With the evolution of a middle class,
over the past decade 400 million Chinese
families have experienced the historic drive
to pursue the universal dream of home
ownership. This drive towards home ownership has given rise to an unprecedented
expansion in home construction, which in
turn has resulted in a significant growth in
architectural coatings.
Although there is no exact measurement of the size of this market it is estimated that in 2010 the architectural
market in China was about 3. 5 million
metric tons. It is further expected that it
will grow at a rate in excess of eight to 10
percent over the next five years. However,
there is a caveat with this projection, i.e.,
the home construction expansion will
continue at its present rate.
Since 2004, the largest architectural
segment has been interior water-based
coatings. In 2010 that market was estimated to be one million metric tons. The
overall improvement of per capita income
for the average Chinese individual has allowed more families to become homeowners. Until recent times, the government
and banks were highly supportive of individual home ownership. Due to the global
economic downturn Chinese banks have
backed off in their lending, which has
slowed the housing development compared to just a few years ago.
What DIY market?
On the surface, the architectural coatings
statistics sound like a good thing for coating producers. Unfortunately, many segments of the traditional coatings market
in China are not well developed. The Chinese architectural market is highly competitive and extremely diffuse. It is
estimated that there may be as many as
8,000 paint producers inside China at
least half of which who produce an architectural coating.
Unlike industrial coatings such as automotive coatings or inks, there is an absence of rigorously enforced quality
standards for architectural coatings in
China. As a result, the market is beset with
a wide range of product composition,
quality and performance. In addition,
there is essentially no DIY coatings market in China. The market is completely
controlled and managed by contract
painters whose objectives and positions
are not in sync with either the paint producer or the homeowner.
If we review strong, well-defined and
well-managed architectural coatings markets around the globe it is noted that
growth and stability cannot exist without
an established DIY market whereby producers and users are in sync. In other
words the primary drivers in most successful architectural markets tend to be
homeowners, not contract painters.
“If we review strong,
well defined and well
managed architec-
tural coatings mar-
kets around the
globe it is noted that
growth and stability
cannot exist without
an established DIY
market whereby pro-
ducers and users are
in sync.”
Although there are well-known international coatings companies established
inside China the route to market is essentially through contract painters, not
through homeowners. This absence of
homeowner participation has given rise to
confusion about what is really needed by
the Chinese architectural market.
Homeowners vs. contractors
Historically, the average Chinese citizen
has not invested a lot of money in either
improving the basic appearance of their
home nor in the use of coatings to protect its various substrates. That position
has changed somewhat over the past
decade and was significantly reinforced
by the Beijing Olympics. In an effort to
impress the visitors to the Olympics and
of course, the rest of the TV viewing
world, the Chinese Government pushed
a massive coatings project of unprecedented size and scope.
Offices, manufacturing plants and
homes were all painted in a variety of dazzling colors designed to impress the
viewer. Even today various cities in China
not only dictate that certain buildings be
painted but what color is to be used. In
the countryside, many small towns have
instituted regulations regarding the painting of homes and offices. Due to the historical cultural influence in China, this
entire painting requirement falls in the
hands of “Contract Painters” and along
with this fact comes a host of problems.
The average Chinese homeowner contracts with a coatings company to do their
painting. The company would visit with
the homeowner, submit an estimate of the
amount of paint that is to be used and in
some instances they would work with the
homeowner in choosing colors. The concept of flat versus eggshell, or eggshell versus gloss may come up but the question of
what type of coating to use—interior or
exterior, water-based or solvent-based—
is generally not discussed nor what resin
type such as vinyl, acrylic, polyurethane,
alkyd, etc.
What generally happens is that the contractor will estimate far more paint than is
required to do the job. Even so, the contractor will often add water or solvent, depending on the system used, to the paint in
an effort to extend coverage and minimize
the amount of paint that has to be used.
The contractor will then take the overage
paint and use it in other jobs or will sell it
to smaller, less organized contractors.
By adding additional water or solvent
to the coating the ultimate performance of
the coating is compromised. Unfortunately, the Chinese architectural market is
primarily based on esthetics and price, not
performance. In some instances the coatings that are eventually applied to homeowner dwellings are so poor that the
locals have coined the term “wall cancer”
signifying that the coatings are terminally
sick and will eventually die.
