Paper chase: Rivals vie to cash in at elections

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Paper chase: Rivals vie to cash in at elections

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The Korean paper industry, which is fast being eclipsed by the relentless digital revolution, is expecting an unusually busy year due to the upcoming legislative and presidential elections in April and December.

While most people prefer sending e-mails over written letters and using smartphones to organize their day rather than post-it notes - even local schools are set to replace textbooks with tablet PCs by 2015 - balloting still requires paper.

Around campaign time, there is also a spike in demand for materials for name cards, guidebooks and envelopes.

Furthermore, the paper industry is looking ahead to another seasonal boost this summer when the London Olympics roll around, as this will require a substantial volume of printed material to be distributed, insiders claim.

This has set Hansol Paper and Moorim, the nation’s top two paper manufacturers, on a collision course as they vie to milk the market for all it is worth - and prove that their product is superior- before the world goes binary once and for all.

Not that the competition is just about cashing in and making a profit. There is also considerable prestige involved in attaching one’s brand to a big event like a national election or the Summer Games that can pay off later in other ways beyond simply raising awareness of the company and its profile.

Industry insiders say that putting paper back in the spotlight will also help revitalize a market that has been cannibalized by its digital offspring in the form of e-books, QR codes (barcodes that store much more data) and a growing preference for tablet PCs at company meetings as well as in place of paper menus at restaurants and bars.

Eco-rush

“With our eco-friendly paper and patented ballots, the three paper subsidiaries of our group - Moorim Paper, Moorim P&P and Moorim SP - expect to begin massive sales and marketing activities from March,” Kim In-jung, the head of Moorim Group, told reporters on Feb. 28.

Moorim, which was founded in 1973, started manufacturing special paper for ballots in 2002. Its product won a special patent related to use in electronic ballots in 2007 that the company claims proves how it is second-to-none in terms of durability and its non-jamming properties.

Also last year, Moorim became the first company of its kind to receive recognition from the Ministry of Environment for its attempts to scale back its carbon dioxide emissions, including its use of newly-built factories, officials say.

Hansol, which was spun off from Samsung Group in 1993, is also promoting its paper’s eco-friendly appeal.

The company said it has increased the proportion of reused materials in its recycled paper from 30 percent to 50 percent, adding that it plans to use this to supply all of the materials for the elections including posters, guidebooks and name cards if it wins the bid.

In the 2007 presidential and 2008 general elections, Hansol provided eco-friendly paper for the ballots and envelopes only.

“If we replace all of the paper that will be used in [both] elections this year, they will become ‘green elections’ which can raise awareness of environment preservation while also boosting the positive images of the candidates,” Hansol Paper CEO Kwon Kyo-taik told Korean media recently.

Later this month, the candidates, parties and National Election Committee will separately choose their printing houses.

Band-aid

Each major election requires the use of 10,000 tons of paper, costing around 10 billion won ($8.9 million), according to sources familiar with the industry.

This means the two rivals are looking at extra income of up to 20 billion won this year if they can convince everyone involved in the two elections that their product is best.

However, the two elections represent just the tip of the iceberg in terms of the Korean paper industry’s annual revenue, which market watchers estimate to be worth some 2 trillion won.

The London Olympics in July will spur more demand - sources estimate 5,000 tons’ worth - as large business conglomerates like Samsung Electronics engage in various sports marketing exercises and other promotions that require substantial volume of printed materials.

Still, given the recent digital rush in Korea, the benefits of the elections and the Olympics are likely to be short-lived - more of a band-aid than a full-on resurrection for a critically ill industry.

And, unlike in previous election years, few expect to see a jump in stock prices or corporate earnings this year.

Investors hoping for a repeat of late 2002, when the stock prices of Hansol, Moorim and Hankuk rose between 50 percent and 180 percent on-year in the wake of presidential and regional elections, will most likely be disappointed, they say.

Times have changed as more candidates take advantage of social networking services like Facebook and Twitter to woo voters, analysts say, and preferences are gauged just as much on mobile devices as they are on paper.


By Kim Hyung-eun [hkim@joongang.co.kr]

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