Taipei, May 7, 2008 (CENS)--Competition between Taiwanese and Chinese paper makers has extended to the emerging market of Vietnam, as Nine Dragons Paper, China`s leading paper firm, has obtained 60% stake in a Vietnamese paper-making company from Taiwan Paper and Pulp Co. at cost of US$22.8 million, stepping into the paper-making sector of Vietnam, ahead of its major Taiwanese rivals, including Yuen Foong Yu Paper and Cheng Loong Corp.

Nine Dragons obtained the stake via buying out a holding firm set up by Taiwan Paper and Pulp on Cayman Islands, which owns 60% interest in the Vietnamese paper-making firm, a joint venture between Taiwan Paper and Pulp and a Vietnamese paper firm. Taiwan Paper and Pulp will rake in US$6.6 million of profit from the sale.

Nine Dragons plans to sink another US$200 million to expand the annual industrial-paper capacity of the Vietnamese firm by five times to 500,000 metric tons, from 100,000 now.

Taiwan Paper and Pulp first contacted Yuen Foong Yu for the deal, which turned down the offer, due to possible over-supply in the market, following participation of many external makers, including those from China and Thailand. Yuen Foong Yu officials noted that supply may far exceed the demand in the market, topping 1.2 million metric tons annually, in the short term. The company now owns two paper-product factories in Vietnam.

Cheng Loong Corp. also confines its Vietnamese operation to paper products for now, saying that it will extend to the upstream paper-making sector only after the number of its paper-product factories has increased to three or four.

The two companies are concentrating their resources on the expansion of their paper-making operations in China, instead.
(by Philip Liu)