Four Major Development Changes in the Coatings Market in 2014
Half of 2014 has already passed. In the past year, the Chinese paint market has experienced significant changes. With the intensification of competition in both domestic and international paint markets and the shrinking profit margins, small and medium-sized paint companies are struggling to survive amidst challenges. Looking back at the Chinese paint market in 2013, there are four aspects worth noting:
1. The era of low profits in the paint market has arrived.
The trend of polarization in the Chinese paint market has emerged. Large paint brands are expanding their territory by opening large and multiple stores due to their strong financial resources and profitability. Meanwhile, small and medium-sized paint brands are leveraging their advantages of low costs and prices to sell in bulk within smaller regions. However, regardless of the size of the paint brand, the common trend in the paint market is: intensified competition, rising raw material costs, and consumer terminals being harder to serve than ever before. In this fierce competition, the era of low profits in the Chinese paint market has arrived.
2. The paint market is characterized by survival of the fittest, with a high "entry and exit rate".
Currently, the "entry and exit rate" in the Chinese paint market is quite high. Due to the relatively low technical barriers in the paint industry, new paint brands are constantly entering the market to "test the waters," attempting to share in the profits. However, the rising production costs in recent years have made it difficult for established paint manufacturers to adapt. Under market pressure where transaction volumes cannot be guaranteed, paint brands that cannot sustain themselves will ultimately choose to exit.
3. Paint companies have a singular marketing approach, lacking innovation and focusing on superficiality.
The marketing strategies of Chinese paint brands often only aim to grab attention, pursuing sensationalism. However, the tendency to focus on superficiality rather than substance makes it difficult for paint brands to win people's hearts. The early success of Nippon Paint's advertisements led many paint companies to follow suit, resulting in a bombardment of advertisements across major media. After failing to replicate Nippon Paint's success, paint companies turned to various public relations activities for promotion, leading to a series of eye-catching gimmicks like "drinking paint" and "body painting with paint" that once created a lively spectacle. However, for various reasons, these paint companies have gradually faded from public view. If they rely solely on attention-grabbing gimmicks for promotion, they may create a "sensation" in the short term, but due to the lack of core elements necessary for paint companies to grow stronger, the impact of such promotions is very limited and cannot provide the "hard power" needed for long-term survival in a harsh market environment.
4. The rise of local paint brands in the market.
Behind the bustling Chinese paint market, local paint brands are quietly rising. Some small and medium-sized paint companies that have been working in the Chinese paint market for many years and are familiar with market rules have already matured in their R&D capabilities, with paint quality comparable to foreign brands. At the same time, due to cost control in localized production and corresponding support from local governments, their strength in the paint market should not be underestimated. As global paint giants increase their investment in building factories in China, the significance of the rise of local paint brands becomes even more profound.
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