America and Europe. For instance, as Southeast Asia’s exports
to these regions have fallen due to the Western regions’ sluggish
economies, so too has the GDP growth of these Asian exporting
nations. In another example, the ongoing debt crisis in Europe
has impacted Chinese exports. While this has been occurring,
there has been a leveling off of middle class consumer demand
across China which has resulted in thousands of layoffs and
anemic sales of certain products for domestic consumption. In
fact, there are some international economists who worry that
China could experience hard economic conditions which would
result in negative consequences for other countries across the
globe that have come to rely on China to fuel the global economy. On balance, what is stated above, China’s GDP growth is
still likely to do better than most other countries, perhaps seven
to eight percent per year over the next few years.
The expectation is that the disparity in growth rates between
Asia Pacific countries will continue over the next several years.
China and India are forecast to experience the greatest growth
in GDP per capita to 2016. Japan and Australia are projected to post positive growth but will lag China, India and other
parts of Asia Pacific. Since growth in consumption per capita
closely mirrors growth in GDP per capita, the expectation is
that the growth areas of the past five years will continue to be
the growth areas for the next five years. Figure 3 depicts the
forecast growth in GDP per capita by country for 2011 to 2016.
are not only the market leaders in Japan but are also major
suppliers in China. Chugoku Marine Paints, another Japanese-based company that sells paint into the marine and industrial
sectors, recently completed the construction of its third manufacturing plant in China. While most of the local and regional
Chinese paint companies tend to focus on the low-end parts of
the market, there are a few Chinese paint manufacturers that
offer high-end coatings. For example, Guangdong Carpoly
Chemical Group, Guangzhou Strong Chemical and Daoqum are
Chinese companies that offer high end products, although none
of them have very large market shares.
Participation by the large multinational paint companies is
growing in India. AkzoNobel, BASF, DuPont (Axalta) and PPG
are all active in the Indian automotive refinishes, powder coatings
and industrial coatings markets. Kansai Paint and Nippon Paint
are also gaining a foothold in India. For example, Kansai Paint
is the holding company for what was once known as Goodlass
Nerolac of India, now called Kansai Nerolac Paints Ltd.
Within India, the large, well-financed coatings companies,
including an increasing number of multinationals as mentioned
above, comprise the so-called “organized” part of the Indian
coatings market. This is estimated to be over two thirds of the
total coatings industry. By contrast, the “unorganized” part of
the Indian market is still quite fragmented with well over 1,000
small participants. This segment tends to be more focused on
the local and regional markets.
Competitive Landscape
Global coatings competitors play a significant role in the Asia
Pacific market. Their role, however, is less than in other regional markets and tends to be more specific to selected end use
markets. For example, in China, it is estimated that more than
15,000 manufacturers are active in the coatings marketplace,
although the vast majority of them operate on a very small scale. There will likely
be a fair amount of consolidation taking
place over the next several years in Asia as
the best of the small and mid-sized companies get acquired by the multinationals
and the weaker players get edged out by
environmental pressures and the demand
for higher quality products by customers.
AkzoNobel, through the ICI acquisition, is a leader in the Chinese decorative
and industrial markets and has a very
strong presence in powder coatings in the
region. BASF, DuPont (Axalta) and PPG
have carved out strong positions in the
automotive OEM and refinish markets
in China. Valspar has a large presence in
the industrial coatings market in China
and is active in the decorative market
through Huarun Paints. In September
2010, Valspar completed its acquisition
of Australian paint manufacturer Wattyl
Ltd. Both Kansai Paint and Nippon Paint
Do Opportunities Still Exist in Asia Pacific
for Western Companies?
The future growth of the coatings industry within Asian countries will depend on the growth and prosperity of their economies. Certain aspects and drivers of the economy impact some
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