Only Two Choices Left For Small And Medium Sized Coatings Companies
With overcapacity getting worse and with the price of raw materials continuously rising up, the coatings market is evolving quickly.
Many small and medium sized coatings companies are closing their factories or retreating from the market. Only the coatings companies who can differentiate themselves and position themselves accurately in a niche market can survive.
On the contrary, large coatings companies are still expanding their footsteps in China. For example, SKSHU is in the process of listing their stock in the market. In the first half of 2016, the company’s revenue was increased by 27 percent over the same period of last year. In addition, the company is building a new coatings production base in Sichuan province. The concentration of production capacities in large coatings companies will put more small companies in the brink of bankruptcy. Focusing on winning a niche market is the only way out of this fierce competition for small coatings companies.
Unlike manufacturing industries, service industries will still grow in China, and the prospect for environmental friendly coatings used by service industries are even better. Besides, although most manufacturing industries’ demand is shrinking, the automotive market in China is growing still fast. Based on the report released by China Association of Automobile Manufacturers, automotive sales in November grew by 10 percent compared with last year. With the number of total vehicles continuously increasing, the automotive service market will grow even faster in China. According to the report released by MARTEC during 2016 ChinaCoat, waterborne automotive refinish market in China will grow by over 20 percent from 2016 to 2020, although overall automotive refinish market’s growth will slow down. The report also disclosed that waterborne coatings have big growth potential in engineering machinery, fork truck and farm machinery market. Right now, waterborne coatings in this market segment only holds 1.2 percent share, and is mainly used as primers.
Sika flooring and coatings business unit has increased their annual sales in China to 350 million yuan in 2016. The growth, representing every 100 million yuan sales growth in three years, comes from market share increase in the flooring market as well as winning of market shares in other architecture coatings and building materials. The success of Sika is originated from high customer satisfaction for Sika’s solution, which combines both high quality products and excellent customized services.
The Chinese coatings market is changing quickly. And the situation could be even worse for coatings manufacturers if the trade relationship between the U.S. and China fluctuate in 2017 with the new government on board. Coatings companies need to adapt themselves quickly to the latest market trends and foster a service mindset instead of focusing simply on production like they did previously.