UPM FLASHUPM AP CUSTOMER MAGAZINE 1/2012

www.upm.com

Glossy and GreenThE fUTURE Of ThE ASIA PACIfIC PRINTING MARkET

Year 2011 has closed with a very positive note and I would like to take this opportunity to thank those who have provided your constant support to UPM along the journey!

Globally UPM is taking a resounding step by an investment in a biorefinery in Lappeenranta, Fin-land, which is the first in the world to produce wood-based biodiesel fuel from crude tall oil. This undertaking has further demonstrated our determination in pursuing Biofore strategy.

In APAC, especially in China, many players are looking at the ways to utilize the region’s growth by investing in new equipment and technology. UPM has a unique platform and opportunity to participate in this development. Our success in Changshu mill has laid a solid foundation for our future growth both in office and graphic papers. A new copy paper sheeting line is under construc-tion now which is expected to be operational in later 2012. The new line will add additional 100,000 tons capacity to our existing copy paper offering. On the graphic paper side, we are continuously developing a new product in low basis weight for magazine and direct marketing material, in an effort to offer a competitive edge to our customers.

Inventory management is a challenging issue for the whole paper value chain. To cope up with the fluctuating market demand, our supply chain team has developed a new system which was designed to help you better manage your inventory, reduce your operational cost and shorten the lead time - a win-win solution for both sides. Our pilot run has received very positive feedback

from the customers.

While the US and Europe are suffering from low growth and even recession, Asian economies remain optimistic with China playing the leading role. UPM Paper shares the same optimism in the Asia

Pacific region and we look forward to working with you to grow your business to a new height in the year of Dragon!

EDITORIAL

UPM Flash is UPM Paper Business Group’s customer magazine in Asia Pacific region.

EDITORIAL BOARD: Lenny Zhong, Vivian Wang, Jackie Bao, Mary Ma

EXECUTIVE EDITOR: Ada Qin (Chi-nese Version), MOLI Design (Chinese and English Version)LAYOUT: MOLI Design

PAPER: UPM Finesse premium silk 250 g/m2 (cover), UPM Finesse premium silk 130g/m2 (inside)

SUBSCRIPTION: fax 86 (21) 5292 8912 or email upm.flash@upm.com

Please email your feedback on Flash magazine to: upm.flash@upm.com UPM in-house magazine

UPM FLASH1/2012

UPM China & Asia-Pacific Sales Network

Shanghai: 86 21 6288 1919

Korea: 82 2 723 0555

Hong Kong: 852 2527 0177

Singapore: 65 6838 7280

Japan: 81 3 5778 2660

Australia: 61 2 9334 5000

www.upm.com

Pertti SalminenSenior Vice President

Business Area Asia-PacificUPM Paper Business Group

PaPer in 2012

/ 1. 2012 / UPM fLASh 2

CONTENTS

12

17

2018

METRO and UPM

NEwS 04

2011 FLASh READERShIP SURVEY wINNERS LIST 16

PRODUCT AND SERVICELess inventory means more efficiency for UPM and clients 18

CORPORATE RESPONSIBILITYa Win-Win Solution: School-enterprise cooperation 20

assessing environmental Products 22

EDITORIAL 02

featUre stOrYCustomer Day in Macau 08

Turn the page with UPM at drupa 2012 17

Marketing infOrMatiOnThe Future of the asia Pacific printing market 10

cUstOMer stOrYMeTrO and UPM 12

Glossy and Green 14

UPM fLASh / 1. 2012 / 3

NEwS

Jussi Pesonen is the next chairman of the Confederation of european Paper industriesLate 2011, the Confederation of European Pa-per Industries (CEPI) has nominated the CEO of UPM, Jussi Pesonen, as the next CEPI chairman. Mr. Pesonen started his chairmanship on January 1, 2012. Mr. Barry Wiersum, former CEPI chair-man, will take the post of Vice-chairman for the next two years to guarantee a smooth transition.

CEPI is a Brussels-based non-profit making or-ganisation regrouping the European pulp and pa-per industry. Through its 19 member countries CEPI represents 25% of the world’s production.

Pesonen states that EU needs a competitive forest fibre industry in order to meet its carbon neutral-ity goals. “The forest fibre industry is the leading producer of bioenergy and renewable wood based bio-products in Europe. European consumers are

most definitely interested in seeing positive pro-gress in substituting oil-based products with re-newable and recyclable bio-products. Therefore European policy makers should ensure a com-petitive operating environment for this industry”, says Pesonen.

Pesonen mentions three examples of policy meas-ures that directly affect competitiveness of the sector: In the emission trading scheme we need a continued carbon-leakage status for 2015-2020 to remain competitive. Also the EU Renewable Energy Policy, by subsidising biomass for energy use, threatens the supply of essential raw materials for our industry. At a regional level, the sulphur directive of marine fuels increases transport costs in Northern Europe to uncompetitive levels.

UPM (China) was officially certified by CRF institute recently as one of China’s top employers in 2012. The CRF institute is an independent organization who is spe-cialized in the area of research, develop-ment and assessment of HR, leadership and strategies. Organizations who wish to participate in this contest will need to go through a series of rigorous assessments. The entire process has provided UPM the unique opportunity to benchmark our HR practices against the international stand-ards and helped us to identify the gaps for continuous improvement.

Pertti Salminen participated the award dinner and received the trophy, “This is a great recognition to our HR practices. Over the years, we have been striving to

build a unique corporate culture and I be-lieve this is something commonly shared by many other employers in the market. Our mission is to create an environment that fosters positive morale, communicates and achieves team goals, and develops people, this is aligned with our renewed corporate value and reflected in many areas we con-duct business.”

Being awarded as the top employer mean-ing UPM as one of the employers in this competitive labor market and fast-paced environment, we have built the capability to distinguish ourselves by continuously de-veloping and promoting our HR strategies and best practices, which would allow us to attract, retain and engage the right talent.

UPM (China) is certified as one of China’s top employers 2012 by CrF institute

UPM has joined the blogosphere by opening an official Sina enterprise microblog. Car-rying the concept of “UPM – the frontrun-ner in the industry”, the blog highlights the company’s values, environmental protection and sustainable development commitments, and information on related marketing activi-ties and recruiting. Through this new social communication tool, UPM hopes to fully engage in two-way discussions, strengthen-ing information sharing and boosting brand construction.

“V” certification in Sina MicroBlog

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UPM to build the world’s first biorefinery producing wood-based biodiesel

crude tall oil

pre-treatment

hydro-treatment

recycle gaspurification

fractionation biodiesel

separation ofhydrocarbons

NEwS

UPM launches a new composite in which wood fibres replace non-renewable raw materialUPM has developed a new composite UPM Formi for both industrial and consumer end-uses. UPM Formi is made from virgin wood fibers and clean plastic polymers. The pro-portion of wood fibres in the composite var-ies from 20 to 60 percent depending on the end-use.

“UPM Formi is suitable for various end-us-es”, explains Stefan Fors, Director of UPM’s Advanced Fibre Materials. “UPM Formi is ideal for electronic and automotive industries. It is also good material for furniture, table-

ware and other goods for everyday living. The possibilities are extensive. Our strong point is the raw material — renewable and wood-based pulp fibre.”

UPM Formi can be dyed and moulded like

plastic. Products made from UPM Formi are consistent quality, odourless and safe. The material is delivered to customers in the form of composite granules, which UPM produces in Lahti, Finland.

成功，源自天然UPM ForMi 是一种用于注射成型的新型天然纤维生物复合材料，

品质卓越，经久耐用。它使设计师们得以实现任何大胆的想法。

UPM ForMi 由可再生木材纤维与塑料制成，是一种无味的可回收

复合材料，品质始终如一。UPM ForMi 是工业和终端消费者的理

想选择。

可再生原材料激发灵感

UPM ForMi 是未来材料的代表产品。此复合材料采用清洁的塑料聚

合物以及来自可持续管理森林的木材纤维制成。由于原材料可以再

生以及芬欧汇川高效的供应链，UPM ForMi 拥有较低的碳足迹。

芬欧汇川在其产品及运营的整个周期中长期致力于环境保护。公司

在环境责任方面的主要领域包括：可持续产品、气候、水资源、森

林以及废弃物处理。

UPM ForMi

UPM_Formi_A4_brochure-CH_2.indd 3 15.2.2012 14.28

Manufacturing biodiesel from crude tall oil

On February 1, 2012, UPM is to invest in a biorefinery producing biofuels from crude tall oil in Lappeenranta, Finland. The industrial scale investment is the first of its kind glob-ally. The biorefinery will produce annually approximately 100,000 tonnes of advanced second generation biodiesel for transport. Construction of the biorefinery will begin in the summer of 2012 at UPM’s Kaukas mill site and be completed in 2014. UPM’s total investment will amount to approximately EUR 150 million.

“The biofuels business has excellent growth potential. The quality of our end product and

its environmental characteristics has gained significant interest among a wide range of customers, and the investment is profitable. Lappeenranta is the first step on UPM’s way in becoming a significant producer of ad-vanced second generation biofuels. This is also a focal part in the realisation of our Bio-fore strategy”, says UPM President and CEO Jussi Pesonen.

UPM’s advanced biodiesel, UPM BioVerno, is an innovation which will decrease green-house gas emissions of transport up to 80% in comparison to fossil fuels. The product’s characteristics correspond to those of the tra-

ditional oil-based fuels and highly comple-ment today’s vehicles and fuel distribution systems.

The demand for biofuels is expected to grow by approximately 7% a year in the EU. The target of the EU is to increase the share of biofuels in transport fuels to 10% by the year 2020. In Finland, the corresponding target is even more challenging with an increase of 20%. The annual production of UPM’s bi-orefinery will contribute approximately one fourth of Finland’s biofuel target.

* The crude tall oil is a resi-due of chemical pulp pro-duction, mainly generated in the production of sulphate cellulose from softwood.

UPM fLASh / 1. 2012 / 5

NEwS

UPM Sponsors ninth asian Printing Grand awardUPM served as an official sponsor of “The 9th Asia Print-ing Awards” this past January in Thailand.

UPM has been a platinum sponsor for the event for seven consecutive years. Sirivatana Interprint PCL won the award of “Best in Web Offset” category sponsored by UPM. By coincidence, the award-winning works used UPM paper. This is Sirivatana’s second time to claim this honor. In addition, Ringier Print (HK) Ltd, Singapore Times Printers and Shen-zhen Toppan Leefung also won awards for their top quality magazine products which were printed on UPM paper.

UPM Sponsors the asia Media awards of Publish asia 2012

Meet UPM’s experts at drupa 2012 and discover what our comprehensive paper portfolio has to offer for you. UPM’s papers are suitable for a wide range of end-uses and all print-ing methods.

At drupa, we will also introduce a new online service UPM ColorCTRL for seamless workflow and color management. It will complement UPM’s versatile service offering.

UPM stand at hall 6 / D60 May 3 – 16, 2012,

Düsseldorf, Germany

UPM at drupa 2012

UPM sponsored two categories of ‘Best in Newspaper Market-ing’ and ‘Best in Community Service’ in Asia Media Awards 2012 held on April 10-12th in Indonesia, which has designated the best publications from Asia Pacific and the Middle East in seven dif-ferent categories among over 650 entries received. WAN-IFRA 11th Asian Media Awards aims to promote the highest publish-ing standards in the fields of newspaper and magazine design, info graphics, printing, editorial content, marketing community service and photojournalism.

Best in Newspaper Marketing

This award recognizes successful campaigns for marketing the news publishing company’s brand or image to readers in order to increase circulation and subscriptions to the print product and the overall media brand awareness. Judges will value the original-ity of the product/brand promotion as well as its efficiency for generating significant increases in engagement with the audience leading to increase in circulation and subscriptions.

Best in Community Service

This award aims to acknowledge the most innovative and valu-able efforts by the media company to be of service to its commu-nity. Judges take in account the merits of such social programs, the effectiveness of their marketing, involvement of the com-munity and the successful delivery of the programs’ objectives.

/ 1. 2012 / UPM fLASh 6

NEwS

UPM-Yuanwang Club event shares information and ideasUPM’s 2nd tier copy paper distributors and a part of end users in Beijing area got to-gether at the 8th Annual UPM-Yuanwang Club Event, which serves as an important communication platform.

The event held on March 14 in Beijing, fea-tured speeches by Eddie Chan, the Greater

China Sales Director, and Jin Lian, the General Manager of Beijing Yuanwang. The Head of UPM APAC Marketing and Business Development, Ali Malassu, in-troduced the new key visual of UPM Jetset and Yes brands. Malassu also shared with the participants research insights on brand recognition and user habits.

UPM investigates counterfeit Yes copy paperAt the end of February, UPM participated in a counterfeiting case in a northern Chi-nese city.

In a joint action, UPM cooperated with local authorities that broke up a counter-feiting ring, seizing fake UPM Yes brand products and packing materials.

UPM asks that consumers strengthen con-sumer and dealer rights by keeping an eye out for fake goods. Counterfeit products are inferior in quality, and by using and selling such products you risk losing legal protec-tion. UPM is resolute in its commitment to fight counterfeit production and sales.

UPM Changshu mill has started constructions on a new copy paper cutting line, it’s sched-uled to be put into production this November.

UPM invested one hundred million RMB for the 8-pocket copy paper cutting line, after the operation of new line, the copy paper capacity of the Changshu mill will increase to 450 thousand tons from 350 thousand tons making it the largest copy paper manufacturer in China.

As one of the largest Chinese wood free copy paper manufacturers, UPM copy paper has gained market recognition and taken the lead-ing marketing position by combining excel-lent quality and a good brand image.

In recent years, the focus has shifted more and more towards environmental protection con-cerns. As a pioneer in sustainable development production and operations, UPM first promot-ed copy paper with FSC and PEFC certifica-tion in the Chinese and Asia-Pacific markets, gaining positive recognition as a result.

The operation of the new cutting line will realize UPM’s copy paper strategic objec-tive in the Asia-Pacific and China, allowing production to keep pace with market growth while better meeting users’ requirements for top quality and environmentally certified copy paper.

UPM Changshu mill launches constructions of new copy paper cutting line

UPM fLASh / 1. 2012 / 7

Customer day in maCauUPM’s senior leadership emphasized the importance of UPM’s strategic development in boosting paper industry growth in China and other emerging markets.

text: Ada Qin Photos: UPM

FEATURE STORY

/ 1. 2012 / UPM fLASh 8

FEATURE STORY

on February 9 this year, UPM held the 2012 customer day in Macau. President of UPM Paper Business Group, Jyrki

Ovaska, the Senior Vice President of UPM APAC, Pertti Salminen, the company’s management team as well as over 30 client representatives from mainland China and Hong Kong gathered together, communi-cating with each other on the future of the paper industry.

In addressing UPM’s future growth oppor-tunities, Jyrki Ovaska highlighted the fast-growth in China as suggesting a very promising future paper market. According to a third-party research institution’s fore-

cast of the 2020 global printing paper mar-ket, China’s printing paper consumption will increase to 40 million tons in 2020 from 25 million tons in 2011. In contrast, the demand for printing paper in the European and Ameri-can markets will decrease, and current print-ing paper capacity has exceeded the demand. In addition to the opportunity in the Chinese market, is the enormous future growth poten-tial in other Asian emerging markets.

Two-way conversations were characteris-tic of this customer day meeting. The Vice President of UPM APAC Supply Chain, York Fang introduced the inventory management innovation program and General Manager of Beijing GAOFU Trading Co., Wang Zhibin,

shared the best practices of their stock man-agement system.

Timo Johansson, General Manager of Chang-shu Mill, announced that the new copy paper cutting line, in which UPM has invested 100 million RMB, is scheduled to put into oper-ation this November. As a result, the copy paper capacity at the Changshu mill will increase to 450 thousand tons from the cur-rent capacity of 350 thousand tons, making UPM the largest copy paper manufacturer in China.

The successful two-day meeting was capped by the UPM golf tournament and city sight-seeing tour in Macau.

UPM fLASh / 1. 2012 / 9

MARkETING INFORMATION

text: Shao Juan Photos: UPM

the fUtUre Of the asia Pacific Printing Market

asia has many very distinct print markets. Japan is very high-tech, and probably the most quality conscious in the world. South

Korea is very developed, Singapore, Hong Kong (often using production in China) have long histories of exporting print, particularly books, into the west. China is the most vibrant print market in the world, with very modern sites working beside very old technology us-ing very high levels of labour. Some sites are very well developed with all the latest equipment but many do not go for the high levels of control and automation as labour costs, although rising, are still relatively low. There are largely undeveloped countries, but these are modernizing as Japanese, European and American companies put locations and joint ventures into the region. The Asian print market in 2011 is valued at $267.3 billion, the equivalent of 17.348 trillion A4 prints. The

CAGR between 2008 and 2011 was 1.4% in value terms and will continue a growth of 4.0% between 2011 and 2016 in volume when there will be some 21.09 trillion A4 prints.

In 2011, the market for commercial print in Asia is valued at $56.5 billion, up by 11.4% since 2006. It will see an average CAGR be-tween 2011 and 2016 of 2.2% in value when the market will be $62.9 billion. In the same period the volume of A4 commercial prints will rise by 3.9% and a total of 4,991 billion A4 prints in 2016.

As Asian markets develop, packaging is be-coming more important. It accounts for 8.1% of the total print volume in 2011, and this is forecast to rise to 8.3% by 2016. The share in value terms in 2011 is 32.8%, and this will be 37.0% in 2016.

/ 1. 2012 / UPM fLASh 10

MARkETING INFORMATION

The print volume of all paper and board in 2011 in Asia was 10.9 trillion A4 prints. This has grown with an average CAGR of 1.9% since 2006 and we predict the average CAGR will be 4.1% from 2011 to 2016 when it will be 13.4 trillion A4 prints.

The Australasian print sector is well devel-oped in Australia and New Zealand, which dominate the region. The print market in Aus-tralasia in 2011 is valued at $11.5 billion, the equivalent of 825 billion A4 prints. The

CAGR between 2008 and 2011 is -3.2% in value terms and will decline -0.9% between 2011 and 2016 in volume when there will be some 788 billion A4 prints.

In 2011, the market for advertising print mar-ket in Australasia during 2011 is valued at $1.3 billion, down by 12.0% since 2006. It will see an average CAGR between 2011 and 2016 of -1.3% in value when the market will be $1.2 billion. In the same period the volume of A4 prints will fall by 2.6% and we

predict a total of 56.21 billion A4 prints in 2016. All offset printing accounts for 82.0% of the total print volume in 2011, and this is forecast to fall to 79.7% by 2016. The share in value terms in 2011 is 50.8% and this will be 43.4% in 2016.

In Australasia all paper and board consump-tion during 2011 is 3.1 million tonnes, the equivalent of 480.35 billion A4 prints. The tonnage will drop to a little under 3 million tonnes by 2016.

Main chart

$ million 2006 2008 2011CAGR(%)2008-11

2012 2016CAGR(%) 2011-16

China 56,876 72,772 92,188 8.2 99,241 134,055 7.8

Hong Kong 5,894 5,585 5,039 –3.4 5,039 5,242 0.8

India 16,008 18,032 20,366 4.1 21,632 27,169 5.9

Indonesia 3,930 4,410 4,785 2.8 5,085 6,153 5.2

Japan 119,416 122,912 112,880 –2.8 112,179 106,552 –1.1

Malaysia 3,001 3,214 3,438 2.3 3,592 4,092 3.5

Other Asia 2,140 2,403 2,378 –0.3 2,568 3,549 8.3

Philippines 1,463 1,609 1,684 1.5 1,738 1,950 3.0

Singapore 2,155 2,138 2,094 –0.7 2,132 2,313 2.0

South Korea 14,673 15,323 14,236 –2.4 14,328 14,651 0.6

Taiwan 5,472 5,646 5,600 –0.3 5,782 6,533 3.1

Thailand 1,974 2,123 2,160 0.6 2,229 2,498 3.0

vietnam 345 433 492 4.4 518 644 5.5

All Asia 233,348 256,600 267,340 1.4 276,063 315,400 3.4

$ million 2006 2008 2011CAGR(%),2011-08

2012 2016CAGR(%),2011-16

Australia 11,373 11,138 10,124 –3.1 10,119 10,259 0.3

New Zealand 1,450 1,420 1,246 –4.3 1,241 1,251 0.1

Other Australasia 129 124 125 0.5 130 159 4.9

Australasia 12,952 12,682 11,495 –3.2 11,490 11,670 0.3

Chart 1 Asia country print markets, 2006-16

Chart 2 Chart 3 Chart 6

Chart 5 Australasian country print markets, 2006-16

Chart 4

2011 Asia print product market: 267 billion USD 2011 Australasian print product market: 11.5 billion USD

2016 Australasian print product market: 11.7 billion USD

2016 Asia print product market: 315 billion USD

Chart 7

Books 5％

Packaging33％

Packaging37％

Commerical21％

Commerical20％

Advertising10％

Advertising10％

Newspaper10％

Newspaper8％

Magazine8％

Magazine7％

Books 5％Label 4％ Label 5％

Catalogues 3％ Catalogues 2％

Directories2％

Directories2％Security 3％ Security 3％

Transactional 1％ Transactional 1％

Packaging30％

Packaging32％

Advertising11％

Advertising11％

Newspaper 4％ Newspaper 3％

Labels 4％ Labels 5％

Book 5％Book 5％

Catalogues7％

Catalogues6％

Directories3％ Directories3％Security1％ Security1％

Transactional2％ Transactional

3％

16

1

1

11

1

2

4

4

11

12

3

3

2011 2016

Trilion pages

Total CAGR (2011–2016): 4.1%14

12

10

8

6

4

2

0

Consumption

Others

Uncoated mechanical

Uncoated woodfree

Packing board

Coated mechanical

Coated woodfree

Newsprint

Commerical19％

Commerical17％Magazines

14％Magazines

14％

UPM fLASh / 1. 2012 / 11

CUSTOMER STORY

since March this year, customers entering the office supplies depart-ments at METRO in China have viewed a short film aimed at cap-

turing the attention of patrons. The short film introduces METRO’s “Sigma” copy paper and tells the story of environmentally respon-sible copy paper moving from the forest floor to store shelves.

The short film adds glamour to the respon-sible stewardship of green forest, ecological resources and the modern paper manufactur-

ing process. Inspired by the goodwill gener-ated by the short film, many customers may put a pile of “Sigma” copy paper into their shopping carts. The theme of “We should do our part to protect the environment” sticks with the customers long after they watch the short film.

The short film is a joint production of MET-RO and UPM, the OEM supplier of “Sigma” copy paper.

As one of the global retail industry heavy-

weight, METRO, whose headquarters are lo-cated in Düsseldorf, Germany, created 66.7 billion euros of global sales in 2011. The in-ternational market outside Germany shares 83.5% of METRO’s total sales. Over the last decade, METRO has set its foot already in 39 Chinese cities with 54 outlets in operation.

a partnership in progress

METRO and UPM, both European based cor-porations, are global cooperative partners. In China, METRO has a ten year relationship with UPM.

METRO Cash & Carry, the international leader in self-service wholesale, has partnered with UPM in publicizing the environmental protection benefits of copy paper in 54 outlets throughout China.

METRO AND UPM: RELEASING ThE BRAND VALUE OF ENVIRONMENTAL PROTECTION

text: Ada Qin Photos: UPM

/ 1. 2012 / UPM fLASh 12

CUSTOMER STORY

Compared to ordinary hypermarkets, pro-fessional customers are METRO’s prima-ry. Because of this, METRO has rigorous selection criteria in choosing suppliers, such as product quality, professional ser-vices, quick response and even business concept.

“Since METRO China joined forces with UPM in 2003, the development in recent years has accelerated,” says Dong Ling, METRO Office Supplies Purchasing Man-ager.

“At the beginning the cooperative invest-ment was small, but now the annual purchase amount has reached nearly RMB 30 million. A healthy cooperation model between MET-RO and UPM built a solid foundation for a brighter future in long-term cooperation.”

generating value from environmental protection

As a world-renowned famous enterprise, METRO has a long term commitment to en-vironmental protection.

“We hope to offer a sustainable working en-vironment and a reliable product to all busi-ness customers who purchase at METRO,” says Dong Ling.

“In China, the environmental protection con-cept is becoming increasingly important. The

amount of FSC certified paper that METRO sold in 2011 increased by 22.6% compared with the previous year.”

Professional customers are increasingly de-manding FSC certified copy paper. In the past, purchasers of FSC certified paper were inevitably international customers. An in-creasing number of Chinese state-owned en-terprises and SME customers are seeking out FSC certified paper.

“More and more Chinese customers have re-alized that using paper with environmental labels is not only beneficial to the natural environment, but also a responsibility,” says Dong Ling, “they’re also finding out that it doesn’t cost much more.”

In order to publicize environmental protec-

tion to end users and add market value to its own environmental protection programs, METRO worked with UPM at the beginning of this year to make a promotion video that ef-fectively presented the paper’s environmental credentials. This video has played repeatedly at each METRO outlet.

“Although Sigma is a METRO brand, we want our customers to understand that we are cooper-ating with a highly reputable vender with a keen sense of social responsibility. We want them to know that the two companies are committed to

environmental protection,” says Dong Ling.

“Many Chinese consumers wrongly think that using paper is not environmentally friendly. Through the video, we hope to show eve-rybody that the paper they use is not only environmentally friendly, but can be 100% recycled, and that paper is a natural product from renewable resources,” says Dong Ling.

Most of normal consumers are not familiar with the facts: besides FSC certified, the copy paper is environmentally friendly in every stage of its production lifecycle. During UPM’s paper production, 97% of water can be reused, with the lowest water consumption per ton of paper in the industry. Also effluent disposal is monitored by the governmental environmental protection department’s net-works.

“Promoting environmentally friendly prod-ucts and the environmental protection con-cept together with METRO is a very positive move by UPM in mainland China,” says Mary Ma, the Environmental Marketing Manager of UPM.

“There’ll definitely be more cooperative oppor-tunities like this with customers in the future. We are building the brand value of environmen-tal protection today and will benefit from this as the environmental protection concept becomes increasingly accepted in society,” Mary says.

METRO and UPM, both European based corporations, are global cooperative partners. In China, METRO has a ten year relationship with UPM.

UPM fLASh / 1. 2012 / 13

International paper-manufacturer gives ELLE an environmentally-sound look

GLOSSY AND GREEN文：Ni Dandan 图：UPM

CUSTOMER STORY

/ 1. 2012 / UPM fLASh 14

When ELLE China started to hit newsstands twice monthly in February, the fashion magazine arrived

courtesy of a new venture with the Finnish paper giant UPM. For its biweekly maga-zine ELLE has adopted the 80g UPM Finesse Classic Gloss coated paper. The paper is certi-fied by the Forest Stewardship Council (FSC) and produced by UPM Changshu mill.

While it hopes the latest move will initiate an environmental change in the Chinese mag-azine industry, UPM China has constantly been using technological innovations to im-prove energy efficiency and reduce the envi-ronmental impacts of its products.

One of the leaders

With a circulation continually ranking among the top two of all fashion media in China (according to the circulation researcher Kai-yuan), ELLE China, which was established in 1988, is one of the most influential fashion magazines. Two years ago, the company de-

CUSTOMER STORY

cided it would only use either paper certified by the FSC or listed with the Program for the Endorsement of Forest Certification (PEFC).

According to Ms. Ellen Huan, Media Pro-duction Director for Hearst Magazines China, every company has social responsibilities, being an even greater issue for the media.

“For Chinese women around the age of 40 who are into fashion, ELLE China has been a constant presence throughout their lives. Personally, I learnt about Dior and Chanel from this magazine. Now the daughters of these women continue to read our magazine. Knowing the role our magazine plays in so many women’s lives, we’re hoping to use our actions to educate our readers and let more of them know about their obligations with re-gard to environmental protection,” says Ellen.

One of the first magazines to adopt FSC-cer-tified paper, ELLE China has chosen UPM as its partner because of its excellent reputation worldwide.

“More importantly, in the uncertain Chinese market, the stability and reliability of UPM’s products and its management and services are especially valuable,” adds Ellen.

Ali Malassu, UPM Asia-Pacific Marketing and Business Development Director, de-scribed the venture with ELLE China as a great match, given that both companies are leaders in their respective industries. Prior to this venture, the two companies had al-ready been working together in China for eight years.

new approaches

UPM first entered the Chinese market in

1998. Since then it has constantly innovated its technology to introduce new methods and approaches to the Chinese paper-making in-dustry, with the hope that this will have a positive effect on the local environment.

All the wood that UPM uses for paper is from sustainably managed forests. As of yet, the company has not found an appropriate and large enough area for the cultivation of such a forest in China, so the Changshu mill imports the raw materials from Finland. “Fiber is re-ally important in this industry, so we make sure of the sustainable origin of the fibers,” says Malassu.

Another important aspect of the paper-mak-ing industry is the use of water. At the Chang-shu mill, up to 97% of the water is now being recycled.

Water conservation is especially important in China. The application of international stand-ards would see the development rate of water resources in rivers controlled at around 40%, ensuring the ecological and environmental aspects of the rivers function normally. In China however, more than 80% of the water resources of most rivers are being utilized and in Southwestern areas like Sichuan and Yunnan provinces, river utilization can be as high as 100%.

Malassu recalled that when he visited Xish-uangbanna, an autonomous prefecture in Yun-nan Province, four months ago, there had been no rain for six months. “It reminded me that we should make better use of the resources that we have at the moment, like water or fibers. We should work more effi-ciently to achieve the same production levels with less consumption.”

As the world’s biggest recycled fiber user, UPM recycles 3 million tons of fiber every year, accounting for 30% of its raw materials. Paper-making fiber can be recycled six times and this helps save two-thirds of the energy consumed during the paper production process.

UPM fLASh / 1. 2012 / 15

CUSTOMER STORY

Dear Readers,

Thanks for your continued support, the 2011 UPM Flash readership survey was completed successfully. Finally, we have 8 participants won the Apple iPod nano.

Zheng Shangke Samson Paper (Shenzhen) Co. Ltd.

Liang Hongyan Shenzhen, Shenkemei Industrial Co., Ltd.

Xu Yan Office Depot

Shen Zhigang RR Donnelley Printing Co., Ltd.

Chen Yu Shandong Jialin International Business Development Co.Ltd.

Zheng Lixing Huizhou Chengbang Sationary Ltd.

Lim Chin Boon Times Printers Pte Ltd.

Kimberly Yong Canon Singapore Pte Ltd.

Congratulations

to the winners!

UPM FLASH READERSHIP SURvEY

The Changshu mill is self-sufficient. It has its own harbor and draws its processing and cooling water directly from the Yangtze Riv-er. “The mill has even worked out a way of using the heat in the processed water. This initially seemed to be quite insignificant, but we’ve saved a lot of coal with this innova-tion.” says Malassu.

Over the past decade, UPM has invested more than one billion euros in renewable energy with a special focus on the development of carbon neutral energy like nuclear, water and wind power. As a consequence, today the company’s carbon dioxide emissions are about 40% lower than they were in 1990.

In addition to these innovations, UPM has also pushed to provide more transparent in-formation in China. For the Changshu mill,

an online platform was set up, publishing the indexes of the chemicals in the waste water the factory puts back into the rivers and mak-ing the data available for the environmental protection authorities in Jiangsu Province in real time.

Positive changes

Over its 14 years in China, UPM has wit-nessed the development of the paper-mak-ing industry in the country. Malassu said he had personally noted positive changes, like the closure of very old and small mills and the government’s plan to shut down more of these, the expansion of production lines at major companies, and the introduction of international technology.

a stable market

A nationwide survey conducted by the China

Press and Publication Research Institute in 2011 indicated that the number of Chinese readers remained nearly the same as it was in 2010. However, the percentage of those reading on computers, mobile phones or other electronic devices saw a year-on-year increase of 5.8%.

Despite strong growth in the digital reading sector, Ellen said that this did not mean that printed media would die out. On the contrary, the printed sector would continue to grow in China in the next few years.

Discussing the emergence of E-media, Malas-su said that what UPM was doing and would continue to do was ensure the company pro-duced the right products for the market and was competitive enough to face emerging trends.

/ 1. 2012 / UPM fLASh 16

FEATURE STORY

it’s time to turn the page and write the next chapter in the story of paper. UPM will do it at drupa 2012.

At drupa you can familiarise yourself with UPM’s wide range of papers for every end use and printing method. New solutions, like UPM SwanBarrier, for the packaging in-dustry, wide DIGI paper offering or low basis weights products, such UPM Eco product family, are just some of the interesting prod-uct examples and innovations presented by UPM at drupa 2012.

UPM believes in co-operation throughout the value chain. By joining the expertise of UPM Paper and visionary cooperatives we’ve cre-

ated inspiring features and solutions for mod-ern print media. Come and see how codes, tags and augmented reality truly add new dimensions to print. You’ll also discover how they help to measure print media effectivity. Check out our demo sessions and take a peek into the future of paper.

UPM is known for the know-how and ex-pertise of its technical sales team. At drupa we will launch a new service for web based pdf workflow and colour management. It has been developed to produce colour accurate print products on UPM paper quicker and easier than ever. Come and hear more about UPM ColorCTRL and other UPM services at our stand.

UPM is exhibiting in PrintCity hall 6 as part of the joint PrintCity Alliance and is also sharing expertise in PrintCity’s Hot Topic clusters. UPM is presenting technical innova-tions improving runnability, printability and the latest value added solutions in newspaper printing. New UPM Seminars and Workshops for printing industry players will be intro-duced at the PrintCity area. At drupa, we will also introduce a new online service UPM ColorCTRL for seamless workflow and col-our management. It will complement UPM’s versatile service offering.

Stay tuned for UPM drupa news by following us at www.upmpaper.com and www.twitter.com/UPM_Papers.

turn the paGe with upm at drupa 2012

the Gateway to exCitinG experienCes

text: UPM Photos: MOLI

UPM fLASh / 1. 2012 / 17

text: Ada Qin Photos: UPM

PRODUCT AND SERVICE

even for a distributor that has been en-gaged in the paper business for many years, large fluctuations in the paper sales market is unpredictable.

From March to May last year, paper sales had been robust for Beijing GAOFU Trading Co., Ltd., one of UPM’s largest northern distributors. Sales by the end of May, however, turned south. Low market demand contributed to sluggish sales over the next several months. Unable to accurately gauge future market demand, Beijing GAOFU accumulated over two months of inventory by July of last year.

“Generally speaking, it’s relatively healthy for a

distributor to have about one month of inventory,” says UPM Supply Chain Planning Manager Chen Zhiming. “It may be hard for a company with too little inventory to handle a sudden order, but too much inventory can also create a huge working capital burden.”

For example, a distributor that has a monthly sales volume of 1,000 tons, costing say 7,000 RMB per ton, will have 14 million RMB of cash flow sucked up with two months of excess inventory.

It is also not a good thing for UPM that the client has too much inventory.

“Due to asymmetry in inventory information be-

LESS INVENTORY MEANS MORE EFFICIENCY FOR UPM AND CLIENTSToo much inventory produces a drag on a company and UPM is to improve inventory management via visible information sharing with clients.

text: Ada Qin Photos: UPM

/ 1. 2012 / UPM fLASh 18

PRODUCT AND SERVICE

tween UPM and clients, we often encounter the case that supply falls short of demand when the paper market becomes flat because resources are tied up in the inventory of dis-tributors whose sales are slow. In contrast, when the market is good, clients will often compete indiscriminately for products. In oth-er words, it is very hard for resources to be optimally allocated,” explains Chen Zhiming.

inventory information sharing benefits all

In August 2011, Beijing GAOFU and the UPM supply chain department began to share inventory related information. The shared data includes major aspects of the orders prepared for the client, the orders that have not yet been produced, the client’s inven-tory and the client’s product delivery status. All the information is maintained jointly by UPM and Beijing GAOFU, and it is updated periodically.

“Information sharing has helped us to dis-mantle a fence between UPM and the dis-tributor,” says Chen Zhiming.

Without information sharing previously, UPM and the distributor ongoing and con-tinuous communications were not common-place. Once the deal was over, sales personnel would communicate with the client via a phone call, which often failed to produce the documents necessary for an accurate in-formation exchange. The present information sharing, however, not only allows the client to accurately understand the UPM mill’s pro-duction and inventory status, but also gives UPM a window into the problems that the client has during sales. This allows UPM to react and adjust in time to help the client ana-lyze situations and provide support.

“The inventory information sharing between UPM and the client is an innovation,” says Wang Zhibin, General Manager of Beijing GAOFU. “The more inventory there is, the more capital it occupies. However, if the in-ventory is too low, the variety and specifica-

tion may be shallow to lose order. GAOFU has noticed that supply chain efficiency im-proved and that overdue inventory caused by inaccurate stock decreased, thus reducing operating costs for both parties.”

From August 2011 to April 2012, the total inventory volume at Beijing GAOFU de-creased to one third of the present volume. Wang Zhibin summarized four benefits by the inventory information-sharing: effective product preparation, decreasing inventory cost, clearer understanding of the best sell-ing goods and specifications, and increased visibility of UPM’s inventory.

trust is the key

However, some people may doubt the wis-dom of information sharing. They argue that inventory and product delivery information are trade secrets and sharing it leaves a company vulnerable to price inflation due to knowledge of a client’s internal information.

“The inventory information-sharing mech-anism is established on the foundation of UPM’s long-term collaboration and mutual trust with the clients. The paper market is already a market with very high transpar-ency, and the rise and fall of paper prices is not the result of action by a single entity,” says Chen Zhiming.

“We have been cooperating with UPM for 13 years and have a very good understanding of each other. The trust we have developed is the cornerstone of our relationship,” says Wang Zhibin.

This year, UPM supply chain department will propose the inventory sharing system to more clients.

“The goal will be to build a real-time inven-tory information system that will allow us to cooperate better with the client in the future. By then, sharing this information will be sec-ond nature,” says Chen Zhiming.

“The inventory information-shar-ing mechanism is established on the foundation of UPM’s long-term collaboration and mutual trust with the clients. The paper market is already a mar-ket with very high transparency, and the rise and fall of paper prices is not the result of action by a single entity.”

UPM fLASh / 1. 2012 / 19

CORPORATE RESPONSIBILITY

in the beginning of March, twenty teachers and students from Wuhan University and Beijing In-stitute of Graphic Communication arrived at the UPM Changshu Mill for a three-day training and

competition.

UPM has supported printing and papermaking colleges in China for many years. Starting last year, in addition to annual scholarship contributions, UPM introduced a bold new proposal cultivating student experience in scientific research. The new program called “School-Enterprise Cooperative Scientific Research” was born. The launch of this program signaled UPM’s commit-ment to develop talent beyond just funding scholarships to give excellent students a solid professional founda-tion upon which to start their careers.

Xia Xiaohui, UPM Senior Business Development Man-ager who participated in the evaluation of the school-

enterprise cooperation project, gave students high marks for their energy and achievement.

“Although the students lack the maturity cultivated from long industry experience, they have the advantage of being able to think out of the box providing mutual learning opportunities for both students and industry veterans,” praises Xia Xiaohui.

Wang Yunjiang, UPM Technical Sales Manager and the Head of School-Enterprise Cooperation Project, pointed out the effort involved many departments.

“Our company has invested human and material re-sources to the project. Contributing to the program are the UPM Asia Research and Development Centre, mar-keting department, technical department and commu-nications department, all of which demonstrate UPM’s attention to the school-enterprise cooperation project.”

A wIN-wIN SOLUTION: SChOOL-ENTERPRISE COOPERATIONThe UPM school-enterprise cooperation project gives students an authentic real-world experience. After spending several months in the program, students acquire an in-depth understanding of UPM’s culture and environmental protection values.

text: Ada Qin Photos: UPM

/ 1. 2012 / UPM fLASh 20

CORPORATE RESPONSIBILITY

Students and teachers who participate in the project are sharing their experience and opin-ions on this activity. Following are some of their views.

Qian Jun, Wuhan University Doctoral supervisor

“The cooperation with UPM really impressed me. The students were able to observe and participate in industry practices through ac-tivities, which are good examples of produc-tion cooperation and scientific research. In addition, UPM’s environmental protection experience exposed students to this interna-tional industry’s social responsibilities. We all live on the same earth, and both industries and schools bear responsibilities for environ-mental protection.”

Li Yanan, Wuhan University student

“I got a lot from this program. During the in-vestigation and research report phase, I learnt the value of practice. Theory is one thing but the value of actually working through a pro-ject is huge. Thinking through the investiga-tion process is valuable practical experience for our college students who have grandiose ambitions but still need to develop our skills. During the tour of the Changshu Mill, both the production line staff and the knowledge-able research personnel were enthusiastic and approachable. They were great down-to-earth models of UPM’s corporate culture. Finally,

the advanced environmental facilities and technology showed us how the processes of the papermaking industry can be aligned with the environment in which it works through technology.”

sang shenglun, Wuhan University student

“Our team is called ‘paper-like life’, which is a team that we organized as freshmen. At that time, our teachers showed us UPM videos and their forest life story impressed us. Last year when we were sophomores, we registered to participate in the UPM School-enterprise cooperation project, but we didn’t get the chance to enter the finals. We staged a comeback this year and finally got the op-portunity. The company’s advanced produc-tion facilities amazed us, and the training they arranged for us was top notch reflect-ing UPM’s professionalism and leadership position.”

Wang Xin, Beijing institute of graphic communication teacher

“So many students have come to me follow-ing this experience to say that this one ac-tivity has been better than studying for an entire year at school. The training provided was intensive but we managed to learn so much about UPM’s advanced technology, rich management practices and its unique company culture.”

Zhou hansong, Beijing institute of graphic communication student

“The thing that you notice the most at UPM is its ‘people-oriented’ culture. The mill has a highly skilled labor force working along-side the industry’s most advanced equip-ment and production lines. Moreover, the ‘printing simulator’ was an eye-opener for us. Advanced equipment like this can have a massive impact on costs and protecting the environment.”

Wang chuize, Beijing institute of graphic communication student

“Our team was very eager to submit impres-sive investigation and research reports, so we came into school to get to work on them before the new semester had even begun. We worked hard, consulted a lot of materials, and during the finals stage we woke up 8am and worked through to 3am. Funnily enough, this wasn’t really a hardship because we knew we were getting so much more than what we were putting in.”

In addition to annual schol-arship contributions, UPM introduced a bold new proposal cultivating student experience in scientific research.

Left: At the R&D Centre, the researchers are explaining the paper characteristics to students.

Right: The student is working carefully with her two classmates

in the laboratory.

UPM fLASh / 1. 2012 / 21

ASSESSING ENVIRONMENTAL PRODUCTS

the management and operation of any business is closely related to natural re-sources and the surrounding environ-ment. For example, energy is needed

to run machines, water is required to dissolve, clean and to be used as carrier. Both are basic production materials. However, in the paper-making industry, the three primary resources are water, energy and fibres.

Reducing energy consumption is a challenge for every enterprise. At the same time, increasing market demands for environmentally friendly

products means that more businesses are pay-ing attention to the development of sustainable products. But what is an environmentally friend-ly product? And what environmental assessment tool can be relied on?

Market and industry players are willing to accept assessments from third party organizations that are independent from the industry or customers, and to be valued more objectively. Following are several of the well-known environmental assessment tools that have been widely used by industry.

text: Mary Ma Photos: UPM

/ 1. 2012 / UPM fLASh 22

check Your Paper

The WWF introduced a global assessment system in 2009, called ‘Check Your Paper’, which assesses the environmental performance of each step in a paper product’s life cycle, e.g., wood source, energy consumption, water consumption, CO2 emission, effluent treatment and wastes. Scores for each of these components are calculated together to create a final score. For example, UPM offset paper are scored 100% in terms of wood source, this underlines the reliability of the wood source of UPM off-set paper and it’s certified by FSC and PEFC already. All assessments are carried out on a voluntary basis. The range of paper category to be assessed are wide, including coated paper, uncoated paper, newsprint, packaging paper and paperboard, speciality paper, pulp and tissue paper. WWF’s ‘Check Your Paper’ provides an objective assessment standard to paper procurement dealers, printers, pub-lishers and other paper buyers. By viewing the environmental performance of a product, buyers can understand comprehensively the product to be purchased and take it as a key factor for procurement.

Paper Profile

‘Paper Profile’ is another outstanding environmental paper assessment tool which was launched by several European papermaking enterprises and conforms to international standards. Paper Profile is different from the WWF assessment tool in that the production enterprises themselves will declare certain key pieces of information such as product composition, certification system, wastewater and waste gas emission data, and power consumption. UPM currently provides the Paper Profile infor-mation and carbon footprint statement for all paper products.

PrePs (the Publishers’ Database for responsible environmental Paper sourcing)

PREPS is a joint initiative from twenty-three leading publishers, which is used mainly in the UK and Europe. According to the environmental requirements of the publishing industry on paper, PREPS evaluates the products from different paper manufacturers, focusing on wood source and forest man-agement as well as monitoring of CO2 emission and water consumption. Based on the forest source information, each paper is awarded a grade of 1, 3, or 5 using the PREPS Grading System. Five is the highest score indicating a completely reliable source such as FSC certified paper. If the score of paper is 1, the purchaser should give more consideration on whether to purchase the paper. Unlike the two previous assessment tools, PREPS is only open to its registered members. Paper manufacturers who are members can only view the scores for their own products. Customers shipping to Europe from China are increasingly requiring products to reach a certain PREPS score.

ePat (environmental Paper assessment tool)

EPAT is an environmental paper assessment tool developed jointly by the sustainability nonprofit GreenBlue and the Paper Working Group which is composed of transnational giants such as Times Group, Staples, HP, and McDonald’s. The system is mainly used in North America. Similar to the WWF assessment tool, EPAT assesses the paper products on each stage of its production lifecycle, for example, whether raw materials have been effectively utilized, raw materials conserved, and waste reduced. An enterprise’s social responsibility and economic performance are also taken into account.

The environmental assessment tools outlined above are several of the ones that have been accepted internationally. With increasing market demand for environmentally friendly products, more and more assessment tools have sprung up. Customers in different regions have different perspectives on the en-vironmental performance of the paper and and will lean towards various assessment tools accordingly.

But on the whole, assessments provided by third party organizations can help purchasers objectively understand the environmental performance of paper, offering them with benchmarks for their paper procurement.

http://checkyourpaper.panda.org/

http://www.paperprofile.com/

CORPORATE RESPONSIBILITY

http://prepsgroup.com/

https://www.epat.org/

UPM fLASh / 1. 2012 / 23