China
growth may not be seen in the future,
the growth of the China coatings market is still not slow compared with those
of developed countries. The same quick
growth will not be as easy for coatings
companies to achieve as they could before, and innovative marketing strategies
and solid quality products are needed to
win the competition in the future.
Nippon Paint increases
investment in China
According to the China coatings ranking report released by coatings361.
com, Nippon Paint is ranked No.1 in
their list of China top coatings companies with a total sales of 14. 9 billion
RMB in 2015, followed by AkzoNobel
with a total sales of 13 billion RMB.
PPG is ranked No. 3 with a total sales
of 8.2 billion RMB. BASF, Valspar,
Axalta and Kansai are also in top 10.
And the only domestic coatings companies which are in top 10 are Xiangjiang
Paint, Yip’s Chemical and Carpoly.
Although foreign investments have
been slowing down in China, Nippon
still decided to increase capacity in China
by a large scale, a signal reflecting that
large foreign coatings companies are still
optimistic about the future of the coat-
ings market in China. Nippon currently
has five large manufacturing bases in
China, respectively located in Shanghai,
Langfang, Guanghou, Chengdu and
Suzhou. Recently, Nippon announced that
it plans to construct two comprehensive
manufacturing bases and several small
scale plants in China, increasing Nippon’s
total plant number to 38 in around three
years. Furthermore, Nippon will expand
the retail network by opening more
Nippon retail stores nationwide. By im-
plementing all of these strategies, Nippon
hopes to increase its market share in
China’s interior decoration market from
30 to 50 percent. Nippon’s confidence
is originated from its analysis of China’s
coatings market, especially the growth
of the repainting market. Currently, less
than 10 percent of the potential of the re-
painting market has been developed, so
Nippon as well as other companies such
as Dulux believe the business opportunity
in this market segment offers big growth
potential in the future.
The new investment from Nippon is
a rare move in China where the growth
of China’s economy is slowing down
and foreign companies are diverting
their investment to other Asian countries such as India, Vietnam and the
Middle East, where quick growth is still
foreseeable. However, Nippon’s new investment plan will increase the current
fierce competition in the Chinese coatings market. Some small or middle sized
companies’ revenues will be under more
pressure and may even be pushed out of
the market when Nippon’s new capacities are released.
Artistic coatings becomes a
popular marketing concept
With the increase of household disposable income in China, Chinese consumers
are more interested in increasing artistic
elements and tastes on the exterior wall
coatings of their living rooms, a reason
why artistic coatings are so popular right.
Simple white paint or single color coat-
ings could not satisfy some high-end cus-
tomers’ demand. To meet the new trend
in the market, domestic coatings com-
panies quickly launched corresponding
coatings products. And foreign artistic
concepts, especially Italian elements, are
always combined with domestic coatings
products to attract Chinese customers.
And some domestic companies have
developed this market segment in recent
years. Carpoly is one of the pioneer companies who launched artistic coatings
in China several years ago, and is now
opening around 200 artistic coatings
stores in China already. Besides Carpoly,
Badese and Maydos are also promoting
hard in the market of their artistic coatings brands in China. Badese is not only
one of the top 20 coatings producers in
China but also one of the largest emulsion manufacturer who competes with
Rohm and Haas, who was merged into
Dow Chemical in 2009, and BASF, a
great success story considering Badese’s
history is only 20 years.
Marketing will be the key
to success in the future
Investment and capacity were critical in
the past to achieve fast growth when the
market was not mature. But counting on
only economy of scale to compete in the
future might lead to disastrous failures
without the support of solid quality products and differentiated marketing strategies. Apparently coatings companies need
to invest more in marketing and brand
management in China. CW
“Although foreign investments have
been slowing down in China, Nippon still
decided to increase capacity in China
by a large scale, a signal reflecting that
large foreign coatings companies are still
optimistic about the future of the coatings
market in China...Nippon announced
plans to construct two comprehensive
manufacturing bases and several small
scale plants in China.
