Global paper maker UPM says it will expand in growth businesses in Asia as part of reshaping its business portfolio.

The company plans a new woodfree speciality paper machine at its Changshu mill in China.

President and chief executive Jussi Pesonen says the move fits a strategic target of having more than half of its sales from well performing growth businesses in the latter part of the decade.

Apart from strengthening partnerships with customers producing label stocks, it will be a platform to expand into new end uses in Asia. “It also supports the good profitability of our growth businesses,” says Pesonen.

A new uncoated woodfree speciality machine capable of producing up to 360,000 tonnes of uncoated woodfree grades will start up by the end of 2014.

UPM says the investment will also include “future-oriented infrastructure investments” in the Changshu site. The total investment cost is CNY 3,000 million (EUR 390 million).

In addition, UPM Changshu is finalising a 100,000 tonnes cut-size sheeting line investment which strengthens the Group’s leading position in office paper grades in China. Both label paper and uncoated woodfree papers have a healthy demand outlook in Asia. In uncoated woodfree grades, UPM focusses on high quality office paper, where the Chinese market is expected to grow by eight per cent annually.

“China and emerging Asia are our natural growth markets where we already have a unique market position, good customer base and excellent distribution networks,” paper business group president Jyrki Ovaska says.

“It is worth noting that for the first time about 70 per cent of the investment will be based on Chinese currency and we aim to maximise the use of Chinese subcontractors.”

The site has been recognised by the Chinese state authorities for its sustainable production and innovative and low-emission technologies. “We are building the expansion with similar sustainability standards, using best available technology,” Ovaska says.