TOKYO, Nov. 27 - Mitsubishi Paper Mills Ltd. said Monday it will set up a joint venture company with Kodak Japan Ltd. to sell photographic products and offer developing services. The new company, Kodak Diamic Ltd., will begin operating Jan. 1 2001, Mitsubishi Paper said. For the creation of the joint company in Tokyo, Diamic Co., a Mitsubishi Paper subsidiary, will spin off its photosensitive products division, and Kodak Japan, the Japanese unit of Eastman Kodak Co. of the United States, will spin off its consumer product division and its subsidiary Kodak Imagex Ltd. The three entities will be combined into Kodak Diamic, capitalized at 2 billion yen. Mitsubishi Paper will hold a 49.9% stake in the join company, with Kodak Japan owning 50.1%. The joint firm will have a workforce of around 500 and sell products under the Mitsubishi Paper and Kodak brands, with first-year sales targeted at 50 billion yen.