Coatings World - February 2015

China

by Arnold Wang China Correspondent

Since 2009 the automobile in- dustry of China has surpassed that of America to become the largest in the world. In 2013, China produced 22.1 million automobiles,

12.1 million out of which are passenger cars. The continuous economy growth leads to fast disposable income increase in China, resulting in more car purchases by Chinese consumers year by year. The continuous growth in the automobile industry also brought momentum to the expansion of the automotive coatings industry in China, although the growing pace will be slowing down in 2015.

It is estimated by the Institute of Coatings & Painting of the Chemical Industry and Engineering Society of China that the market of the OEM coatings for the passenger vehicles (including car, SUV and MPV, etc) is about 360 thousand tons in 2013, growing by around 15 percent over 2012 and which is about 50 percent of the whole passenger vehicle coatings market in China. And the OEM coatings market will grow by 7-8 percent annually in the future.

The “Walking out” Policy of the Chinese central government encourages domestic car producers to invest in other developing countries such as Brazil and Russia to build overseas manufacturing bases. The fierce competition in the local automobile market is another reason that Chinese automobile producers speed up their outbound investments. Those companies leading this trend include Geely, Chery and Great Wall Motor. And this trend has “ripple influence” on their coatings suppliers’ investment strategy as well. For example, BASF expanded their coatings capacity in Brazil in order to provide water-based coatings and electrophoresis coatings to Chery’s new local car factory there.

Car refinishes market will grow
even faster

By the end of 2013 China has already 110 million passenger vehicles, 71. 3 million out of which are cars. The big size of the existing car market will lead to fast growth of market demand for car refinishes in the following years. Some foreign companies such as AkzoNobel have already noticed the huge market potentials in China. Just two months ago, AkzoNobel started operations at its new invested vehicle refinishes plant in Changzhou, Jiangsu province, the company’s 30th manufacturing facility in the country. The new factory adds around 25 million liters of capacity for Sikkens, Lesonal and Prime vehicle refinishes products. It will strengthen the company’s position as one of the leading players in China’s vehicle refinishes and commercial vehicle OEM markets, building on its acquisition of Changzhou Prime Automotive Ltd. in 2010. Right now, the car refinishes market in China is controlled by foreign brands such as Dupont, PPG, AkzoNobel, Top Wave (joint venture), Sherwin Williams, Nippon and Noroo(Korea). The local brands are mainly located in Guangdong province and competing in price with relatively lower quality.

And the relatively high profitable refinishes market attracts new investments even when the economy is not growing as quickly as before. PPG, another major automotive coatings player

The continuous growth in the automobile industry has brought momentum to the expansion of the automotive coatings industry in China, although growth will be slowing down in