Operations Report

With a firm grip on the niche, high-end speciality tissue products market, Ehime Paper Manufacturing is set to compete on quality as well as price.

Quality is one of the first things that comes to mind when you think of Japan and its manufacturing sectors. Globally, the country, which has a population of 126m plus, punches well above its weight in many areas, but especially in terms of its technical clout.

This is reflected in its tissue sector. The market is tough and unique, no culture values hygiene in the same way that the Japanese do, and this is coupled with Japanese demand for an expected level of quality at the right price.

Image is also high on the agenda: once something has gone out of favour, it is very hard to win it back into the popular conscience.

Ehime Paper PM11: the company’s 3,645mm wide, 1,800m/min Crescent Former, delivered by Metso/Kawanoe group in 2003

These are tough criteria to match, but it is something that Ehime Paper has embraced. The paper manufacturer is based in Shikokuchuo, in the Ehime Prefecture, and its production of paper for speciality tissue products has been its route to success. It has invested in the tissue box, and it also produces toilet tissue, diaper tissue and the base paper for corrugated board. Formed in 1953, the company’s most recent investment was a Crescent Former tissue machine which was installed in 2003 and delivered by Metso Paper /Kawanoe Zoki group.

Ehime Paper is a member of the Kamishoji Group, which also consists of tissue converters. In Japan, the group, has a toilet paper market share of 14%, and in terms of turnover, it ranks fourth in the country.

Recently, executive managing director Tsutomu Ono says there has been more emphasis on sanitary products and diapers. Sanitary products in particular are a growing requirement, unlike many other grades which have become stagnated.

In terms of tissue growth, the Japanese tissue market is a little saturated. The country’s general economy has also experienced nearly two decades of very little growth. However, toilet paper is a must for everyone. And this is despite the fact that the Japanese tissue market is a little saturated.

While no big increase in demand is expected, there is consistency. He says: “Companies operating here can expect a constant level of demand. What this means is that the way to compete is on quality, price, and niche products.”

One tactic competitors are taking is lowering the number of tissue sheets in boxes, but Ono says that this isn’t a strategy he employs. “Tissue has kept a low price. It is very difficult to increase the price of paper. So in order to get a better price for products we add lotions or scents to them so that the tissue quality increases. We add to the tissue so that hands feel softer after use. While we aren’t top end of the luxury niche market, our products are very good quality.”

One of the main concerns is the increased competition faced from imports, mainly from China. “Some big Japanese supermarkets import tissue products from China. The Chinese have a special strategy – to keep the product price very low while also keeping the quality.”

Elemoi products

Ehime Paper PM11

In an interview with TW on the back of the Ehime Paper visit, Kawanoe Zoki president Masayoshi Shinohara says the energy consumption of tissue machines recently installed for many Chinese tissue producers is very low, which also enables them to create very high quality products that are sold at a low price.

“There is also a spectacularly quick startup rate,” he adds. However, some of the big machines in China are expected to be postponed – there has been overcapacity in the Chinese tissue market, but equally, tissue demand is growing in rural areas. In the end though, the health of the Chinese market is very important for Japan.

There are, however, some potential growth areas for Japanese producers. While bathroom tissue is slowly decreasing, hand towel usage is increasing and is very popular with the younger generations. “Young people use a lot of these products. But I am anxious for Japanese tissue production. There is overcapacity here,” Shinohara adds.

In the end, what is unique for this market is its quality and the fact that Japanese customers are willing to pay for it. While competition for producers is in cost, popularity is also very important. A lot of people`s buying habits are based on rumour and trial and error. Internet sales are very popular and that is how young people order the majority of their products, and of course, this is largely down to word-of-mouth.

“Over the next few years our main concern is which direction China will go,” Shinohara says. “This will really influence the direction the Japanese tissue market is heading. The proximity of China means it has a great influence on our development. The trend we are seeing in Japan at the moment is for tissue producers to get together to form one company, and that means they have a certain monopoly.”

For Ehime Paper, its target is to cover the whole of Japan. Ono says the company, despite fears of over-capacity, must increase its production, and that it hasn’t ruled out getting another machine. It is certainly looking to invest in new converting machinery in the near future, although he couldn’t go into further details at this time.

However, it is by developing quality products ahead of market needs that the business is drastically increasing its territory and expanding its niche tissue products.