Pollution makes papermaker see the light

Wood-free specialty papers and labeling materials in China are one of the growth initiatives the group has focused on to achieve its profit improvement targets.

The fine paper market is nearly 40 million tons in the Asia Pacific region, with China by far the largest market and offering the strongest growth opportunities, said Poulsen.

The annual growth of labeling materials is expected to rise globally by 4 percent. More than half of the global growth takes place in Asia where the most attractive markets are China, Southeast Asia and India.

Demand in the office paper sector is expected to grow by about 6 to 8 percent per year in China, he said.

"Urbanization and consumer behavior will be driving factors to the growth," he said. Poulsen.

A lot of people will be moving to the cities in China, 100 million in the next six years. When people to come to cities more paper will be used. For example, more people will visit supermarkets whose products require stickers. Demand for release paper will increase, an area where UPM is the global leader, he said.

"In the areas where we operate, there is still growth, but the growth rate is becoming smaller," said Poulsen.

Sales for UPM Paper Asia have decreased from 1.13 billion euros in 2012 to 1.11 billion euros in 2013 and operating profits reduced from 101 million euros to 80 million euros in 2013, as fine paper prices decreased in Asia.

Poulsen attributed this trend to the decline in the global printing and publishing business. The packaging materials sector has seen growth, although the growth rate is less than it used to be.

He observed that the intensified investment in paper mills in recent years has led to an overcapacity in almost all the paper grades in China.

"An increasing number of companies are exporting out of China to balance it out, but unfortunately the price level of exports is not healthy," he said.

He believes the oversupply in China will not affect UPM as strongly as other companies because of its Asia Pacific sales network, which can offset the demand and supply problem in China.

Poulsen has been doing business in Asia since 1999.He has held his position in Shanghai since 2013.

His philosophy at work is to stay humble but strong.

"We need to stay humble towards the future because we don't know what is to come. We must also stay flexible, keep our eye on the ball and work hard. Doing those things will keep us competitive," he said.

"It is my philosophy that the way you treat people on your way up is the same way they'll treat you on your way down."