Jiaboli Chemical Group12.16.22
Chinese paints & coating industry has surprised the global coating industry by the unprecedented volume growth during the past three decades. Rapid urbanisation during this period has spurred domestic architectural coating industry to new highs. Coatings World presents an overview of China’s architectural coating industry in this feature.
China’s overall paints & coating market was estimated at USD 46.7 bn in 2021 Source- Nippon Paint Group). Architectural coatings account for 34% share of the total market on value basis. The figure is quite low as compared to the global average of 53%. Huge automotive production, rapid development in the industrial sector in the past three decades and a large manufacturing sector are some of the reasons behind higher share of industrial coatings in the overall paints and coatings market in the country. However, on the positive side, the low figure of architectural coatings in overall industry offers Chinese architectural coating producers a number of opportunities in coming years.
Chinese architectural coating producers accounted for a total volume of 7.14 million tonnes of architectural coatings in 2021, a growth of more than 13% as compared to the Covid-19 hit 2020. Country’s architectural coatings industry is expected to expand steadily in the short and medium term, largely driven by the country’s increasing focus on energy conservation and emission reduction. The production of low VOC, water-based paints is expected to register steady growth rate to meet the demand.
The largest players in the decorative market are Nippon Paint, ICI Paint, Beijing Red Lion, Hampel Hai Hong, Shunde Huarun, China Paint, Camel Paint, Shanghai Huli, Wuhan Shanghu, Shanghai Zhongnan, Shanghai Sto, Shanghai Shenzhen and Guangzhou Zhujiang Chemical.
Despite the consolidation in Chinese architectural coating industry during the last eight years, the sector has still a number (nearly 600) of producers competing on very low profit margins in the economy and lower segment of the market.
In March 2020, Chinese authorities released national standard of “Limit of Harmful Substances of Architectural Wall Coatings”, in which the limit of total lead concentration is 90 mg/kg. Under the new national standard, architectural wall coatings in China follows the total lead limit of 90 ppm, for both architectural wall coatings and decorative panel coatings.
Covid-zero policies and the housing market crisis have been two of the most important factors behind the decline in production of architectural coatings in the year 2022. In August 2022, new home prices in 70 Chinese cities fell by a worse-than-expected 1.3% year on year, according to official figures, and nearly a third of all property loans are now classed as bad debts.
As a result of these two factors, China’s economic growth has lagged behind the rest of the Asia-Pacific region for the first time in more than 30 years, according to World Bank forecasts.
In a biannual report released in October 2022, the US-based institution forecast GDP growth in China – the world’s second largest economy – of just 2.8% for 2022.
Established in 1992, Nippon Paint China has emerged as one of the top architectural paint producers in China . The company has steadily expanded its reach across the country in tandem with the country’s rapid economic and social growth.
In 2022, AkzoNobel invested in a new production line for water-based texture paints at its Songjiang site, Shanghai, China – boosting capacity for supplying more sustainable products. The site is one of four water-based decorative paints plants in China and among the company’s largest globally. The new 2,500 square meter facility will produce Dulux products such as interior decoration, architecture and leisure.
In addition to this plant, Akzo Nobel has decorative coating production plants at one more site in Shanghai, Langfang and Chengdu.
“As AkzoNobel's largest single country market, China has huge potential. The new production line will help to enhance our leading position in paints and coatings in China by expanding new markets and further driving us towards strategic ambition,” says Mark Kwok AkzoNobel’s President of China/North Asia and Business Director for Decorative Paints China/North Asia and Director for Decorative Paints China/ North Asia.
Overview of architectural coatings market in China
China’s overall paints & coating market was estimated at USD 46.7 bn in 2021 Source- Nippon Paint Group). Architectural coatings account for 34% share of the total market on value basis. The figure is quite low as compared to the global average of 53%. Huge automotive production, rapid development in the industrial sector in the past three decades and a large manufacturing sector are some of the reasons behind higher share of industrial coatings in the overall paints and coatings market in the country. However, on the positive side, the low figure of architectural coatings in overall industry offers Chinese architectural coating producers a number of opportunities in coming years.
Chinese architectural coating producers accounted for a total volume of 7.14 million tonnes of architectural coatings in 2021, a growth of more than 13% as compared to the Covid-19 hit 2020. Country’s architectural coatings industry is expected to expand steadily in the short and medium term, largely driven by the country’s increasing focus on energy conservation and emission reduction. The production of low VOC, water-based paints is expected to register steady growth rate to meet the demand.
| Year | Coatings | Architectural Coatings | ||||
|
Output (10000 tonnes) |
Growth rate (in %) |
Output (10000 tonnes) |
Growth rate (in %) |
Proportion of overall market (in %) |
||
| 2021 | 2088 | 15.9 | 714 | 13.3 | 34.1 | |
| 2020 | 1801 | -26.15 | 630 | -9.22 | 34.9 | |
| 2019 | 2439 | 38.6 | 694 | 7.0 | 28.5 | |
| 2018 | 1760 | -13.6 | 649 | 3.0 | 36.9 | |
| 2017 | 2036 | 7.2 | 630 | 9.0 | 30.9 | |
| 2016 | 1900 | 10.6 | 577 | 7.2 | 30.4 | |
| 2015 | 1718 | 4.2 | 538 | 4.2 | 31.1 | |
| 2014 | 1648 | 26.5 | 516 | 7.9 | 31.3 | |
| 2013 | 1303 | 2.4 | 478 | 14.9 | 36.7 | |
| 2012 | 1272 | 17.8 | 416 | 20.4 | 32.7 | |
| Table- Output of architectural and overall coating industry in China during last ten years | ||||||
The largest players in the decorative market are Nippon Paint, ICI Paint, Beijing Red Lion, Hampel Hai Hong, Shunde Huarun, China Paint, Camel Paint, Shanghai Huli, Wuhan Shanghu, Shanghai Zhongnan, Shanghai Sto, Shanghai Shenzhen and Guangzhou Zhujiang Chemical.
Despite the consolidation in Chinese architectural coating industry during the last eight years, the sector has still a number (nearly 600) of producers competing on very low profit margins in the economy and lower segment of the market.
In March 2020, Chinese authorities released national standard of “Limit of Harmful Substances of Architectural Wall Coatings”, in which the limit of total lead concentration is 90 mg/kg. Under the new national standard, architectural wall coatings in China follows the total lead limit of 90 ppm, for both architectural wall coatings and decorative panel coatings.
Covid-Zero Policy and Evergrande Crisis
Year 2022 has been one of the worst years for architectural coating industry in China on account of the coronavirus induced lockdowns.Covid-zero policies and the housing market crisis have been two of the most important factors behind the decline in production of architectural coatings in the year 2022. In August 2022, new home prices in 70 Chinese cities fell by a worse-than-expected 1.3% year on year, according to official figures, and nearly a third of all property loans are now classed as bad debts.
As a result of these two factors, China’s economic growth has lagged behind the rest of the Asia-Pacific region for the first time in more than 30 years, according to World Bank forecasts.
In a biannual report released in October 2022, the US-based institution forecast GDP growth in China – the world’s second largest economy – of just 2.8% for 2022.
Dominance of foreign MNC’s
Foreign multinational corporations ( MNC’s) accounts for a lion’s share of Chinese architectural coatings market. Domestic Chinese companies are strong in some of the niche markets in tier-II and tier-III cities. With the rising quality consciousness among Chinese architectural paint users, MNC architectural paint producers are expected to increase their share in this segment in short and medium term.Nippon Paints China
Japanese paint producer Nippon Paints is among the largest architectural coating producers in China. The country accounted for a revenue of 379.1 billion yens for Nippon Paints in 2021. Architectural paints segment accounted for 82.4% of the overall revenue for the company in the country.Established in 1992, Nippon Paint China has emerged as one of the top architectural paint producers in China . The company has steadily expanded its reach across the country in tandem with the country’s rapid economic and social growth.
AkzoNobel China
AkzoNobel is among the largest architectural coating producers in China. The company operates a total of four architectural coating production plants in the country.In 2022, AkzoNobel invested in a new production line for water-based texture paints at its Songjiang site, Shanghai, China – boosting capacity for supplying more sustainable products. The site is one of four water-based decorative paints plants in China and among the company’s largest globally. The new 2,500 square meter facility will produce Dulux products such as interior decoration, architecture and leisure.
In addition to this plant, Akzo Nobel has decorative coating production plants at one more site in Shanghai, Langfang and Chengdu.
“As AkzoNobel's largest single country market, China has huge potential. The new production line will help to enhance our leading position in paints and coatings in China by expanding new markets and further driving us towards strategic ambition,” says Mark Kwok AkzoNobel’s President of China/North Asia and Business Director for Decorative Paints China/North Asia and Director for Decorative Paints China/ North Asia.
