Sun Lianying disclosed the economic performance of the coatings industry in the first half of the year.

In the first half of 2019, China’s coatings and pigments industry will continue to face severe challenges as environmental protection and safety regulations and requirements become increasingly stringent, thereby standardizing corporate production and business practices. Given that safety concerns at chemical enterprises in 2018 prompted many firms to actively seek entry into industrial parks for centralized management, the upward trend in upstream raw material prices has begun to ease. Over the past year, an increasing number of companies have come to recognize that leveraging environmental protection to drive transformation and pursuing green development are the only viable path forward, leading the entire industry to significantly accelerate its pace of transformation and upgrading.

Against this backdrop, Sun Lianying, President of the China Coatings Industry Association, recently delivered a presentation titled “Analysis of the Economic Performance of China’s Coatings Industry and Interpretation of Key Policies” at the 2019 China Coatings Enterprises ‘8+3’ Summit Forum. In her address, she analyzed and interpreted the industry’s economic performance in the first half of 2019, providing a solid empirical foundation that helps the industry gain a clearer understanding of its current development landscape, enables enterprises to adjust their strategic approaches, and guides individuals in aligning their efforts with the right priorities.

Economic Performance of the Coatings Industry in the First Half of the Year

Sun Lianying disclosed that in the first half of 2019, China’s coatings industry recorded a total output of 9.6445 million tonnes, up 4.8% year on year; total revenue from principal operations reached RMB 148.92 billion, down 1.0% year on year; and total profits amounted to RMB 9.82 billion, a decline of 7.1% compared with the same period last year. Among them, Guangdong, Shanghai, Jiangsu, Sichuan, and Hubei ranked first through fifth in terms of output, respectively. On the import–export front, during the first half of 2019, the combined import–export volume for China’s coatings and pigments industries totaled 990,700 tonnes, down 5.89% year on year; the total value of imports and exports reached US$2.493 billion, a decrease of 8.81% year on year; and the trade surplus stood at US$682 million, down 19.95% year on year.

Economic Performance of “Hundred-Index” Enterprises

Among the 104 coatings companies selected for this survey based on having main-business revenue exceeding RMB 100 million, Nippon Paint topped the list in 2018 with RMB 17.574 billion, far ahead of the rest. AkzoNobel, PPG, Jotun, BASF, Hunan Xiangjiang, Axalta, Sherwin-Williams, San Ke Shu, and DeWitt Coatings ranked second through tenth, respectively. Together, these ten companies accounted for approximately 57% of the total main-business revenue of all 104 firms participating in the survey. Notably, Nippon Paint alone contributed 15.74% of the aggregate main-business revenue of the “Top 100” companies and 5.37% of the national coatings industry’s total main-business revenue in 2018; its total profit represented 11.49% of the industry’s overall profit.

Key Policy and Trend Analysis

Sun Lianying stated that the Comprehensive Governance Plan for Volatile Organic Compounds in Key Industries outlines measures across four key areas. First, vigorous promotion of source substitution and enhanced policy guidance: Sun Lianying noted that the state encourages the replacement of high-VOCs coatings with low-VOCs alternatives to reduce VOC emissions at the source. At the same time, policy provisions stipulate that if enterprises use coatings, inks, adhesives, and other products that comply with national regulations on low-VOC content, and if their emission concentrations consistently meet standards while their emission rates and performance also satisfy relevant requirements, then the corresponding production processes may be exempt from the requirement to install end-of-pipe treatment facilities. Furthermore, processes that use raw and auxiliary materials with a VOC content (by mass) of less than 10% may be exempt from the requirement to implement uncontrolled emission collection measures. Second, strengthening control over uncontrolled emissions; third, promoting the construction of appropriate and efficient pollution-control measures; and fourth, deepening the implementation of refined management by introducing a “one plant, one plan” system, mobilizing expert teams to provide specialized technical support, enforcing strict oversight, and enhancing assistance and guidance for enterprises.

The Technical Guidance on Emergency Emission Reduction Measures for Key Industries during Severe Pollution Episodes provides standardized guidance on the scope of application, production processes, pollution-generating and emission-related stages, emission reduction measures, and verification methods for 31 industries, including coatings, inks, furniture manufacturing, and industrial painting. In addition, it establishes performance-based grading for 15 industries, including coatings and inks, and formulates differentiated emission reduction measures. The stringency of these emission reduction measures shall exceed that specified in the Technical Guidance, with the aim of fully meeting the required pollutant reduction ratios for each level of the severe-pollution emergency response plan during all warning periods.

Future Development Directions and Economic Outlook for the Coatings Industry

Speaking about the industry’s future direction, Sun Lianying believes that the coatings sector will move toward green practices, consolidation, innovation, and intelligent transformation. She noted that, as the national green manufacturing initiative gains momentum, the certification of green products, green factories, and green supply chains will become synonymous with a company’s commitment to environmental sustainability and serve as a hallmark of quality assurance. By contrast, non‑intensive and low‑quality development will inevitably lead to market disorder, misguide policymakers, and undermine the industry’s long‑term trajectory; therefore, concerted industry-wide efforts are needed to address pressures across the value chain. Centralized procurement at the upstream end and the establishment of standardized pricing systems at the downstream end can help curb cutthroat competition, while mergers and reorganizations can enable firms to grow in scale and strength, ensuring that inferior players do not crowd out superior ones—this is the essence of consolidated development. Sun Lianying emphasized that conventional companies tend to focus on price‑driven competition, whereas innovative firms prioritize technological advancement and quality; thus, innovation is the underlying engine of success for leading enterprises. As for intelligent transformation, she acknowledged that human factors remain a significant and often uncontrollable source of uncertainty in day‑to‑day operations. Consequently, only well‑resourced companies will be able to harness digitalization to achieve sustainable development across the entire supply chain, enhancing collaboration and production efficiency. “In short,” Sun Lianying concluded, “in 2019 the Chinese coatings industry remains in a critical period of strategic opportunity, characterized by steady yet gradual deceleration and incremental change. I urge all business leaders to prepare themselves to meet the challenges ahead.”

Source: China Coatings