Since China’s inception into the WTO in 2001, the Asian paints and coatings market has reported tremendous growth. Due to the lack of environmental regulations in Asia, traditional solvent-based coatings seem to dominate the coatings market in the region. However, buoyant economic growth, globalization of end-user industries, and increasing foreign investments have brought quality products to the market. "Local manufacturers have established tie-ups with leading multinational coatings companies to serve their customers better," according to the analyst of the study. "In order to sustain profitability in a market where rising raw material costs and competitive pricing command profit margins, manufacturers should start investing in cost-effective coatings technologies, for which the margins are higher."
The rapid growth in the end-user markets is expected to act as the key driver for the growth of the paint market. Paint manufacturers cater to a variety of end-user industries; the increasing influx of foreign investments into emerging markets has benefited most of the industries. The construction industry has witnessed robust growth over the past few years. The growth of the automotive industry in Asia, which is primarily driven by China, has been bolstered by India and Thailand. China is expected to emerge as the global production hub for electronic goods. Asia accounts for 60% of the global ship building market, and rapid growth in China, aided by moderate growth in South Korea and Japan, is expected to drive the demand for marine coatings.
The report also notes that mergers combined with stringent regulations are likely to boost market growth. There have been a number of mergers, acquisitions and technical co-operations between MNCs and local suppliers in the Asian paint and coatings market. Mergers and acquisitions have been beneficial for international manufacturers trying to penetrate the Asian market in order to tap its potential. The local suppliers, in turn, benefit as they get access to superior technologies and foreign markets. This enables them to support their customers who are penetrating the overseas markets. Consolidation has resulted in the rapid advancement of coating technologies, and is expected to drive the growth of the paints market in the next five years. Numerous unqualified coating suppliers are finding it difficult to compete, as the focus is shifting from lowering prices to consistent supply of quality products.
In addition, mature markets such as Australia, Japan, and South Korea have strict regulations in place. Coating manufacturers in these countries invest consistently in R&D in order to remain competitive in the market. In emerging markets such as China, India, and Southeast Asia, the regulations are lax and the market is price sensitive. With growing consumer awareness and consolidation in the market, manufacturers are investing in high-end technologies. Regulatory bodies in these countries are expected to impose regulations in these markets, slowly and gradually. "With strict regulations in place, the paint manufacturers are expected to move away from low-cost pricing strategy and focus more on quality products," explained the analyst. "Regulatory standards are expected to drive product innovations in the Asian coatings industry in the coming years."