July 22, 2003

Establishment of a New Joint Venture for Corrugating Medium and a Partial Acquisition of a Corrugated Carton Board Conversion Company in China

Nippon Paper Industries Co., Ltd.

Nippon Paper Industries Co., Ltd. (President: Takahiko Miyoshi), a core company of Nippon Unipac Holding Group, has entered into agreements to establish a joint venture company for producing corrugating medium in Zhejiang, and to invest in a Shanghai-based corrugated carton board manufacturing company, both in China.
Establishment of a new joint venture company for corrugating medium
Nippon Paper Industries gained a foothold to expand its paperboard business into China by acquiring a 5% stake in Zhejiang Jingxing Paper Joint Stock Co., Ltd. in June 2001, where Nippon Paper Industries and Nippon Daishowa Paperboard Co., Ltd. jointly provide technical support on the production of liner board with a newly installed machine (production capacity of 200,000t per annum).
Through the existing business relationship with Japan Pulp and Paper Co., Ltd. and Zhejiang Jingxing Paper Group, Nippon Paper Industries announces the establishment of a joint venture company which will produce corrugated medium in Pinghu City, Zhejiang located approximately 100km southwest of Shanghai. A machine at Kameari Mill within Nippon Unipac Holding group in Japan, which was idled recently due to the mill shutdown, will be installed with some modernization improvements into the production site of the new company (production capacity of 150,000t per annum). We expect the commercial run to start by the end of 2004 with technical assistance from Nippon Unipac Holding Group. Through this joint venture, production for the base paper (i.e., both liner board and corrugating medium) will be well balanced to meet customers demand.
Investment in a corrugated carton board processing company
Everwealth Paper Industries (Shanghai) Co., Ltd. is a company that manufactures and processes corrugated carton board. The company, wholly owned by an U.S. entity, is located in the industrial zone of Songjiang District, (25km southwest from the center of Shanghai), in Shanghai. Since it was established in 1993, the company has remained in good business standing with stable management. By taking a stake in this company, we will be better positioned to respond to the needs of in-Japan users entering the Chinese market. We place strategic emphasis on closer relationship with Everwealth not only as its stakeholder, but also Everwealth as a prospective user of the corrugated medium produced in the new joint venture company stated above.
Demand for corrugated cardboard in Shanghai has been growing rapidly. Through this investment, Nippon Unipac Holding Group will venture into the paperboard business in China with less risk thanks to the following advantages:(1) Good business partners and an ideal location (2) Consistent deployment of corrugated cardboard business, from base paper and sheets to boxes, and (3) Smooth start-up using existing equipment and technology.
In addition, Zhejiang Jingxing Paper Group is aiming to expand its production to over 1,000,000 tons per annum in the future and we plan to grow the company as our future business hub in China.
A new joint venture company for corrugating medium
1. Company name:   Zhejiang Jingxing Nippon Paper Co., Ltd.
2. Capital:   Approx. US$16,000 000 (approximately corresponding to 1,900,000,000yen)
3. Controlling shares:   41% by Nippon Paper Industries, 14% by Japan Pulp and Paper Co., Ltd. and 45% by Jingxing Paper Group Paper-making Co., Ltd.
4. Location:   Pinghu City, Zhejiang (adjacent to Jingxing Group Paper-making Co., Ltd.)
5. Production:   150,000 tons for corrugating medium/year (with width of wire: 5,600mm)
6. Sales:   Directly sold by Zhejiang Jingxing Paper Joint Stock Co., Ltd. mainly to the existing customers for liners


A corrugated carton board conversion company
1. Company name:   Everwealth Paper Industries (Shanghai) Co., Ltd. (founded in 1993)
2. Capital:   Approx. US$6,000,000 (approximately corresponding to 700,000,000yen)
3. Controlling shares:   By acquiring a 23% stake from Everwealth Paper Industries Company
4. Location:   Songjiang District, Shanghai
5. Production:   Approx. 30,000,000 m2/year (doubled by investment in facilities in 2006)
6. Sales:   Directly sold mainly to foreign customers within Songjiang District, Shanghai