When companies expand their business to foreign countries they are sometimes faced with a series of unexpected risks. Companies have to deal with new cultures and practices, not to mention working with foreign governments and legislation. What sounds good on paper often turns out to be a challenge of whole new proportions.
This is something that the Swedish-Finnish pulp and paper manufacturer Stora Enso has experienced in China during the past decade or so. Today, the company supplies a third of all raw materials for the world’s liquid packaging board. Since the early 2000s Stora Enso has explored the opportunity to establish itself in China and get a foothold on the growing Chinese market.
The plans are for the Guangxi mill to manufacture fibre-based liquid packaging board for products such as milk cartons and fast-food drink cups. Demand for these products is expected to grow at an annual rate of 10% in China over the next decade.
Many peasants who own the land where Stora Enso want to plant Eucalyptus trees feel exploited and there have been rumours of violent behavior and threats. Nordea is a major investor in Stora Enso and we simply cannot ignore accusations like these. Even though the paper manufacturer has a good reputation when it comes to sustainable and responsible practices.
We want to support growth and we want to help businesses expand, as long as it also benefits local communities and complies with our ESG standards. Therefore, we have visited the Guangxi province in China several times in order to talk to local authorities and witness the situation at first hand.
New markets mean new challenges
What Stora Enso has realized is that a solid business model is one thing, carrying it out is something completely different. Especially when expanding to different cultures and communities that have depended on the farming land for centuries.
As active investors we want to take part in the process and ensure that there is understanding between expanding companies and local people. Also, that local communities can handle the changes that follow these expansions.