Finnish company uses 'Biofore' as a new motto to reinvent itself, says its president

Jussi Pesonen, president and chief executive officer of UPM, one of the largest makers of paper in the world, says that despite the turbulent times in the market, the Finland-based company has managed to hold its head above the water by reinventing itself as a "Biofore" company.

"Biofore is a new word that means a commitment to efficient operations, profitable business and a more sustainable future, demonstrated through concrete actions and a string of R&D successes that complement existing businesses," says Pesonen.

"Biofore is in our DNA. It is there in all that we do, be it innovation, efficient products, new markets, new customers, growth, and the transformation to a multi-product company," he says, adding that it is also all about effective leadership.

Though the global papermaking industry has experienced solid growth over recent years, it has seen slower demand and growth after the advent of digital technology. Many firms also have to adjust to the changes and even eliminate products to avoid overcapacity.

Pesonen recently spoke to China Daily about the company's development strategies. Following are edited excerpts of the interview:

How do you perceive the future for UPM in the digital age?

Paper is one of the most sustainable products in use today: Its primary raw material, wood, is renewable and fully recoverable. After use the product can be easily recycled into new paper.

I don't think digital products will sound the death knell for us. Different media channels can complement and support each other. The real question is not a choice between electronic media or paper, but what combination of these has the least impact on our environment. Paper is a sustainable part of today's media mix. It's a powerful communication tool that is based on a renewable resource and recyclable material.

How would you rate growth prospects for the industry in China?

I would predict a robust future for the industry in China. Most of the paper products sold in China have shown solid growth in recent times. We have high confidence in this market. The growth rate for paper products in the US and Europe has been about 3 percent to 4 percent, while it is about 7 percent in China.

Do you think the economic slowdown will have an impact on your strategy in China?

To some extent, yes, especially in the way we manage our day-to-day operations, on how efficiently we can operate the mills and how efficiently we can meet and serve customers. What it means is that these things will become more of a necessity in a slowing environment.

When there is growth, we have more freedom in a way. But when the economy is slowing, we really need to have the basic plan in place. If the economy is going to grow, then we will have more freedom.

But on the other hand, our position in China is not restricted to the Paper Asia mills in the country, but to all the businesses.

Since we sell a lot of products here, we will continue to hold various customer events to be in constant touch with customers.

I am happy that our sales team here is well aware of the customer requirements and this will hold good for us in the long run.

What challenges face the industry in China?

In recent years, China's paper industry has seen rapid development in both technology and quality. But there are still several issues like the number of small-scale enterprises, high energy consumption and pollution. China is the world's largest paper producer and exporter. Fine paper demand in China is expected to grow by nearly 1.1 percent every year till 2020.

The biggest challenge is overcapacity in China's paper industry. I believe every industry will experience such a painful period, which may not be a bad thing for the entire industry. Companies will be reshuffled and consolidated to a higher level.

What do you think is the biggest challenge for UPM?

I think the global economy is by far the biggest challenge, as it has not been growing like before. If the global economy slows down, it will be the biggest challenge for all industries, and also UPM. If there is growth, we know what to do and how to run our business to make profits.

What opportunities do you give to young talent?

There are several growth opportunities for young talent within the UPM global system, especially in research, production, sales, logistics and sourcing. Along with these skills we also look for people who have the commitment to succeed and a keen global view.

Different regions need different leaders, so there are more opportunities than limitations in our company.

What has been your most satisfactory decision?

The most important decision I made was in February 2014, about Changshu PM3, a new papermaking machine in Changshu, Jiangsu province. Set to start up at the end of this year, it is not only a major investment for Paper Asia, but also a big step for UPM. It is also the biggest single investment of the whole group. We are actually moving where the growth is and where the opportunities are. Obviously, in Europe there are plenty of opportunities when it comes to the energy business or biofuel business.

How do you stay energetic with such a global agenda?

Learning every day inspires me a lot. Every day is different for me. I talk to new people, different people, trying to learn all the time what will be beneficial for us, what are the products needed globally, what are the trends that I can utilize to make UPM a good participant and make good business. I want people to share ideas with me routinely as part of the information-sharing process.

What kind of green lifestyle do you practice?

In Finland, we recycle just about everything. We recycle paper, plastics, aluminum and glass. So that's our everyday life. Actually, we try to make use of resources efficiently.

What traits are important for you as a leader?

There are many basic values, in which trust and to be trusted are really important for me.

I cannot run a business on my own. So I need to be trustworthy and to trust many people. I also need to have the ability to tolerate different people and different ways of thinking. Hence, trust and to be trusted is quite important and is applicable to the whole organization.

What is your typical day in UPM like?

Actually, the harvesting operation is fantastic in Finland, so we have taken plenty of customers to see forest harvesting. Here I have a big picture to show you. He is President Xi Jinping, who visited our forest in 2010.

But there is no typical day for me. Today I am here in Shanghai, tomorrow I may be in Changshu, the next day I may be somewhere else to meet new customers, investors.

How do you spend your weekend?

During the winter I ski a lot. I have been skiing since my childhood. In the summer I play golf on vacation trips.

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