November 21, 2007

Conclusion of a Memorandum of Understanding
Regarding Alliance with Taiwanese Yuen Foong Yu Paper Mfg. Co., Ltd.

Nippon Paper Group, Inc.

Today Nippon Paper Group Inc. (President Masatomo Nakamura) and Yuen Foong Yu Paper Mfg Co., Ltd. (YFY Paper Mfg, Chairman Melody Chiu), Taiwan's largest general paper manufacturer, have signed a Memorandum of Understanding on a strategic business alliance.
The alliance will focus on the Asian paper market, leveraging the strengths of the two companies. It will encompass technical cooperation, as well as cooperation in paper sales and the exploration of new business development, with the aim of increasing the corporate value and international competitiveness of both companies.
Nippon Paper Industries, of the Nippon Paper Group, has already begun OEM supply to YFY Paper Mfg. to market lightweight coated paper produced on the N6 paper machine at Ishinomaki Mill (Mill Manager Masahiro Hirakawa), which began commercial operations this month. Steady sales of manufactured products through the sales network of YFY Paper Mfg. will demonstrate the cost competitiveness of the N6 paper machine, and the Nippon Paper Group will make progress toward full entry into the Taiwanese market. At the same time, the two companies will also establish a cooperative relationship in their overseas businesses in the mainland China and other Asian markets.
Nippon Paper Group will actively promote the alliance in the rapidly expanding Chinese and broader Asian markets, as part of the Group's efforts to achieve its goal of becoming "one of the top five pulp and paper companies in the world," as called for in its "Group Vision 2015."
Profile of Yuen Foong Yu Paper Mfg. Co., Ltd.
Chairman : Melody Chiu
Address : 51, Sec.2 Chung Ching South Rd., Taipei
Capital : 15.6 billion Taiwan dollars (approximately 54.5 billion yen)
2006 consolidated sales : 39.4 billion Taiwan dollars (approximately 140 billion yen)
Paper/paperboard production capacity : Approximately 1.3 million tons/year