offered herein are clearly contingent on a number of factors. The
first major assumption is that Western economies will continue
to drag themselves out of recession. While much of the end use
OEM products manufactured in Asia-Pacific is for domestic consumption, a great deal is exported to the U.S. and Europe.
Continued economic malaise in these regions will depress
coatings demand in Asia-Pacific. Recent spikes in oil prices have
emphasized the fragility of this recovery. An additional concern
is the tight supply of key raw materials both in Asia-Pacific and
in other parts of the world. Continuing price escalation could
lead to market stagnation or replacement by alternate materials.
Furthermore, it is uncertain how the recent devastation in Japan
will affect the regional and global markets.
regions. The data suggests that Asia-Pacific grew faster than
North America and Europe prior to the recession and significantly outperformed Western Economies during the recession.
Furthermore, the most recent data from the International Monetary Fund, World Economic Outlook forecasts that the disparity
in growth will be even greater post-recession than pre-recession.
Chart 3: Historical and Forecast Regional GDP Based on Purchasing Power Parity illustrates the historical and forecast GDP
by region as measured by purchasing power parity.
Chart 2. Source: Orr & Boss, Inc. estimates
Coatings forecast
Over the next five years the Asia-Pacific market is projected to
continue to grow above the global average, albeit at a slightly
lower growth rate than what it has previously experienced. As in
the past, China and India are forecast to lead the region in growth.
Several key industrial coatings segments, including wood, powder,
packaging, and industrial maintenance and protective coatings are
forecast to experience the greatest rate of growth to 2014. Given
the recent advancement in the region and the projected continued
growth, Asia-Pacific is forecast to account for approximately 43
percent of the total global coatings volume by 2014.
The forecasts offered in the IPPIC global market analysis and
Asia-Pacific as a platform for growth
The rapid growth in Asia-Pacific, and in particular growth in
China and India, has not gone unnoticed by leading coatings
manufacturers and raw material suppliers. Especially given the
slow growth in Western countries, many formulators and suppliers are focusing on the Asia-Pacific region for future growth.
The vast majority of new construction of coatings end product
and raw material production facilities is occurring in Asia-Pacific.
While the high level of activity in the region does present opportunities, many Western suppliers underestimate the differences in business culture in the region, particularly between Chinese companies
and their Western counterparts. Differences related to conducting
business in China can be broadly categorized as company, personnel, and market differences. Each of these is discussed briefly below.
It is important to note that there are different kinds of “Chinese
companies” and there is a different way for Westerners to approach each of these ethnically diverse types of companies. There
are Chinese-native companies, Taiwanese and Hong Kong-based
companies and foreigner-owned Chinese companies. Recognizing
each and treating them accordingly is important. In addition, initial interaction with them, either directly or through a Chinese
speaking agent is very important and will affect how a Western
company deals with a Chinese company.
Chinese-native companies tend to have a love-hate relationship with Western companies. On the one hand, they are proud
and highly nationalistic. There is also a tendency by some to distrust Westerners and their motives. On the other hand, many believe that dealing with Westerners elevates their social/industrial
status. In terms of business acumen, some feel inferior to the
Westerners, and believe any association with the Western culture,
brand and corporation is something good and is desired.
When dealing with Chinese-native companies, it is important
to understand the Chinese culture of reciprocity. English-speak-ing Westerners should focus on professional protocols but should
also be aware of certain customs such as offering small gifts at
an initial meeting to help in building the relationship. Learning
a few Chinese words is also sign of respect and will help in relationship building. When enlisting a Chinese-speaking agent to
facilitate business with a Chinese-native firm, the agent will need
