in the region, particularly between Chinese companies and their
Western counterparts. Furthermore, it should be noted that although emerging Asia will continue to represent solid investment
opportunities within the coatings industry, the competitive environment is becoming more challenging. As mentioned above,
there is an increasing awareness by customers and regulators
of the need for higher quality, sustainable technologies. While
Europe and North America are lagging on this issue, sustainability will likely become front-and-center within the coatings
industry over the next decade in emerging Asia. The multinational companies will continue to make major investments in
the region via acquisitions and greenfield investments in manufacturing plants and R&D facilities. At the same time, the larger state-owned and privately-held companies will continue to
ramp up to compete more aggressively and effectively with the
multinational players in their home markets. Asia Pacific, with
all of its diversity, will provide a tremendous stream of revenues
and profits for companies who commit the necessary resources
to capitalize upon the myriad of opportunities that exist within
this region.
Market Trends and Drivers
In comparison to most developed nations, China, India and
most of the Southeast Asian countries have historically been
more focused on the lower quality, lower priced coatings segments. Limited R&D expenditures by and capabilities of the
small, local and regional players have historically resulted in a
lower overall level of product quality in this region of the world.
Simply stated, price was often the first priority for customers in
many Asia Pacific countries in years past, followed by product
quality and reliability. Increasingly, an emphasis on lower quality coatings products in Asia Pacific, particularly in certain end
use segments (automotive OEM, protective, marine, etc.) has
become a thing of the past.
Many segments of the coatings industry within Asia Pacific
have been making significant strides in modernizing and meeting
the standards of the developed nations. However, there is still a
ways to go in many end use segments within most countries. At
its present pace of growth, most Asian countries will continue
the rapid path to technical and economic parity with the West.
New coatings technology migrating into, and being developed
within the region is having a positive impact on the Asia Pacific
market. Some of this is being driven by public pressure and government regulations. For example, smart coatings, nanotechnology and a range of “green chemistries” are all playing a role
in addressing the growing Asian demand for environmentally
friendly and sustainable coatings that have more functionality
for customers. Much of this trend in improved coatings quality,
particularly in the industrial sector, is being driven by the multinational customers of coatings with operations in Asia Pacific
that require suppliers to meet global coatings standards.
Throughout parts of Asia Pacific, a greater emphasis is being
placed on R&D efforts and “higher technology” formulations
due to the increased importance and growth of the indus-
trial coatings sector. Many of these efforts are accomplished
through collaboration between the multinational and local/
regional companies.
Rapid urbanization and a more stable economy have spurred
the proliferation of home improvement supplies stores in
some Asia Pacific countries. For example, it is estimated that
across Indonesia’s largest cities – Jakarta, Semarang, Surabaya,
Bandung, Makassar, etc. – a few thousand large and small retail
outlets now exist that supply home improvement materials. The
most widely available products, which are sold in 95 percent of
these stores, are paints. As more residential structures are being
built to meet the needs of a growing population in and around
the major cities in Indonesia, Malaysia, Thailand, Vietnam and
other countries throughout Asia Pacific, a surge in demand for
home improvement supplies is expected.
A result of the diversity of the Asia Pacific region is the un-
even distribution of demand within each of the end use seg-
ments. The automotive industry is now a focus for development
in China, India, Korea and Thailand. The demand for automo-
tive OEM and refinish paints will continue to grow as the pent
up demand is fulfilled. Countries like China, India, Thailand,
Vietnam and Malaysia are also investing heavily in infrastruc-
ture, which increases demand for decorative coatings.
Developing Asia Pacific appears to be placing more em-
phasis on environmental issues and sustainability. China is
out front of the others with its Ministry of Environmental
Protection beginning to consider measures that address these
issues. Environmental concerns are getting more attention as
the Chinese government has put a VOC consumption tax and
a VOC emission fee on the agenda for discussion with coat-
ings industry leaders, with the likelihood of being implemented
within the next one to two years. There is also a lead-contained
coatings elimination program being formed in China focused on
with implementation being targeted over the next few years.
The Asia Pacific region has clearly outpaced all other re-
gions of the world since the global recession. The region has
posted well over seven percent growth per year in GDP since
2008 in contrast to the slower growing regions of Europe and
North America.
China has experienced tremendous economic growth since
the late 1970s. In part, the result of economic liberalization policies, the gross domestic product of China increased tenfold between 1978 and 2006, and foreign investment soared during the
1990s. In the first decade of the new millennium, China grew its
proportion of global manufacturing output from less than 10%
of the global total to more than 20 percent of the total. Greatly
contributing to this is the fact that China’s economy grew nearly
four-fold from 2002 to 2013. After sustaining decades of annual GDP growth of ten percent or more, in 2007 China passed
Germany to become the world’s third-largest economy, and in
2010, it passed Japan to become the second-largest economy.
In the past five years, China has contributed significantly more
to overall world growth than any other country. Most economists agree that China’s steady growth through the 2008 – 2009
Recession helped prevent the entire global economy from slip-ping into an even more destructive downturn. China heads the
