By Jiang Jingjing (China Daily)
Updated: 2007-08-07 08:57

APP's production and converting capacity stands at 6 million tons a year, making it the leader in the domestic industry.

Dongguan-based Hang Luck Paper Products Factory says its costs have gone up by 25 percent as a result of the new policy, along with the rise in costs of imported raw material.

Fu Zhenguang, managing director of the factory, said the firm had to terminate its plans to expand the existing factory, according to a report from www.paper.com.cn, a leading paper industry portal.

East China's Zhejiang Province is the main paper production base. An official with Jiaxing Seagull Paper Products Co Ltd said the new policy will result in a reduction of $800,000 in profit for the firm annually.

"We can't change quotations to our long-term clients. The company will have to bear the loss," an official surnamed Shen was quoted by Zhejiang-based Qianjiang Evening News as saying.

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But rather than complaining about the new policy, enterprises should enhance their competitive edge by improving the quality and cut production costs, says Zhao Wei, secretary-general of China Paper Association.

He said the paper industry has a long production chain, such as raw material providers, chemical industry, logistics sector and clients. For individual enterprises, the only thing they can do is to increase their competitiveness.

Zhao pointed out that paper exporters will have a good market potential as long as they focus on adjusting product portfolio and improving the operational method and the logistics system.

"Competing on price does not work in the industry any more," he said.

Zhao said paper-making is closely linked to the country's overall economic performance.

The US paper industry leads the world, with that of China taking the second position.

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