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Paint and Coatings Dompanies and Their Suppliers Continue to Invest in China

 November 02, 2013
Investments in China
Paint and coatings dompanies and their suppliers continue to invest in China.

China 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.

 - See more at: http://www.coatingsworld.com/issues/1013/view_features/investments-in-china/#sthash.yu00Ow9G.dpuf

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