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April 12, 2019
By: Arnold Wang
China Correspondent
The China coatings market has been pushing forward by the government to a future scenario in which only companies with environmentally friendly products and scale of production can survive and develop their business further. Under stricter environmental protection regulations, hundreds and even thousands of small coatings companies retreated from the market, a phenomenon also seen in other industrial sectors. Those coatings companies that have accumulated favorite brand recognition in the market and enough capital are taking advantage of this market trend and quickly stepping up their expansion activities. It is estimated that since the beginning of 2019 the start of the construction for at least 10 large coatings investment projects in China has been reported publicly. Nippon has been tapping into this market situation by upgrading its coatings production process in its new plants in China. The design of the new plant in Xianning, Hubei province is based on the standard of Industry 4.0. Only 50 workers are needed to run the production facility which can produce 200 thousand tons per year at the moment. And the total capacity can be expanded to 300 thousand tons in the future. DCS control system has been introduced to the new plant which can produce emulsion paintings, functional coatings, wood coatings and dry mixed mortar. Xianning plant has been constructed as a model plant, and Nippon will copy the same model in other plants in Qingyuan, Kunming, Lankao, Changshu, etc. The reason behind Nippon’s decision to have so many plants in China is that they can be close to each regional market so as to be friendly to the environment and cost effective by avoiding long distance logistics. Nippon is also adjusting its market strategy from retail market to project-based market. Fine decoration has become a requirement for many residential houses developed in China, so this needs coatings companies to develop a closer relationship with real estate developers. Intelligent Manufacturing Coatings companies are investing heavily in intelligent manufacturing in China. Process upgrading is becoming popular in the coatings industry, but not every company can afford to do so. French Parex has nine plants in China and is a strong market player operating under the main brand Davco. The company has a unique retail distribution network with 90,000 points of sale, among which 3,000 are exclusive independent distributors under the Davco brand. At the end of last year, the company just celebrated three billion yuan sales record in China. The Conghua Super plant, which was opened last year and produces cement based mortar, coatings, adhesives and sealants, etc for refurbishing and construction markets, is the one with the largest production output and the highest automation in Parex group. The plant covers an area of 50,000 square meters, introducing the world-class equipment and eight fully automatic production lines with the annual output of 500,000 tons. One of the fully automatic powder production line for the complete segments of Davco products only needs two operators. The entire production process and technology are controlled by an intelligent system to ensure the formulation and process be scientific and rigorous.The on-site visual management is adopted in the plant, covering from the source to the process, to the production process for ensuring the safe and controllable production process. Investment Spree Both international brands and large domestic players are joining a new wave of investment. International brands are beefing up to expand their market shares and also to get into new segments. Industrial coatings such as wind power coatings, and automotive coatings for shuttle buses were Nippon’s weak spots in China, so Nippon is investing heavily in these two years, and so to speak Nippon is increasing their overall presence in all the market segments in China. And they are not alone. On January 24, Guangzhou NDRC disclosed that PPG will construct their South China R&D and production base from 2020 to 2022 and this project will have an investment of 620 million yuan. On March 4, Zhang Jiagang government released a piece of news saying Hempel will invest 170 million dollars to construct a new coatings project which includes 105 thousand tons per year of high-performance marine coatings, 75 thousand tons per year of high-performance industrial coatings and 20 thousand tons per year of waterborne coatings. The construction period will be 18 months. On Feb. 14 Hubei province announced that ShenzhenUV-ChemTech LTD and Yihua will invest 8 billion yuan to construct the world largest UV curing material project, in which 20 thousand tons per year of photoinitiators, 80 thousand tons per year of monomer resins and 100 thousand tons per year of LED curing coatings. On February 21, Asia Cuanon disclosed that they have signed an agreement to construct a new production base in Changsha, Hunan province. This project, which will have a total investment of 600 million yuan, will include 200 thousand tons of high-quality architecture coating as well as other construction materials. Production Scale is Important, but Technology is the Key Green development in the industrial sector might give international companies more chances to win more market share in China because they have more mature green technologies tested in the past. Solvent-based and high VOC coatings are not welcomed in many cities and in many markets, especially in refinishes, wood coatings, and some industrial coatings, etc. SANY is one of the leading engineering machinery companies in China. Based on their introduction recently, they ranked six coatings solutions including waterborne, high solid, powder coatings, solvent-based, UV and polyurea. And their favorite options are powder coatings and waterborne coatings. Of course, the weight of considerations is a subjective decision based on environment protection (25 percent) and coating thickness (20 percent), etc. But it again proved that environmentally friendly and high-quality products will be favored in the market by large customers in general. Under current environmental regulations, SANY would like to choose coatings technologies which show stable quality and are environmentally friendly. Those companies who can not afford to invest in R&D will be pushed out of the market sooner or later. And this will in another way facilitate the development of international brands in China.
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