Anti-corrosives and colour keep Taiwan’s paint market’s head above the water

For International News Services’ client Asia Pacific Coatings Journal

Jens Kastner reports from Taipei on the highs and lows of the paint and coatings industry in Taiwan

The paint and coatings industry in Taiwan, generally, has an optimistic outlook, with the industry making the most of its close links to mainland China’s burgeoning manufacturing and domestic markets. It is just as well, given the island’s do-it-yourself (DIY) home painting sector remains weak, with such improvements traditionally a deeply unpopular concept.

“2012 wasn’t a good one for our archi- tectural paints but other categories actually did well,” says Chen Hung-wei, Vice President of local paint and varnish maker Yung Chi Paint & Varnish MFG, whose Rainbow home paint brand had a 20.5% market share in Taiwan in 2011, according to UK-based industry analyst Euromonitor International. UK-based Information Research Ltd, reports that the size of Taiwan’s paint market last year was 296,880t, including segments such as architectural paints, general industry coatings, wood paint and marine coatings. In 2011, 18,908t were imported and 123,000t exported.

COIL COATING

But for Yung Chi last year, “the best perform- ing product was coil paint,” says Mr Chen, pointing to healthy demand in the Taiwan steel sector. “Our customers export steel to other countries – the USA, EU [European Union], ASEAN [Association of Southeast Asian Nations] – and the US economy recov- ered somewhat last year.” Coil coating involves coating metal before fabrication in one continuous operation, with manufacturers being able to choose from a wide range of coatings from polyester-based paints, water- borne emulsions and dry lubricants.

Yung Chi’s sales grew by 2.5% from US$216.2M in 2011 to US$221.5M last year despite the global economic slump. And its export focus was important, given Taiwan’s economy grew by a mere 1.26% from the previous year.

The Taiwan-based company operates its main plants in China, Vietnam and Malaysia, producing for local markets there, along with a smaller Taiwan-based production facility supplying special projects in Dubai and Israel.

Mr Chen adds that Yung Chi’s anti-corro-

sion paint is also performing well, tapping demand from the many factories in China and Taiwan that are clustered in coastal areas, increasing their exposure to salinity in the air, water and soil.

“Last year, we introduced a new anti-corro- sion paint for the pipelines of Taiwan’s Formosa Plastics Group’s naphtha cracker petrochemical complex and have seen good progress,” Chen says, adding that such focus on large facilities helps make the company near-immune to a single bad macroeconomic year.

According to Chen, fire-retardant paint is also an increasingly promising product type, especially for use in high-tech factories that are so plentiful in the region. Yung Chi is supported by Taiwan’s government-run Industrial Technology Research Institute (ITRI) in its research and development. This has enabled them to produce new paints ensuring steel structures withstand blazes for two to three hours. A product launch is possible later this year, Chen says.

CLIMATIC INFLUENCES

Taiwan’s subtropical and ocean-influenced climate also affects the domestic paint market, which consumed 410,352t of paint in 2011, according to the Ministry of Economic Affairs. Torrential rainfall and extreme humidity is common year-round and so, according to a 2012 consumer survey by Taiwanese magazine My Home, consumers want architectural paint to be anti-bacterial, anti-mildew, anti-moisture, waterproofing, cooling and anti-fungal.

As a result, higher-end international manu- facturers do well in the Taiwan domestic sector. Good examples of new products targeting that demand include AkzoNobel’s waterproof roof paint Dulux A959 or its Forest Breath line, which the company claims elimi- nates bacteria through a formula of bamboo charcoal and tea tree oil.

But the problem for domestic paint sellers wanting to expand these markets is that they struggle to sell to home-owners direct.

While the slow economy last year made people reluctant to spend on paints and remodelling, the main challenge to this sector is reaching the end-customer, says Lotus Wu, AkzoNobel Taiwan’s brand manager, who declines to give concrete sales figures, quoting company policy.

“But a major problem for us is that 90% of our customers are painters and paint

14 APCJ – June 2013

shops; the Taiwanese don’t do painting frequently, are unfamiliar with DIY and thus solely listen to the painters when it comes to choosing paint.”

Ms Wu explains that painters and paint shops usually enjoy long-established business relationships and that they are notoriously unreceptive to new products. AkzoNobel is also still considered a foreign company despite its 26.7% share in the Taiwanese home paint market in 2011, according to Euromonitor and local competitors find it generally easier to sell to established networks.

“We need more time and more effort to communicate painting knowledge to the end- consumer,” says Wu. “For this year, we are thus planning integrated campaigns through internet and modern retailers such as B&Q.”

But Wu sees a potential advantage for AkzoNobel: while walls are traditionally painted white in Taiwan, there’s a shift toward the western way of frequently changing colours. “The young generation has begun using more colour because they find it’s a cheap and convenient way of creating atmos- phere at home,” she says. “This phenomenon helps us spur home paint usage.”

APCJ

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