by Arnold Wang
China Correspondent
Based on the information released by the National Bureau of Statistics of China, we can see that China’s
coatings market in 2014 grew by around
eight percent last year over 2013. And the
fact that China’s architectural coatings
market is entering an era of single digit
growth is not surprising to everyone, so
some of the coatings producers have already begun to adjust their business strategies in China to meet this new challenge.
And the architectural coatings market is
revealing to us its new picture:
Not every market sector will
grow slower than before
Architectural coatings producers used to
invest heavily to promote their products
towards the market segment of newly constructed buildings, but with China’s real
estate market slowing down its growth in
recent years, the market potential in this
sector is not large enough to absorb the
total production capacities (even growing) of the architecture coatings industry
in China. Some major changes also happened in the real estate market as well, for
example, the government’s latest action to
support the real estate market is through
purchasing unsold residential properties
and converting these units into low-cost
public housing. The real estate market
in China is so critical and important and
closely linked with so many other upstream industries that the Chinese government will not let it fall free.
Besides, the construction of public in-
frastructures such as highway and railway
still attract huge investments. In 2014 the
investments for the public infrastructure sec-
tor grew by double digits, apparently out-
performing the real estate sector. And the
momentum will be even stronger because
public infrastructure and public housing
will play an important role in the Chinese
government’s plan to maintain GDP growth
rate at seven percent in 2015 so as to control
unemployment rates under a reasonable rate.
Conversely, both public housing and public
infrastructures provide new growth opportu-
nities for some coatings producers in China.
Repainting market will
grow 50 percent annually
Although the market demand for painting
new apartments will not grow as fast as
before, the demand coming from repainting old apartments is catching up rapidly
at a very low base. It is estimated by an
expert in Nippon Paint that no less than
three million apartments in tier one cities, which include Beijing, Guangzhou,
Shenzhen and Shanghai, need to be repainted. And this market sector will grow
by 50 percent annually. Nippon Paint and
AkzoNobel have started expanding their
services in the repainting market with the
hope of finding new sales growing areas.
Accurate marketing and
efficient operations will
be key factors to drive
continuous growth
Facing even fierce competition and less
positive business environment, differ-
ent architectural coatings companies in
China have adopted different business
strategies to keep their sales growth
from slowing down. Some companies
reorganized their operations to better
prepare themselves for the recent market
change. For example, YIP’s Chemical,
a leading coatings and ink company
founded by an entrepreneur born in
Hong Kong and whose total sales have
surpassed 10 billion HK dollars, consoli-
dated their household and architectural
coatings, industrial coatings and resins
into Bauhinia Coatings Group, with a
new management core team assuming
full responsibility. “Having set root in
China for many years and having pre-
pared ourselves accordingly, we are con-
fident that we can enjoy the fruit of the
country’s economic boom by leveraging
our competitive edge. After consolidat-
ing and optimizing the core businesses
of the Group, a streamlined manage-
ment structure and a clear market posi-
tion will further strengthen our overall
competitiveness and synergies will grad-
ually appear.” Tony Ip, chairman of YIP’s
Chemical Group commented.
China Architectural Coatings Market
Enters A New Era
