Setting sail: exporting recovered paper to mills in China is the backbone of America Chung Nam's business - America Chung Nam Inc

Recycling Today, June, 2002 by Brian Taylor

The opening of a paper mill complex in China offers little risk in terms of finding a market for end products. The Chinese economy has grown tremendously for the past several years, and more growth is expected.

In theory, the greater risk might be in finding a reliable pulp and paper source. But tot America Chung Nam Inc. (ACN), Pomona, Calif., that risk was less daunting, since ACN's background lies in scrap paper brokerage.

Thus far, America Chung Nam and its Nine Dragons mill complex have met with success, and the company's owners are embarking on an ambitious growth strategy that will involve the production of more finished paper and the trans-oceanic shipment of more recovered fiber.

SEARCHING THE PLANET

Entrepreneurs in China, Hong Kong, the U.S. and other nations have played a major role in the fast-paced conversion of China's agricultural economy to an industrial and information-based economy.

Although leaders of the centrally planned Chinese economy have made the crucial decisions to promote this conversion, corporations and entrepreneurs have stepped in to follow up on the opportunities created.

Husband and wife Ming Chung Liu and Yah Cheung created America Chung Nam in 1990 to serve as a U.S.-based broker to secure and supply recycled paper to several joint venture mills they co-owned in China.

Yah Cheung began her career with a paper processing company in southern China before starting a scrap paper exporting business based in Hong Kong in 1985. Ming Chung Liu has a background in medicine, but switched careers to paper and steel trailing and manufacturing before co-founding ACN in 1990.

ACN grew steadily in the 1990s as the company built strategic alliances and partnerships with recycling facilities in the U.S. and paper mills in China. ACN was successful in supplying fiber for the joint venture mills as well as for additional consumers of recycled fiber in China and other East Asian countries.

"In 1996, we made the decision to operate our own mill," notes Wang. "That changes the nature of our business, as we're now a trading company as well as a mill buyer for our own mill."

The mill ACN built is the Nine Dragons Paper Mill in Dongguan, China. According to Ming Chung Liu, the mill originally contained two hoard machines with the capacity to produce 600,000 tons per year of kraft linerboard (KLB). Additional expansions--including a third machine which was successfully started up in the first week of May--will bring the mill's capacity to one million tons annually.

Nine Dragons takes in considerable recycled paper feedstock to feed the KLB machines, with a heavy dependence on old corrugated containers (OCC) and mixed paper.

Finding that much secondary fiber has been a full-time job for ACN but the company has been up to the task. "ACN has a wide network of suppliers," Wang comments. "We buy material from the East Coast and the West Coast and in between. We source some material in Canada and have an office in Rotterdam, through which we source European fibers," he adds.

In an interview conducted last year with Recycling Today, Ming Chung Liu indicated that Nine Dragons procures "approximately 70 percent to 80 percent" of its furnish from North America, with the remainder coming from Europe.

In addition to its considerable scrap paper business, ACN also brokers scrap plastic. "We have been trading scrap plastic grades consistently for some time, although it's a smaller piece of our overall business," says Wang.

ACN has also become involved in the transportation side of the business, a natural offshoot for a company that ranked as the number one U.S. exporter by volume in 2001, according to the U.S. Journal of Commerce. ACN shipped more than 150,000 TEU containers (twenty-foot equivalent units) of material last year.

America Chung Nam Transportation operates a trucking fleet in North America while ACN Recycling Industries offers intermodal transloading services, storage and quality inspection. Additionally, the company operates its own container repair and storage service to ensure it does not run low on export containers.

THE PROCUREMENT PROCESS

In its attempt to secure material for its joint venture mills, its Nine Dragons mill and for other Asian consuming mills,' ACN at one point decided to open recycling facilities in California where it could process material accepted from scrap paper generators.

"We set up two wholly owned recycling centers in southern California a few years back, for the sake of testing the water," notes Wang. He describes the plants--in Wilmington and Pomona, Calif.--as "one-baler" plants, one of which also has a sorting line to process material collected in a single-stream manner.

Although the centers have helped attract additional material as hoped, ACN's officers are re-examining the company's need to become a leading processor. "Eventually, the processing won't be our focus," says Wang. "Instead, we feel that our focus should be on building relationships with suppliers here in the U.S."