Russia
October 2016 www.coatingsworld.com Coatings World | 39
has reduced from 45 percent to 30 percent.
According to Kuznetsova, this trend has
been especially observed in the enamel segment. She explains that consumers in the
country started to be aware of the health
risks of using cheaper coatings.
According to Peshkov, in 2016 the
market has seen a reduction of demand
for coatings in the premium segment, and
it forces consumers to shift back to production of economy and even extra economy segments. Once again this situation
is explained with devaluation of national
currency and falling purchasing power of
population in Kazakhstan.
At the same, Peshkov indicated that
consumers’shift to eco-friendly coatings
continues and takes place in all price segments: not only in premium, but also in
the economy as long as domestic manufacturers also offer water-based products and position it as ‘environmentally
friendly’. Peshkov believes that this trend
corresponds to the global practice.
Fly-by-night competitors
However, the rise of prices for coating
s and the economic crisis at post Soviet
Union space in recent years created
a very negative phenomenon of so-
called fly-by-night companies who are
producing the cheapest types of coat-
ings, in most cases ignoring any health
safety standards and avoiding any co-
operating with inspection authorities.
Kuznetsova said that these companies
could be found both in Kazakhstan and
in neighbor CIS countries.
She added that major producers also
operate in the cheapest segment, but the
main difference between them and fly-by-night companies is that legal manufacturers would never sacrifice safety of
coatings for the sake of low price.
According to Ravshav Kutarbekov,
spokesperson for the Agency of Consumer
Right Protection, the problem of half-le-gal producers, which are manufacturing
unsafe coatings, really takes place, but in
generally they account for less than 5 percent of the overall market share.
Kutarbekov explained that in most
cases these are underground lines, based
somewhere in private garages or abandoned industrial buildings and their production does not necessary pose any harm
to health, but in most cases it composition
is differs from one shipment to another.
Peshkov explained that counterfeit re-
ally could be found at the market, but in
terms of fakes it is quite insignificant. He
said that in the border with the Russian
regions some gray imports takes place, but
more important is the presence of play-
ers in the spring and summer producing
water-based products that do not meet
any standards, without any quality and
guarantees, with the price below the
threshold of the economy segment.
According to Peshkov these players
are as seasonal phenomenon, since they
appear and disappear at certain times, but
given stable demand for cheap products,
in the period of their activity they could
compete with official market players.
Call for merge and
protectionism
Local coating firms are cautiously speaking about the future of the market, since
gradual invasion of foreign products, obviously scares them.
In the opinion of Kurmanalin, in long-term forecasts domestic producers could
successfully compete with import and foreign companies only if they hold a course
for merger or establish an alliance. He noted that the oldest local firms are operating
for less than 20 years, so they have the lack
of experience to stand against international giants alone and if nothing would be
done, within coming years they could be
simply pushed out from domestic market.
Another representative of local coating firm, who agreed to comment on this
issue only on condition of anonymity,
suggested that the industry has came to
the point when it should be protected by
the government. He explained, that coating manufacturers suffer from excessively
high rates on loans, unavailability of raw
materials in Kazakhstan, such as titanium
dioxide and high taxes.
Neighbor Russian producers enjoy
some state support and in general a better investment environment, so as a result they are able to sell their products
in Kazakhstan at prices lower than in
Russia, trying to grab huge market share
for the sake of future benefits. According
to market participants, this policy has
clear features of dumping invasion.
Trade legislation of Eurasia Economy
Union has rules about dumping, providing that if it would be proved in court,
country affected with it, could enter import restrictions. However, anti-dumping
investigation is very complicated procedure and none of the market participants
could initiate it alone. CW
