Investments in China

By Kerry Pianoforte, Editor | October 24, 2013

Paint and coatings companies and their suppliers continue to invest in China.

hina has become the world’s largest producer and consumer of coatings. According to a recent report, from January to November 2012, China’s coatings output reached 11.4 million tons, with a year-on-year increase of 12.09 percent. This figure is expected to grow by 10 to 15 percent annually. According to IBISWorld’s Paint Manufacturing market research report, “Paint Manufacturing in China,” the Chinese paint market is set to grow 11 percent in 2013 to reach $52.2 billion in revenue.  According to the report, strong performance in downstream industries has fueled 13.4 percent annualized growth in the paint manufacturing industry in China over the five years through 2013.

As the paint, coatings, adhesives and sealants industries continue to grow in China, leading companies continue to invest heavily in this region. 

AkzoNobel recently announced plans to invest a total of more than €50 million in China to build new manufacturing facilities for its powder coatings and decorative paints businesses, adding further momentum to the company’s strategic growth ambitions.
Both new facilities will be located in Chengdu with the powder facility scheduled to open in 2014 and the decorative paints site starting production in 2015.

The announcement follows the recent start-up of commercial production of Bermocoll cellulose derivatives at the company’s multi-site in Ningbo, which will serve the growing demand from customers throughout the region, as well as from AkzoNobel’s own decorative paints business. Cellulose derivatives are used in water-based paints and building additives applications.

“China is playing an increasingly important role in our growth strategy and by expanding production capacity we will further strengthen our position as a leading supplier to the Chinese market,” said AkzoNobel CEO Ton Büchner.
“We already have a strong manufacturing footprint in eastern, central and southern China,” he added. “As demand and volumes continue to rise, we will extend our production and distribution westwards and the new sites will enable us to better serve our customers whenever and wherever they need our products.”

Chengdu is one of the fastest growing cities in south western China and has consistently delivered double digit growth over the last two decades. It has established itself as an important industrial hub, resulting in high demand for quality powder coatings and decorative paint, which is expected to remain strong as the area continues to develop.

“Our investments in Chengdu underline our commitment to further developing our business in China and capitalizing on the business opportunities being created by growing domestic demand,” said Lin Liangqi, president of AkzoNobel in China.
AkzoNobel currently employs more than 7,700 people in China, including 500 in research and development. Revenue for 2012 was €1.7 billion, the majority being generated from local demand.
Auto Sales in China Continue to Climb
China’s passenger-vehicle sales gained the most in four months in August, led by sales of sport utility vehicles, as the world’s second-biggest economy rebounds from a two-quarter slowdown, according to a recent report by Bloomberg News. Wholesale deliveries of cars, multipurpose and sport utility vehicles climbed 11 percent to 1.35 million units last month, the biggest gain since April, according to the China Association of Automobile Manufacturers.

Total sales of vehicles, including buses and trucks, gained 10 percent to 1.65 million units last month, the association said. In the first eight months of the year, 13.9 million vehicles were delivered, putting sales on track to reach the 20 million units estimated by the association.

Sales of SUVs jumped 46 percent to 240,100 units last month, while deliveries of multipurpose vehicles increased 162 percent to 105,600 units. Sedan deliveries gained 4 percent to 899,100 vehicles.

As a result of the surging automotive market, automotive coating manufacturers are expanding their presence in China.
Business Development Asia LLC  recently announced that its client, The Sherwin-Williams Company, has acquired 100 percent of Changzhou Pulanna Coating Co., Ltd. Pulanna is a leading manufacturer of automotive coatings for sale in the Chinese aftermarket. The acquisition increases Sherwin-Williams’ presence in China’s automotive sector where passenger car sales have grown strongly in recent years, increasing from 6.8 million in 2008 to more than 16 million in 2012. Car sales are forecast to continue rising at an annual rate of approximately 10 percent  for the next decade.

“This transaction shows how BDA’s focus on cross-border M&A with in-country expertise helps its clients realize their Asian growth plans. We wish Sherwin-Williams all future success as the new owners of Pulanna,” said Mark Webster, managing director of BDA.
Axalta Coating Systems will invest more than $50 million to construct a new facility to manufacture and supply up to 25,000 metric tons of paint to automobile manufacturers that are expanding into south and central China. The plant will be dedicated to production of the company’s waterborne coatings that meet both manufacturer and regulatory environmental standards. Pending final government approvals, construction of the new facility is expected to break ground in the second half of 2013 with production beginning the first quarter of 2015.

“The new facility will be close to customers in the Shanghai area and have easy access to major transportation routes reaching into western and southern areas of the country,” said Charles Shaver, chairman and CEO of Axalta Coating Systems.“This additional facility will complement the manufacturing capacity of Axalta’s flagship OEM coatings manufacturing plant in Changchun that is already accelerating production to meet extraordinary growth in automotive production in China.”

The waterborne coatings that will be produced at the new facility will be used in two of the consolidated manufacturing processes that Axalta has developed for automobile manufacturers to improve productivity and save energy. The specially formulated primer of Axalta’s 3-Wet water-based system replaces the need for a full oven bake step required after the application of traditional primers, enabling manufacturers to replace larger ovens which are expensive to build and costly to operate. Products manufactured at the new facility will also be used with Axalta’s EcoConcept production system, a proprietary technology that combines the primer and basecoat, enabling manufacturers to replace multiple bake steps with only one.

“China’s expanding car production is a reflection of the nation’s fantastic economic growth. Axalta is excited to contribute to China’s success story,” said Shaver. “We know our coating systems make sense to manufacturers and the environment alike. We never forget that the colors and performance of our coatings also are part of the pleasure car owners receive when they buy a car. Axalta is proud to be able to play such a multifaceted role in China’s accomplishments.”

BASF has also expanded automotive coatings production in China. BASF Shanghai Coatings Company Limited is investing in a new basecoat plant at the Shanghai Chemical Industry Park in Shanghai, China. The new plant will increase the company’s local production capacity for basecoat by 13,500 tons per year. The investment represents an important step to strengthen BASF’s position as a leading coatings supplier to the automotive industry in China, according to the company.

The new coatings plant is planned to start production in the first half of 2014. It will be designed according to the latest and most environmentally friendly manufacturing processes and technologies. BASF Shanghai Coatings Company Limited is a joint venture with 15 years of successful partnership between BASF and Shanghai Coatings Company Ltd. The joint venture is already running a production facility in the district of Minhang in Shanghai.

“In China, BASF has been supplying coatings reliably to international and domestic car makers for more than 15 years. As a long-term partner, we have witnessed how China has become a world leader in automotive production,” said Peter Fischer, senior vice president, Coatings Solutions Asia Pacific at BASF. “Our investment in additional local coatings production facilities reflects our commitment to address the current and future needs of our automotive customers in this dynamic market.”

“With our latest technologies, innovative coatings solutions and processes, we will continue to invest in strengthening our infrastructure to support the growing automotive industry in China,” Fischer continued.

BASF is the coatings supplier who first introduced waterborne basecoats to China in 2005. The company offers a wide range of products for use in the automotive industry throughout the value chain, for automotive manufacturers and suppliers and in customer service.

PPG Industries has made a number of major investments in China. PPG opened its new automotive OEM coatings development and application center in Tianjin, China. This facility is the first of its kind locally, and it will focus on the development of automotive coatings in China.

The company also opened PPG Coatings (Tianjin) Co., Ltd., a new waterborne coatings manufacturing facility. The Tianjin plant is PPG’s largest coatings manufacturing facility globally, and the expansion significantly increases the plant’s production capacity for waterborne coatings.

“We are pleased to celebrate the completion of this critical expansion project in China,” said Cynthia Niekamp, PPG senior vice president, automotive OEM coatings. “China’s automotive manufacturing industry is experiencing dramatic growth, and in light of new environmental protection regulations, the increased demand for eco-friendly waterborne automotive coatings continues to drive the expansion of PPG’s business here.”

Last year, the Regulation on the Access Management of Passenger Vehicle Manufacturers and Products went into effect, requiring that all automotive basecoats and topcoats used in manufacturing have waterborne formulas, setting a new entry threshold for automakers. As a result, PPG’s waterborne coatings technologies – with its low VOC emissions and high cost-efficiency – have become increasingly popular with automakers in China, the company reported.

“Following the environmental protection policies stipulated by the Chinese government, we estimate that waterborne coatings use on newly built vehicles in China will increase from 40 percent of new builds to more than 60 percent within the next five years,” said Vincent Robin, PPG vice president, automotive coatings, Asia Pacific. “PPG is well positioned to help automakers in China increase their use of waterborne coatings products and technologies. For example, the B1:B2 premium compact process is an innovative waterborne coatings technology that enables our customers to eliminate the primer layer and reduce the total cost of painting a car, as well as the total weight of the vehicle for fuel efficiency.”
In addition to the capacity expansion, the new development and application center is equipped with advanced, state-of-the-art equipment to simulate the automatic car painting processes in a shop, which is another example of introducing PPG’s best practices to China, Robin added.

“Innovation, sustainability and color expertise have long been strengths at PPG,” said Mike Horton, PPG president, Asia Pacific. “The expansion of our capacity to manufacture waterborne coatings marks a crucial step toward our sustainable development. We will continue to capitalize on the favorable investment climate and geographic advantages of the Tianjin Binhai New Area and to develop and produce more premium technologies and sustainable products for the Chinese and global automotive markets.”
With automotive coatings plants in Tianjin and Wuhu and a resin plant in Zhangjiagang, PPG serves a wide range of automotive coatings customers in China including well-known global automakers and leading domestic manufacturers.

PPG Industries recently opened a new manufacturing facility for the production of heavy-duty equipment coatings in Tianjin, China. The Tianjin site also has installed equipment to help reduce VOC emissions and preserve the local environment, the company reported. With annual capacity of approximately 9,000 tons, the new plant will produce industrial coatings for China-based manufacturers of heavy-duty machinery, such as agricultural, construction and mining equipment. “Demand for premium coatings products in various industries and by local and multinational companies operating in China continues to grow rapidly,” said John Richter, PPG vice president of operations, coatings, Asia Pacific. “We are pleased, and this investment demonstrates our continuing business and environmental commitment to the region and toward meeting the expanding customer demand.”

Along with the Tianjin plant, PPG has a research center and a powder coatings plant in Suzhou to help improve local product development, supply-chain efficiency and technical service. The new manufacturing operation in Tianjin improves the regional capacity of PPG’s industrial coatings.

The overall Tianjin coatings operation was the first PPG coatings plant built in China, and it has developed into PPG’s largest coatings production base in the world. The factory currently supplies automotive OEM coatings and industrial coatings to the China market.
Suppliers Invest in China

There has been a flurry of investments in China by suppliers to the paint and coatings industry. BASF is building a new Ultramid polymerization plant with a capacity of 100,000 metric tons per year in Shanghai, China. The new plant is planned to start up in 2015.
“As part of our long-term strategy, we aim to locate production close to our customers in the Asia Pacific region, so that we can better support their growth, operate more efficiently and collaborate more closely. BASF intends to grow two percentage points above the market in Asia Pacific and maintain our commitment to environmental protection as well as ensuring a positive contribution to society for a sustainable future ,” said Albert Heuser, president and chairman Greater China and Functions Asia Pacific.

“The demand for polyamide products in the engineering plastics, fiber and film industries will grow strongly, particularly in China,” said Hermann Althoff, senior vice president of the Global Polyamide and Intermediates Business Unit. “The investment enables us to participate in this growth and supply our Asian customers with locally manufactured high performance products.”
The BASF wholly-owned plant will be built at the Shanghai Chemical Industry Park in Caojing which is also home to a world scale facility for integrated isocyanates, operated by BASF and partners. bAt this location, BASF also has production plants for polytetrahydrofuran (PolyTHF) and polyisocyanate (Basonat) for the coatings and furniture finishing industry and precious metal solutions for automotive catalysts.

BASF operates Ultramid polymerization plants in Ludwigshafen, Germany; Antwerp, Belgium; Freeport, Texas and São Paulo, Brazil. The production of polyamide for film, textile and carpet fiber as well as for engineering plastics applications is integrated into BASF’s global Verbund structure with polyamide intermediates (i.e. adipic acid, anolon, caprolactam), chemical raw materials (i.e. ammonia, cyclohexane, sulfuric acid), energy, by-product recovery, logistics and other services.
BASF has recently announced plans to invest €90 million to set up a world-scale production plant at the Shanghai Chemical Industry Park in Shanghai, China. The new plant will produce high performance resins and electrocoat (e-coat). The start-up of the production line is planned for the second half of 2015. The plant will help to address the increasing demand for high quality coatings solutions in growing industries, notably the automotive industry, in Asia Pacific.

“The continued investment in our infrastructure and capacity demonstrates our strong commitment to supporting our customers’ growing business in the automotive market in Asia Pacific, particularly in China,” said Peter Fischer, senior vice president, Coatings Solutions Asia Pacific. “With the new plant in place, we will respond to customers even quicker and further enhance our efficiency of logistics and supply of advanced coatings products.”

This new resin and e-coat plant will be located adjacent to another new BASF automotive coatings plant which broke ground in early 2013. The close proximity of these two plants will allow for more synergies and efficiency, the company reported.
Resin is a key intermediate used in the production of various types of coatings. The new facility will supply resins with the latest technology to support the company’s expanding coatings production and growth plans.

Applying the latest technologies, BASF’s new plant will also supply CathoGuard 800, an e-coat that is ideally suited for the new standard of integrated coatings application processes and contains less than one percent solvents. E-coat is a critical coating layer in automotive production, protecting a car’s surfaces, edges and cavities from corrosion, as well as being the base for applying subsequent paint layers.

Ashland Inc. recently celebrated the grand opening of its new gelcoats production facility in the Chemical Industry Park of Changzhou Yangtze Riverside Economic Development Zone. This $60 million dollar facility, which is Ashland’s most advanced gelcoats plant in the world, serves customers in marine, sanitary ware, transportation, wind energy and industrial markets in China and the broader Asia Pacific region.

The plant currently employs 30 people and is located in Changzhou where Ashland also operates an unsaturated polyester resins and epoxy vinyl ester resins production facility that has been manufacturing products in the region for more than 10 years. The grand opening celebration was attended by nearly 250 people, including customers, suppliers, trade associations, government officials from various levels of Changzhou and members of the media.

Gelcoats are specialty resins that help to improve the appearance of fiberglass products and to protect structural layered materials from corrosion. They are used in a wide variety of consumer and industrial products, including yachts, bathtubs, basins, high-speed trains, buses, wind energy blades, nacelles, cooling towers and storage tanks.

Ashland’s product brands include award-winning Maxguard and Enguard gelcoats. The new facility will also produce adhesives, fire retardant resins and low-profile additives for many industrial products. With an initial annual capacity of 10,000 tons of gelcoats and 2,000 tons of adhesives products, the facility is designed for further expansion to meet increasing market demand across Asia.
“China is an attractive market for investment, despite some of the current economic challenges. Ashland has made a series of investments in the country over the past few years to expand our ability to serve local customers,” said Ted Harris, senior vice president and president, Ashland Performance Materials; and president, Ashland Global Supply Chain. “This new facility reflects Ashland’s commitment to maintaining the highest production standards for gelcoats products. More importantly, we are extremely proud of our two-year zero incident record we maintained throughout the construction of this plant. Thanks to the long-term support provided by the Changzhou government, I’m confident that this new facility will soon become an integral part of Ashland family and the local community.”

“Ashland started our gelcoats business in China in 1995, and we have enjoyed significant growth since then,” added Baochang Zhang, vice president, Ashland Performance Materials, Asia Pacific. “This new facility will enable us to better assist our customers in providing competitive products to the marketplace while strengthening our position as China’s leading gelcoats supplier.” “Ashland is committed to Responsible Care,” said James Ying, operations director, Ashland Asia Pacific, “We have taken all possible measures to make sure our gelcoats plant demonstrates the highest environmental, health and safety standards, as other Ashland plants across the region.”
Dow Corning (Shanghai) Co. Ltd., a subsidiary of Dow Corning Corporation, a leader in silicones, silicon-based technology and innovation, celebrated the completion of its multi-million USD expansion at the Shanghai Songjiang site that marks one of the largest single investments in China’s paper release industry to date.

The newly established solventless silicone manufacturing system demonstrates the company’s continued effort to increasing efficiency in the regional supply chain and brings environmental and financial benefits for customers across China and the Asia Pacific region because no solvents are used.

Dow Corning entered the China market in 1973 and to date, its combined investment in China is more than $2 billion. The company’s three major facilities in China – the newly expanded manufacturing Songjiang site that serves as the Asia Specialty Chemicals Hub; Zhangjiagang’s manufacturing facility that is an integral part of China’s largest integrated silicone production site as well as Shanghai’s Dow Corning China Business and Technology Center – are key to providing a complete and complementary local service offering, the company reported. This fully integrated local supply chain enables customers to benefit from a more reliable supply of locally produced products; a reduced lead time on products’ delivery; and lower costs and a diminished carbon footprint due to reduced trans-ocean freight costs.

Allnex officially opened its new Technical Services & Development (TS&D) laboratory in Shanghai. This facility is planned to bring together Allnex’s key technologies under one roof for synergies and resource sharing in technical developments. The laboratory will commence operation in September 2013 following its official opening.

“China is the focal point of our coating resins business growth strategy,” said Allnex’s vice president, Asia Pacific, Siva Iyer. “The new center will integrate the capabilities of our existing two laboratories in China; it will meet global safety and environmental standards and provide modern state-of-the-art lab facilities for our employees to further help our customers by faster product and applications development. Our aim is also to speed technology transfer from Europe and America to the emerging growth regions.”
Frank Aranzana, CEO, Allnex added, “The opening of our new TS&D laboratory is part of Allnex’s strategy to accelerate growth in Asia and further globalize our business. It also reinforces our position as a preferred resin supplier.”
Allnex’s TS&D laboratory is located within an easily accessible modern technology park at Yin Du Road, Shanghai to support its entire coating resins and additives portfolio. This laboratory facilitates paint formulation, technical service, raw material research, resins modification and new resins development.