track in the first quarter of 2016.
If the trend is consistent for the entire
year for 2016, this could transform into
another growth opportunity for the coatings industry, especially for the architecture coatings market sector, in China. But
the fluctuation of the real estate market
is foreseeable too, and the final impact to
coatings market is not clearly visible at
the moment. The latest regulation policy
in China’s real estate industry is to restrict
house and apartment purchase in tier
one cities, such as Beijing, Shenzhen and
Shanghai, but the governments in tier 3
and tier 4 cities, on the contrary, are loosening their real estate policies in order to
encourage real estate transaction.
Although the Chinese coatings producers are paying more and more attention on repainting market, namely
refurbishing or redecoration projects, it
is unlikely that this new growing segment will replace the new house and
apartment market for architecture coatings anytime soon, but developing brand
awareness in a new market segment normally takes years of marketing efforts, so
the companies who move early towards
this direction could take advantage of
their position when the market scales up
in the future.
Wood coatings market will
be a hot battle field
Unlike some other coatings segments, the
wood coatings market is still very frag-
mented in China. No single brand has
a dominant position in wood coatings
market like Nippon Paint in architecture
coatings, or AkzoNobel in powder coat-
ings. Instead, the Chinese wood coatings
market is represented by private domes-
tic companies. This phenomenon of the
wood coatings market is closely linked
with the market fragmentation of the
Chinese wood furniture market. Close
customer relationships with wood furni-
ture customers, who are mainly domestic
companies too, enabled domestic wood
coatings manufawcturers to compete
with or even defeat foreign brands in the
past. However, the new market demand
for high quality waterborne wood coat-
ings has created a new hot battlefield in
the last two years, which could reshuffle
the current ranking of the wood coat-
ings players. The new trend provides a
new opportunity for the wood coatings
companies who can meet the customers
demand both for high quality, such as
coatings hardness, and environmental
demand, such as low VOC or no VOC.
Foreign brands with technical advantages
could take advantage of this new trend,
but to win the market competition, they
still need to find new approaches to es-
tablish a close customer relationship with
their end users.
Automotive industry will
maintain stable growth,
providing consistent
growth opportunities for
foreign brands
The other industry which is crucial to the
development of the coatings market is the
automobile industry. Inside a car powder
coatings and solvent-based coatings are
widely used on dashboards, panels and
door handles and as well as other plastic
and metal parts. But waterborne coatings
are quickly catching up and beginning
to take more market share from solvent-
based varieties. OEM and refinish paint
is closely linked with the growth of the
automobile industry, which provides con-
sistent growth opportunities for large for-
eign brands such as PPG, Akzo Nobel and
Nippon Paint as well as BASF. Based on
the report released by China Association
of Automobile Manufacturers, in 2015
China sold a total of 24. 6 million vehi-
cles, increased by 4. 7 over 2014. In this
number, 21 million are passenger vehi-
cles, the first time in history for this sector
to surpass a new milestone: 20 million.
Compared with 2014, passenger vehicles
grew by 7. 3 percent over 2014. And even
faster was the growth of new energy au-
tomobile sector, which sold a total of 331
thousand vehicles in 2015, an increase of
340 percent over 2014. The association
said the rebate on consumption tax for
the car with a displacement of equal or
below 1.6 liters has a significant contri-
bution to the growth of the passenger car
market sector.
Competition will upgrade
the whole industry
With the launch of both more environmental friendly coatings products and
more customized, and even personalized
services, the whole coatings industry in
China will go through an internal transition. New financing models, new technologies and new services will increase
the intensity of market competition in
the coatings market. But the big picture is
that the whole coatings industry in China
will be upgraded towards higher quality
and “greener,” which, for the whole society, is good to see happen. CW
“Waterborne coatings are quickly catching up and beginning to
take more market share from solvent-based varieties. OEM and
refinish paint is closely linked with the growth of the automobile
industry, which provides growth opportunities for large foreign
brands such as PPG, AkzoNobel, Nippon Paint and BASF.”
