Vietnamese Paint & Coating Industry

Though Vietnam’s economy registered a slight decline during the second wave in 2021, the country’s paint and coating industry sailed through the tough times with only a few scratches. Coatings World presents an update on the Vietnamese paint and coating sector in this feature.

Overview of Vietnam’s Paint & Coating Industry

Estimated at $16 million at the end of 2020, the Vietnamese paint and coatings industry has grown steadily over the past five-years (2016-2020). Most stakeholders believe that during these five years, the overall paint and coating industry has registered a growth in the range of 5.5%- 6.5% on a CAGR basis.

On the basis of retail prices of coatings products, the Vietnamese market can be classified into four distinct groups. High-end segment, upper-middle segment, lower-middle segment and low-end or mass segment, High-end paint in architectural and industrial segment account for nearly 35% of the total Vietnamese coatings market on value basis. Upper-middle and lower-middle segments account for 23% and 15% of the market share. The low-end segment accounts for the remainder 27% of the total market.

One of the most noticeable trends in the Vietnamese paint and coatings industry has been the emergence of a number of mid-scale paint producers in the architectural segment. Over the last few years, these domestic companies have become very competitive in the scale and scope of their operations. Some of these companies are Kova Paint Group, Dong Tam, Alphanam, and Hoa Binh.

These domestic companies dominate the market in smaller cities and rural areas. Overall, the country’s paint and coatings sector is dominated by multinational and regional paint and coatings producers.

According to the Vietnam Paint-Printing Ink Association, “the Vietnamese paint and coatings industry is dominated by multinational paint and coatings producers with foreign paint makers accounting for 65%  of the market. Under Vietnam’s plan for developing the paint and ink industry, the average growth rate in production value of the paint and ink industry will register a growth of 14%  in the period from 2021 to 2030 and the proportion of production value of the paint and ink segment in the whole chemical sector will increase from 11.5%  in 2020 to 12%  in 2030.”

Architectural Segment

Like most of the other Asian countries, architectural paint dominate the overall paint and coatings market in Vietnam. This segment accounts for more than 70% of the total value of the country’s paint and coatings industry.

Going forward, the architectural sub-segment is expected to reap maximum dividends of the vibrant growth in the Vietnamese construction industry. The Vietnam construction market was valued at around $60 billion in 2021 and the market is projected to register a CAGR of about 8.71% during the five-year period. (2022-2027). The Vietnam construction industry is one of the best performing in the Asia-Pacific (APAC) region. Despite losing the momentum due to COVID-19 for a brief period, it grew strongly in the second half of 2021, according to the General Statistics Office (GSO) of Vietnam.

In a conversation with CW, Pamela Phua, general director, Akzo Nobel Vietnam said, “Currently, we are witnessing massive building booms in major cities thanks to years of rapid economic growth.

There will be a requirement of large quantities of paints following the enormous high-end housing developments altering the skylines of the country’s urban areas and the apartments housed in these buildings. In view of that, we see potential growth in the consumption of paints and coatings in Vietnam.”

Industrial Segment

Vietnamese industrial paint and coatings sector has registered steady growth rates in the last few years on the back of steady industrial growth. This segment has increased its share from 23%  to 29%  (on value basis) during 2014-2020.

The automotive sector is expected to drive the growth of industrial coatings in the country in the short and medium term. Though the country’s automotive production is not as high as in neighboring Thailand and Indonesia, but the country’s automotive market is now among the fastest-growing in Southeast Asia. While still seen as a big-ticket item, cars are increasingly crowding the streets of Vietnamese cities, emerging as one of the main modes of transportation alongside motorcycles for many urban residents.

Vietnam’s GDP is predicted to increase 7% in the next five years. Vietnam intends to speed up industrialization and modernization and become a developing country with modern industry and high-middle income by 2030 and a developed high-income country by 2045.

Jotun’s $100 Million Investment in Vietnam

Norwegian paint maker Jotun has made significant investments in Vietnam in recent years. The company invested $100 million in 2020 and 2021 towards setting up a new water-based and powder coatings factory in Hiep Phuoc Industrial Park of Ho Chi Minh City.

The new production facility has an installed capacity of 85 million liters of water-based paints and 10,000 tons of powder coatings.

Jotun has had a presence in the Vietnamese market since 1993. Initially, the company entered only with imported products, operating mainly in the field of industrial paint and marine works. However, it veered towards decorative paint a decade later when it was one of the first paint makers in Vietnam to introduce state-of-the-art color mixing technology.

Nippon Paint to Invest In a New Resin Plant

Japanese paint major Nippon Paint has announced it will set up a new resin production plant in Hanoi in Vietnam in its 2021 three-year strategy report.

“We already have a paint factory in Vietnam that started operations a few years ago and the addition of the resin factory will strengthen our supply chains in Asia,” according to the company’s management.

Nippon Paint has been in the Vietnamese market for more than 25 years, as one of the earliest paint brands in the country. Nippon Paint has built and put into operation three factories in Hanoi, its neighboring province of Vinh Phuc, and the southern province of Dong Nai specializing in the production of both decorative and industrial paint and coatings.