What is the outlook for the paint industry? Three major factors influencing it.

As the world's second-largest economy, China's economic stability has given hope to people around the world who are suffering. However, after decades of simple and extensive economic development, the Chinese economy has encountered a bottleneck at this critical juncture. To be more precise, the growth rate is tending to stabilize, returning to the right track under the guidance of market laws and national policies. As a member of the traditional industry, what is the outlook for the paint industry? The paint industry is certainly inseparable from these closely related issues: the slowdown in real estate, energy conservation and emission reduction, overcapacity, and so on. Whether for paint companies or paint distributors, only by having sufficient foresight about the market can they face challenges during this difficult transformation period.

The Outlook of the Paint Industry: China's Real Estate

No one denies that real estate is absolutely one of the most important factors affecting the paint market, and the rise and fall of the paint industry is closely related to the ups and downs of real estate. Over the past decade, the reason why China's paint industry has thrived coincidentally aligns with the rapid development of China's real estate. However, with the real estate bubble looming, even if the rumored collapse of the real estate market does not occur, the atmosphere of waiting and seeing has been the main theme. Currently, only the first and second-tier cities are still experiencing warmth in their real estate markets, but the excess inventory is enough for these big cities to digest for a while. In the first and second-tier cities where new housing demand is approaching saturation, the transaction of second-hand houses has gradually taken the lead since last year, leading to the rise of a new emerging market in painting, which is the "repainting market." This is because everyone who buys a second-hand house will renovate their home again, which can be seen as a glimmer of hope during difficult times. If this trend continues, the opportunities brought by the repainting market will not be inferior to the period of rapid growth in real estate.

The Outlook of the Paint Industry: Overcapacity

It is well known that China's paint market is the largest in the world, with more than 20,000 paint companies of various sizes. Among them, the market size of decorative paints alone reaches 200 billion, but over 90% of the market share is monopolized by latex paint giants represented by Nippon and Dulux. However, new wall materials represented by diatom mud and water-based wall paints are gradually occupying more market share, a phenomenon that started in the high-end sector and is gradually spreading to more home decoration markets. Currently, there are hundreds of brands in the diatom mud market, and the intensity of competition is evident. The typical low investment and quick returns have led to the distorted development of China's paint industry. In the context of high gross profit margins, everyone feels there is money to be made, but this good time should be coming to an end. With the growing call for environmental protection, small companies may be quickly eliminated, as they have no sustainable development capabilities other than imitation.

This is not alarmist; under the national advocacy for energy conservation and emission reduction, some small brands and workshops that lack strength and rely on gimmicks in the paint market will inevitably face the risk of reshuffling. In contrast, some brands that are truly grounded in research and development and have high-quality products, such as Jingran's formaldehyde-removing artistic wall materials, have produced negative ion diatom mud, water-based wall paints, and 3D colorful paints after nearly years of silent research and development, achieving a true meaning of being free from formaldehyde VOCs while effectively adsorbing formaldehyde. Although they missed the golden decade of paint, it is precisely this craftsmanship spirit of honing a sword for ten years that has allowed them to stand out in today's challenging paint market, shining as a rising star.

The Outlook of the Paint Industry: Environmental Protection Calls

The vast majority of Chinese paint companies operate in a mixed manner, meaning that both environmentally harmful solvent-based paints and environmentally friendly water-based paints are produced in the same factory. As the country tightens its environmental regulations, the production and use of solvent-based paints are becoming increasingly unpopular, and many places have begun to restrict or prohibit them. However, it should not be realistic for the entire Chinese paint industry to stop producing solvent-based paints, but it is an undeniable fact that the production and sales of solvent-based paints will face increasingly strict regulations and restrictions. The increasingly stringent environmental governance may be the "sword" that leads to the large-scale closure of small and medium-sized paint enterprises. Jingran, which initially focused on the environmental paint market, stands out calmly due to its focus on environmental protection and innovation.

Repainting, capacity elimination, and prioritizing environmental protection are the trends I see emerging in the paint market in the coming years. I am optimistic about the development of China's paint industry, but I am not optimistic about the production of solvent-based paints, as it does not align with China's development direction in any aspect. Environmental paints represented by Jingran will surely shine.