TOKYO -- Japanese paper maker Oji Holdings will spend some 6 billion yen ($54.8 million) to boost cardboard box production in Southeast Asia, where economic growth has increased shipments of home appliances, food and other products.
The company will spend roughly 3 billion yen to build a plant in Vietnam's Ha Nam Province, south of Hanoi. The facility, slated to come online next July, will manufacture cardboard boxes at a pace of about 50 million sq. meters a year, increasing Oji's total capacity in the country by roughly 30%. The company currently produces 150 million sq. meters annually at its four existing plants there.
In Malaysia, the Japanese company plans to expand two factories located outside the capital of Kuala Lumpur, with the goal of kicking off production at the new sections in December. Oji operates eight plants in Malaysia, making some 500 million sq. meters a year. The plant expansions are expected to lift output there 20% in five years to about 600 million sq. meters.
Cardboard demand is expanding 6% a year in Vietnam and 4% in Malaysia, as manufacturers ship more home electronics like televisions as well as food and drink products.
The company now produces cardboard boxes in China and eight other countries abroad. With sales reaching roughly 3.8 billion sq. meters, the company earned about 240 billion yen in fiscal 2016, excluding paper board, from which cardboard boxes are manufactured.
Demand remains strong in Japan, thanks to the spread of online shopping. But Oji has been bolstering overseas operations because sharp growth is unlikely in its home market going forward.
Due to growing demand in China, the price of used cardboard, a key raw material for cardboard boxes, surged across the globe last year. Oji has been unable to fully pass on the higher cost to cardboard boxes in Japan, but it is easier to hike prices in the Southeast Asian market, a company official said.