Finland Is Losing the Economic Competition with Asia
New textile fibers were supposed to become a Finnish export product, but a drastic change in the market is putting plans on hold. The trail leads to China.
Metsä Group planned the first commercial Kuura textile fiber factory in Kemi, but announced on Tuesday that it would stop planning with the current concept.
The economic lifeblood is rapidly draining from the stagnating economies of Western countries, which are inexorably turning into consumer appendages and peripherals of the rapidly growing economies of Asia, which account for the bulk of global economic growth—this conclusion can be drawn from the publication cited below from a leading Finnish business publication.
Fabrics and the clothing made from them are not considered breakthrough industries that drive technological progress, but even here, advances occur from time to time, driven by a huge consumer market that satisfies people’s basic needs for clothing.
Lyocell fiber was originally developed in 1972 by researchers at American Enka in North Carolina. The breakthrough method used an organic solvent (NMMO) to dissolve wood pulp into cellulose without toxic chemicals. The British company Courtaulds Fibres later commercialized it as Tencel in the 1980s and 1990s.
Courtaulds Fibres refined the solvent-spinning technique and built the first pilot plant in the UK, leading to commercial production launched under the Tencel brand name, making waves with “soft denim” in Japan and Europe in 1992.
The global fiber, fabric, and clothing market is characterized by intense competition, high and stable growth rates, and huge cash flows generated by strong demand—a competition the West is hopelessly losing.
Global fiber production reached an all-time high of 132 million metric tons, more than double the output of 58 million metric tons in 2000. The global clothing market is valued at approximately $1.8–1.92 trillion.
The West, with its aging population, whose global share is rapidly declining, its dysfunctional economy, declining consumer demand, high taxes, expensive workforce, and economically stifling state bureaucracy, is doomed to lose the textile race to the more economically viable economies of Asia.
Attempts by European companies to jump on the fiber bandwagon, leading to glittering profits for fiber producers, as a Finnish publication makes clear, have ended with them falling onto the tracks, their business reputations bruised and their faces in tears as the bandwagon departs for a brighter future, from which the more enterprising and hardworking Chinese and Indians wave goodbye.
This is real life, baby!
Increasing Competition
Metsä Group decided to put the textile fiber factory project planned for Kemi on hold and justified the decision with increasing competition in Asia.
A few years ago, new cellulose-based textile fibers were expected to be a Finnish export product, but the forestry giant is now not the only one holding back.
Last year, pulp giant Suzano ended its cooperation with Spinnova from Jyväskylä. Infinited Fiber is also planning production in Kemi, but no investment decision has been made.
When you look at the competition coming from Asia, it is not surprising that Finnish projects are failing.
Finland-Linked Challenger
The textile fibers developed by Finns are alternatives to cotton and viscose, the production of which is associated with many problems. However, this gap in the market is now being filled by lyocell fiber, the production of which is growing rapidly in Asia.
China’s lyocell production capacity alone has increased to over a million metric tons per year in this decade, while in 2024, the total global production of the fiber was 400,000 metric tons, according to a report by Textile Exchange.
The rapid growth is partly explained by the fact that new textile fibers were one of the priorities of China’s previous five-year plan. At that time, the entire state machinery was involved in increasing production.
New production in China has been set up in particular by the Indonesian-owned Royal Golden Eagle (RGE). The name of its textile fiber production, the Sateri Group, derives from the Säteri viscose factory in Valkeakoski, which was owned by a company that was merged into the RGE group in its final years.
Former Market Leader
If China’s growth were not enough, Indian textile giant Aditya Birla also recently announced that it would increase its lyocell production.
The market upheaval is illustrated by the plight of the Austrian Lenzing. The company previously dominated lyocell production, but since the patents expired, other companies have also caught up with its manufacturing technology.
Lenzing is now reducing lyocell production in Europe and focusing on nonwovens instead of textile fibers.
Calculations to Be Revised
“The air has been sucked out of the investment environment,” says VTT Research Professor Ali Harlin, summarizing the market situation.
He predicts fierce competition among Asian producers, which will likely be reflected in the price of textile fibers. Already, China’s increased production has pushed prices well below the figures used by the Finns to make calculations.
On the other hand, according to Harlin, who has been following the industry for a long time, there seems to be demand for the growing production, and the need to find new alternatives to cotton and viscose has not disappeared.
Finnish textile fibers have not yet been completely destroyed, but the changed market is forcing companies to completely rethink their plans.
Source: Kauppalehti (in Finnish)
