Lee & Man Paper Manufacturing ( 02314.HK) will increase its production capacity to six million tonnes by the end of next year from the current four million tonnes despite slowing demand.
"We hope to focus more on western and central China instead of the coastal areas by opening more production plants and setting up used paper collection points in those areas," chief executive Raymond Lee Man- chun told The Standard. Inland provinces offer a lot of opportunities as they are now getting more industrialized, he added.

Lee said containerboards are sold at an average price of 450 yuan (HK$548) per tonne in coastal provinces, whereas in the rest of China they fetch about 500 yuan per tonne. But he conceded the firm's business environment is likely to get tougher.

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"Amid the uncertainty in the global economy, there is room for price cuts." However, demand for the firm's products is likely to be stable over the medium and long term as domestic sales of electrical appliances continue to rise, Lee said. The company specializes in pulp and containerboard - used mainly to make corrugated board and carton boxes.

New production lines in Hongmei, Chongqing and Jiangxi are expected to commence production by December 2012.

Meanwhile, the firm has been lowering its debt-to-equity ratio to 55 percent from 64 percent, but Lee said this would not adversely affect capital expenditure.