Coatings World - August 2013

Oceania) have mature, slow growing paint industries, not unlike that of Western Europe, with a very similar end-use structure. Since they are mature economies, rapid growth within the Oceania region of Asia Pacific is not expected over the next several years.

Over the last five years, coatings volume in Asia Pacific has increased by an average annual rate of seven percent. Value has increased by an annual average rate of 7. 5 percent over this period. The automotive OEM, other transportation, powder and decorative sectors have experienced the largest increases in Asia Pacific over the past five years. China grew at a rate of well over 10 percent per year in terms of both volume and value during this timeframe. Figure 2 depicts the position of Asia Pacific within the global market as well as the position of the constituent countries within the region.

At the most basic level, industrial coatings demand is a function of the production of end use OEM products such as cars, tractors, furniture, packaging, etc. Given that China is such a large percentage of the Asian market, it is important to note that coatings have continued to get a boost from the Chinese government’s investment in infrastructure development, including new bridges,

landmark properties, alternatives energy facilities, nuclear power generation, hospitals, schools, etc. Hosting world events such as the 2008 Olympics in Beijing, the 2010 Shanghai World Expo and the Guangzhou Asian Games has certainly continued to stimulate large infrastructure projects. Also, much has been made of the changes in the global automobile industry, with China supplanting the United States a few years ago as the largest car producer in the world. This transition to the number one automobile market in the world is simply a microcosm of the shifting manufacturing landscape around the globe.

Economic Influences within the Asia Coatings Industry Coatings demand in Asia Pacific is heavily influenced by a wide array of economic factors. For example, demand for decorative coatings is affected by new construction, housing activity and overall affluence. While housing and construction markets in North America and Europe have languished somewhat in the period following the economic recession, activity has continued to be strong in China, India and other parts of developing Asia Pacific. As an example, new construction spending in the United States declined by four percent from 2009 to 2011. Over that same period, construction spending in China increased by over 10 percent. This general trend in construction disparity is projected to continue, although perhaps not with such a large gap since North America’s construction industry will likely increase and China’s could cool down some over the next few years.

Market Trends and Driving
Forces

In comparison to most developed nations, China, India and some of the Southeast Asian countries are more focused on the low end, low priced coatings segments. An emphasis on low cost and low priced products and limited R&D capabilities result in a lower overall level of product quality. Price is often the first priority, followed by product reliability or quality.

Despite much of the coatings market in Asia being lower end, there is an emphasis being placed these days on R&D efforts and “higher technology” formulations due to the increased importance and growth of the industrial coatings sector. Many of these efforts are accomplished through collaboration (i.e., licensing agreements, joint ventures, technology transfers, etc.) between the multinational and local/regional companies.

For example, within India, applications include performance coatings for the growing oil & gas and power plant sectors, packaging coatings for India’s exploding packaged food and beverage industry, coil coatings for the construction industry, automotive OEM and refinish coatings, and the conversion of liquid coatings to powder coatings for a range of durable goods. Other than powder coatings, much of Asia’s industrial coatings is still based mostly on solvent-borne technology. This will slowly change over the next decade throughout the developing parts of Asia Pacific as environmental and health & safety issues gain greater prominence with regulators and the general public.

Over the past five years, China has contributed significantly more to the overall world growth than any other country, and this is forecast to continue for the foreseeable future. That being said, there has clearly been a recent slowdown in China’s GDP growth compared to past years. Some of China’s and other Asian countries’ economies are tied to the economies of North