Major Japanese paper producers Hokuetsu and Daio Paper have opted to forge a strategic business tie-up.

The two companies, which had been at loggerheads for many years, decided to come to terms with the aim of surviving an increasingly tough business environment exemplified by a continuously shrinking demand for paper.

With shareholders skeptical about the effects of the tie-up, however, close attention is being paid to whether the two companies can produce mutually beneficial partnership.