and packaging products is slower than expected.
Revenue from China accounted for 35.2 percent of the company’s total revenue in the second quarter, compared with last year’s 41.1 percent.
Soaring labor costs and higher environmental standards in China increased Cheng Loong’s operating expenses, Tsai said, adding that the company sold a plant in Guandong Province’s Dongguan in August.
The company also halted operations of its plants in Tianjin and Chongqing due to weakening demand, he said.
The company is still working on its capacity adjustments in China, Tsai said, without giving a target.
Due to capacity adjustments at its Chinese plants, Cheng Loong saw its consolidated revenue fall 8.9 percent annually to NT$29.5 billion (US$936 million) during the January-to-September period.
Cheng Loong shares closed unchanged at NT$11.65 in Taipei trading yesterday.
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