Frost & Sullivan Asia Pacific Paint & Coating Market Outlook
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Transcript of Frost & Sullivan Asia Pacific Paint & Coating Market Outlook
Asia Pacific Paint and Coating Market Outlook
Chemicals, Materials & Food Practice
Frost & Sullivan
Sep 2012
“ We Accelerate Growth”
© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated,
quoted, copied or otherwise reproduced without the prior written approval and consent of Frost & Sullivan.
2
Table of Contents
2 Paints and Coatings Industry Outlook
1 Macro Economic Outlook and Drivers
3
Source: IMF(World Economic Outlook, 2011)/ 2012
GD
P G
row
th %
Regional GDP Growth
2011: Global World growth slowed down to 3.8% from 5.2% in 2010. Developing Asia also slowed to 7.9% from 9.5% in
2010. China and India key growth regions
2012 : Global World Growth estimated at 3.3%, ( 2.5% by world bank) Developing Asia : 7.3%. ASEAN 5 gaining
importance along with China and India
Macroeconomic Scenario- Asia still strong led by China, India
and ASEAN 5 and a rebound from Thailand and Japan
-5
0
5
10
15
2007 2008 2009 2010 2011 2012
United States
Europe
Asean-5
Africa
China
India
World
4
-5 0 5 10 15 20
Japan
ANZ
Singapore
SKorea
HK
Taiwan
Thailand
Philippines
Malaysia
Vietnam
Indonesia
India
China
2012
2011
2010
High Growth
GDP Growth %
GDP Growth of APAC Countries
Asia : One region, many countries , different growth
rates……means different strategies for different markets
Per capita paints
>13kg
Focus- Greater
push to high-end
technologies
Per capita paints
<5kg
Focus- Greater
penetration
5
Key Drivers of Growth in ASIA/ ASEAN
Demographics
Growing Middle Class/ Purchasing
power
Growth in Construction, Infrastructure
and Manufacturing
6
Population favors Indonesia, Vietnam and Philippines
Population of Top 20 Population Countries
Source: United Nation Populations Fund
2025 2010
7
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0 50 100 150 200 250 300
GD
P (
US
$ B
illio
n)
POPULATION (million)
GDP - POPULATION CHART 2010 - 2015
2010 2015
GDP Per Capita expected to grow in line with economic
growth
• Indonesia and Vietnam are predicted to be the fastest growing countries in next 5 years with increase in GDP per
capita are likely to be 9% and above
Size of bubble indicates per capita GDP
Malaysia
Thailand
Vietnam
Philippines
Indonesia
Source: IMF, Analysis: Frost & Sullivan
8
Asia expected to receive high investments in
infrastructure
North America
Asia/Oceania
Europe
Source: Morgan Stanley
Middle East
Latin/South America Africa
Water
Power
Road & Rail
Air/Seaports
$22,610bn
$9,000bn
$7,800bn
$1,590bn
Total
0
1,000
2,000
3,000
4,000
0
1,000
2,000
3,000
4,000
5,000
0
100
200
300
400
0
2,000
4,000
6,000
0
200
400
600
800
0
2,000
4,000
6,000
8,000
10,000
Projected Infrastructure Investment (Global), 2005-2030
M65B-18
9
Indonesia
10
Individually none of the ASEAN countries figure in top 10 globally,
but as a region ASEAN is likely to become 8th largest automotive
market by 2018 after China, Japan, India.
In 2010, ASEAN was 9th largest market 2015 it would become 8th largest market.
Country Sales 2010
1 China 17,212,891
2 USA 11,562,701
3 Japan 4,891,452
4 Brazil 3,363,445
5 Germany 3,109,641
6 India 2,712,587
7 France 2,669,402
8 UK 2,260,881
9 ASEAN 2,226,965
10 Italy 2,128,492
Sales 2015
1 China 29,010,852
2 USA 16,466,283
3 India 5,788,462
4 Brazil 5,364,935
5 Japan 4,591,476
6 Germany 3,850,511
7 Russia 3,429,031
8 ASEAN 3,140,684
9 France 2,704,451
10 Italy 2,563,360
Sales 2018
1 China 33,391,276
2 USA 16,970,585
3 India 9,039,806
4 Brazil 6,287,188
5 Japan 4,517,218
6 Russia 4,025,975
7 Germany 3,968,411
8 ASEAN 3,634,697
9 UK 2,897,909
10 Italy 2,793,822
• AFTA (ASEAN Free Trade Agreement)- will encourage regional hubs for manufacture
• Healthy rivalry among various countries to attract investments
• Growth hungry Indian and Chinese companies vying for this market
• ASEAN is a competitive production base, net exporter with strong competencies in certain product ranges. Rebound seen in Thailand after floods
• Japan expected to see the highest growth in 2012 after 2011’s earthquake and tsunami
11
Table of Contents
2 Paints and Coatings Industry Outlook
1 Macro Economic Outlook and Drivers
12
Asia’s share of paints and coatings has increased in line
with economic growth
Asia Pacific:
10% CAGR
Growth
America: 2.5% CAGR Growth
Europe: 2.6% CAGR Growth
Africa: 6.9% CAGR Growth
2001
2010
Middle East: 7.9% CAGR Growth
34.6
%
32.9
%
27%
1.6
%
3.9
%
2
%
27.6
%
25.9
%
4.5
%
40%
13
APAC market worth over $62 billion in 2011. Growth rate is
12-15 %
APAC Paint & Coatings Market Size ( 2011 )
5%
6%
65%
0%
2%
11%
1%
0%
1%
1%
1%
1%
2%
3%
Paint and Coatings Market: Percent of
Revenue by Segment
Paint and Coatings Market: Percent of
Revenue by Country
3%
13%
14%
10%
1%
12%
13%
24%
6%
4%
China Vietnam
Thailand
Taiwan
South Korea
Singapore
Philippines
India New Zealand
Malaysia
Indonesia
Japan
Hong Kong
Australia
Wood
Automotive -OEM
Automotive - Refinish
Can
Marine
Coil
Decorative Protective
Powder
Other Industrial
14 14
*Note: Bubble size indicates size of the coatings market
• Relatively more price-conscious
consumers
• Low cost coatings
• Scope for improving quality
Low-end Coatings High-end Coatings
Underdeveloped Market
Developed Market
• South Korea and Australia are maturing
markets, and moderate growth is
expected in the next two years
• The growth of eco-friendly coatings,
though, is expected to outpace the
market
• Japanese market is mature and has
become stagnant- some rebound
expected in 2012
• Manufacturers have resorted to eco-
friendly coatings to boost profitability
and to gain competitive advantage
• Focus on high end value paints
Australia
Thailand
Japan
South
Korea
China
India
Indonesia
• Rapidly developing markets for paints.
• A mix of high end and low cost coatings
Vietnam
Japan most advanced market while China is the largest
Malaysia
Myanmar
15
High raw material costs puts pressure M
ark
et
Dri
vers
M
ark
et
Restr
ain
ts
Greater Economic Growth in APAC region
Growth in end-use sectors- construction, automotive etc,
increasing investment in Infrastructure
Escalating Prices of Raw Materials as a result of rising crude oil prices as
well as developing markets increased consumption of these raw materials
Increase in Purchasing power- Rise in Middle Class
Reduced Export Demand from Western economies
Mergers & acquisitions and New technologies
Slower adoption of technology than expected
Key Market Drivers and Restraints, Asia Pacific, 2011-2012
Local companies cannot compete on R&D, marketing, branding
Source: Frost & Sullivan analysis. High Medium Low
16
• Global construction spending to slow to < 5% p.a. Asia constn spending to increase by 9%p.a
• Japan – rebuilding from earthquake. Thailand- rebuilding after floods
• China- growth in west,/ interior regions as per 12th 5 yr plan . India rising middle class and urbanization drives housing
• Singapore drop in construction sector, sustainability and productivity key
• Indonesia spending on construction to increase in line
• Korea- grew by 6% last year to become the largest in new orders- 52 billions$ but slow down expected in 2012 due to global crisis
• Challenges also seen in China due to high costs of labor and raw materials and lack of competitive tech
• Emerging opportunities in Vietnam and India
• Industrial sector expected to grow at 6-8% in coming decade
• Car sales and demand to slow in H-1 2012 and is expected to pick up later in ASEAN while China and India continue to drive demand
• Thailand is expected to drive the demand through pent up demand after floods and disruptions in supply chain
• Export market to slow
• Japanese players to bounce back
• China has the largest demand for car production.
Key Growth Segments- Construction and Infrastructure key growth
industries
17
• 2011 Market Size: USD 15 Bn
• Key countries: China and India, Indonesia
• Market drivers: Growth in construction industry and ecofriendly coatings
• Market restraints: Rising raw material prices, presence of numerous unqualified coating suppliers.
• 2011 Market Size: USD 9-11 bill
• Key countries for marine: Vietnam, Japan and South Korea, China
• Market drivers: Environmental drive to antifouling paints, growth in the ship maintenance market, investment in industrial infrastructure
• Market restraints: Rising crude oil prices, rise in metal prices, rising global crisis
• 2011 Market Size: USD 6.3 Bn
• Key countries: China, India, Thailand and Indonesia
• Market drivers: Growth in production and domestic sales, pent up demand in Thailand
• Market restraints: Rising raw material prices and competitive pricing in the automotive industry.
Key Growth Segments- Decorative and Protective coatings expected
to see higher growth rates than other segments
deco
Protec
tive
and
marine
deco
auto
18
Key countries driving growth- China, India, Indonesia and Vietnam
besides rebound seen in Japan and Thailand
Growing segment: Decorative segment,
automotive and protective
Market Drivers: Growing middle class
population, increased sale of premium paints in
urban areas.
Market Restraint: No mandatory standard for
regulating lead in paints or VOC emissions, so
slow shift to green expected
Growth: 13-15%p.a
Growing segments: Industrial and
Decorative coatings
Market Drivers: High growth end-industry,
China as hub for 3 C manufacture,
increasing commitment to green, growth in
West China/ second tier cities
Growth : 10-15%p.a
Growth Regions: Vietnam and Indonesia
Market drivers: High potential growth region driven by
increasing spending power and continuous economic
development, Increasing environmental awareness . Green
labeling, worker safety on the rise in Singapore/ Malaysia.
Thailand on a rebound
Market restraints: Rising raw material prices/ inflation is a
concern
India
ASEAN
China
Vietnam Highlight
- Growth in marine and wood coatings
- 70% of raw materials imported
- Growth 10%p.a
Indonesia Highlight
- Large population and potential to grow -
mainly decorative and protective
- Constn sector to increase to 9% of GDP
- Growth of paints >8% p.a
19
Trends in Decorative Coating- Construction spending drives
decorative. Low VOC, functional coatings the trend
Overview and trends Decorative coating
• Decorative coating market grows parallel with the activity in
construction and renovation of commercial and residential .Countries
such as China , India, Indonesia has a high demand for Decorative
paints.
• Companies like Nippon and Akzo Nobel are very active in the
decorative coatings market with environment friendly paints (reduction
of voc) in paint
• Major driver includes rising paint consumption per capita due to trends
in interior decoration and standard of living in Asia Pacific
• Development of green and sustainable building in Asia-Pacific region
(for e.g. countries like Australia, Singapore, New Zealand) will be a
driver for decorative coatings
• 3 tech trends: sustainable coatings (energy / fuel saving), functional/
smart coatings ( e.g dirt resistance), ecofriendly ( low VOC,
formaldehyde free, water borne)
China 43%
India 16%
Japan 15%
Australia 6%
Indonesia 5%
Others 15%
20
Marine coating- Korea and China drive this market
Overview and trends Marine Coatings
• Marine coating is estimated at about 6% of coating business.
• Ship Building moved to Asia- South Korea, China and Japan leading
Ship building countries globally. They take up 80% share of ship
building globally
• New shipping hubs in Vietnam, Philippines and India.
• In future high quality paint per litre value is expected to increase due
to rising cost of raw materials
• Innovations in Copper and Tin free anti fouling system to increase.
Glass flake epoxies for higher abrasion resistance to increase.
Coatings focused on reducing drag and increasing fuel efficiency on
the rise
China 46%
South Korea 19%
Japan 18%
Thailand 6%
Singapore 3%
Others 8%
21
Protective coating – China drives this market. Japan and Thailand
rebound. Increasing investment seen in Indonesia and India
Overview and trends Protective coating
• Protective coatings take up about 12-14 % of total paint and coating
market share in Asia pacific
• China leads the market for protective coatings.
• High growth of industrial sector like Energy and power sector, Oil and
gas units, Infrastructure Sector and manufacturing industries promotes
the usage of protective coating
• Companies like AkzoNobel and PPG are very active in this segment
and they investing in R&D to develop new eco friendly products with
better functionality and emphasis on environment friendly product such
as low voc and water based
China 78%
Japan 6%
India 5%
South Korea
3%
Australia 2% Others
6%
22
Automotive Coating- Besides China and India, pent up
demand from Thailand and Japan drive growth
Overview and trends Automotive coating
• Automotive coating market grows parallel with the production and car
sales in Asia pacific ,Countries such as China ,Japan and India has a
high demand for Automotive paints. Pent up demand from Thailand is
expected to increase in 2012
• Rebound expected from Japanese players like Honda, Toyota in 2012
• Japanese companies like Nippon and Kansai are very active in this
market followed by BASF and PPG.
• Auto companies are generally more environmentally conscious and
demanding ecofriendly materials which will drive coatings like
Waterborne & UV curable coating
China 56%
Japan 25%
South Korea
7%
India 6%
Thailand 2% Others
4%
23
Key Takeaway: Nippon Paint and Akzo Nobel have a wide presence in the Asia Pacific
coatings market, further reinforcing their market revenue.
Key Participants, Asia Pacific, 2011
China
Nippon Paint
AkzoNobel
Valspar
Japan
Nippon Paint
Kansai
SKK
Philippines
Boysen
Charter Chemical
Dutch Boy
Hong Kong
AkzoNobel
Nippon Paint
Camel Paint
Vietnam
AkzoNobel
4 Oranges
Nippon Paint
Singapore
Nippon Paint
AkzoNobel
Jotun
Indonesia
AkzoNobel
Nippon Paint
Mowilex
Malaysia
Nippon Paint
AkzoNobel
Jotun
Thailand
TOA
AkzoNobel
Nippon Paint
India
Asian Paint
Berger
Kansai
Taiwan
Yungchi
AkzoNobel
Kansai
South Korea
KCC
Samhwa
DPI / Nooro
Australia & New Zealand
Dulux
Valspar
Major companies are multinational or regional in operations……small
country centric companies may lose out with global trade
24
Presence of MNC’s growing in the region with greater
investments and commitment – e.g Akzo, Nippon, KCC
Local companies under pressure to grow through tie-ups with
MNC’s or expanding to new markets- e.g Asian Paints, TOA,
Yung Chi
Continued investment in Branding, distribution network, new
product introductions
Key Players include Jotun, Nippon, KCC, PPG
Players need to drive eco friendly practices and coatings
Technology, service and reliability of company is important
As Asian end users expand globally, Asia paint companies like
KCC, Nooru, will expand outside Asia
Industry very price sensitive and pro environment
Key paint companies continue to focus on developing eco
friendly process and key account relationships
Strong presence of Japanese paint companies like Kansai and
Nippon
Industrial
Automotive
Architecture
Industry dynamics differ by segment: Decorative paints is high
volume business relying on channel push and advertising pull.
Industrial coatings rely on technology and service
25
Last Word
Major I are multinational or regional in operations……small country
centric companies may lose out with global trade
In Rapidly developing markets such as China and India, we note that market leaders are
dominating by focusing on volume sales at affordable prices. This helps build brand awareness
and gain popularity and recognition amongst the masses. Nevertheless, premium products are
also sold to boost profitability. Focus on second tier cities/ cities in the West or interior regions in
China
Much of the focus is now also shifting towards emerging markets mainly Vietnam and Indonesia.
Volume is the name of the game in these markets. Domestic suppliers resort to competitive
pricing as the sole competitive strategy. Established paint manufacturers are leading through
product offering and quality but also ensure they have a reasonably wide product range to cater
to low to high price needs. Increase in competition and expansion expected as many companies
are eyeing these markets
In mature markets such as Australia and Singapore, we note that manufacturers focus more on
product differentiation to standout against the competition. Focus is on eco friendly, sustainable
coatings or higher functionality products. Quality and innovation are also key drivers in these
markets
Sustainability and green initiatives will continue. Growth in point of sales tinting seen in countries
such as Malaysia. Mid tier expected to grow as companies push to offer more choices in this
space
26
For Additional Information
Krithika Tyagarajan
Research Director
Chemicals, Materials and Food, Asia Pacific
(65) 6890 0230
Please log on to our Paint Frost
website at www.paintfrost.com
for more info.