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Analysis of Asia Pacific Paint & Coating
Industry
Chemicals, Materials & Food Practice
Frost & Sullivan
“ We Accelerate Growth”
© 2011 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
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3
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will help you minimize your risk and maximize your growth opportunities
4
Table of Contents
Asia Pacific Paints and Coatings Industry
Asia Pacific’s paint and coating market
Macroeconomic trends influencing the paint industry in Indonesia
Market Driver and Restraint
Trend Analysis
5
APAC Paint Market – the market is still growing despite the global
economic crisis
Industry Overview
Paint and coatings is a high-growth market. In the last five years, economic boom coupled with industrial
migration from the west has led to a rapid growth of the paint and coatings industry, particularly within the APAC
region.
• The key countries driving much of the growth in this region are China, India, and some major ASEAN
countries namely Indonesia and Vietnam.
• Japan and South Korea, who although still maintain a relatively large share of the industry are more mature
markets with lesser scope for growth.
During the global economic crisis, most regions have seen a drop in the growth of the industry. APAC is an
exception, the market is more resilient achieving moderate growth, although the proportion is much lesser than
what was experienced in the past years.
China has become the fastest growing market in the Asia Pacific region, immediately followed closely by India.
• China has emerged as the second largest market next to the United States in the global landscape, and
accounts for around 50% of the total Asia Pacific market by value.
• The Indian paint market is mainly driven by a surge in domestic demand triggered by the country’s strong
economic growth and a shift of consumers to more affluent middle-income group.
In terms of market segmentation, decorative and protective coatings are expected to be the leading growth
markets in the Asia Pacific paint and coatings market. This is due to a rapid boom in the construction industry of
developing countries as well as a large number of industrial projects initiated by local governments as part of
their economic recovery plans.
6
Asia Pacific is taking up more share
2001
2010
America: 2.5% CAGR Growth
32.9% 25.9 %
World volume in 2001: ~24 mio tonnes
APAC share expected to increase to 50% by 2015
Africa: 6.9% CAGR Growth
3.9% 4.5 %
Middle East: 7.9% CAGR Growth
1.6% 2.0 %
Europe: 2.6% CAGR Growth
34.6% 27.6%
Asia Pacific: 10%
CAGR Growth
27.0% 40.0%
7
Market Revenue
24.055
29.107
34.515
40.193 43.525
48.101
53.553
0
10.000
20.000
30.000
40.000
50.000
60.000
2005 2006 2007 2008 2009 2010 2011
After a deep global recession, economic growth has turned positive in 2010.
In 2010, Asia Pacific region had the highest GDP growth, China driving the region.
Growth at about 7-8%p.a
2011 APAC Outlook: Economic Outlook slower than 2010 but remains high at
above 5%p.a.
Reve
nu
e (
mil
lio
n U
S$
)
Market Revenue Forecasts, 2005-2011
Note: All figures are rounded; the base year is 2009.
Source: Frost & Sullivan
Percent of Revenues by Region (World), 2009
Source: Frost & Sullivan
APAC 30%
Rest of
World 70%
8
Market Break-up by type of coatings
Decorative coatings
27%
Protective coatings
11%
Industrial wood
coatings 13%
Powder coatings
10%
Automotive coatings
13%
Other coatings
26%
APAC – Nearly $ 45-50 billion market, growing at
about 10-15% / annum in 2009.
Decorative coating is the most popular segment in
the ASEAN region. In Philippines, Malaysia, India
and Indonesia, it occupied more than 50% of total
paint and coating market.
Followed by protective and wood coatings.
• China leads the market for protective
coatings which constitute more than 75% of
APAC wood and protective coating share
• High growth of industrial sector like energy
and power sector, oil and gas units,
infrastructure sector and manufacturing
industries
• 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 Note: All figures are rounded; the base year is 2009.
Source: Frost & Sullivan
Paint and Coatings Percent of
Revenues by Segments
9
Market Break-up by Geographic Region
China 62%
Malaysia 1%
Japan 14%
Thailand 1.9%
South Korea 6.9%
Vietnam 1.2%
India 6.5%
Australia 3.5%
Indonesia 2.3%
• China is the second larget market in the
world after USA. Paint production has
tripled in the last 5 years to approx. 7
mn tonnes.
• ASEAN 5 occupied 7% of total APAC
market. Much of the growth is from
Thailand, Indonesia and Vietnam.
• Decorative coating is the most popular
segment in the ASEAN region. In
Philippines, Malaysia, India and
Indonesia, it occupied more than 50%
of total paint and coating market.
• Japan’s market is considered as
mature and experiencing minimal
growth
• South Korea is mainly driven by
decorative, automotive and marine
coating.
Note: All figures are rounded; the base year is 2009.
Source: Frost & Sullivan
Paint and Coatings Percent of Revenues
by Geographic Region
10
-5
0
5
10
15
2006 2007 2008 2009 2010 2011 2012
World
China
India
Asean-5
Africa
Europe
Western Hemisphere (Americas, Caribbean)
Source: IMF(World Economic Outlook, Oct 2010)
GD
P G
row
th
%
Regional GDP Growth
After a deep global recession, economic growth has turned positive in 2010.
In 2010, Asia Pacific region had the highest GDP growth, China driving the region. Growth at
about 7-8%p.a
2011 APAC Outlook: Economic Outlook slower than 2010 but remains high at above 5%p.a.
Macroeconomic Outlook- Asia Pacific region had the highest GDP growth
11
Indonesia real GDP growth rates
Growing faster than the world’s average
since the last 3 decades, except in 1998
when Indonesia was hit severely by the
financial crisis
Indonesia is the only major economy in
the region that had positive growth rate
during global economic crisis in 2008 .
Projected to grow 7-8% by 2015
Expected to outperform
most ASEAN countries in
the next 5 years but
behind China and India.
Within the APAC region,
both Vietnam and
Indonesia show the
highest GDP projection
from 2009 to 2011.
Source: IMF, Analysis: Frost & Sullivan
Source: IMF, Analysis: Frost & Sullivan
12
-
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 versus Population
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
Both countries are considered as important countries for automotive market
Size of bubble indicates per capita GDP
Malaysia
Thailand
Vietnam
Philippines
Indonesia
Source: IMF, Analysis: Frost & Sullivan
13
Macro economic
GDP Growth
Purchasing Power
Construction Industry
.
Macro economic indicators influencing the paint industry in Indonesia
GDP growth is continuing
Considered as one of the fastest growing economies
The market is as large as it is volume wise is still “under-penetrated” from the
point of view per capita consumption of paint
With the rising GDP per capita, consumer are paying more to their lifestyle, and
spend more on consumer goods such as paint.
Indonesia has a considerable of wealthy individuals, and the high end of the
market is quite strong
The construction industry is expected to grow steadily over the next couple of
years as government is allocating money in many project in order to stabilize
economy
Growth of Industrial Market
.
Strong growth of the end-use industrues such as in automotive, wood furniture,
shipping and packaging.
Many infrastructure project such as power plant, bridges and marine sector.
Regional Growth .
Indonesia is performing well, especially in the palm oil industry. This attracks
investors into the country.
The country is a key investor hub in the region, thereby offering benefits to foreign
investor.
14
Focus on environment-friendly products
Trend toward mergers and acquisitions and emergence of key local
participants
Greater scope for paint usage due to the huge population and growing
affluence of middle class Indians
Growth in infrastructure projects
Expected to be the fastest growing paint market in Asia over the next
couple of years. It is also likely to be the second largest growth market
in Asia volume wise.
Infrastructure development to overhaul the standard of living
Regional center for Japanese OEMs
Technological trends toward green products; the Thai Government has
initiated the eco-car project
Government to promote the country as a shipbuilding nation
Growing popularity as a manufacturing hub
The decorative market migrating from low tier to mid and premium
tiers
China
India
Indonesia
Thailand
Vietnam
APAC Focus
15
Ma
rke
t D
rive
rs
Ma
rke
t R
es
tra
ints
Growth of end used Industries
Low Purchasing
Power Rising Raw
Material Cost
Imp
ac
t
Low
High
Imp
ac
t
Low
High
Market Drivers and Restraints
Source: Frost & Sullivan.
Market Drivers and Restarints for paint and coating Industry in APAC during 2010-2011
Low Operating Cost
Greater
Economic
growth Product Innovation
e.g. Enviromental
friendly
Stringent
Environmental
Regulations
Social, economic
and political
threats
Increase infrastructure
spending
Reduced
export
demand
16
Future Trend
Market Trend
Market Trends Smart coating
Sustainable coating
Value added dirt resistance
High performance coating
Value added heat reflective
Eco Friendly
Market Trends of Paint and Coating Industry
Source: Frost & Sullivan.
Current Trend
17
Future Trend
2
3
1
Smart Coating
Nano coatings are considered a type of smart coatings as they are composed of extremely tiny
particles and consist unique characteristic such as extreme flexibility, aesy adhesion, resistance to
corrosion and microbacterial growth.
High Performance Coating
Fluoropolymer coating is well known for its high performance property. It has a long life cycle and
hance, is more cost efficient.
Sustainable Coating
The growing interest in “greener” coating has spurred many manufacturers to look into several
technologies that will make them more environmentally friendly. Therefore, demand high
functionality coating which also has less capability to help conserve energy is expected to increase
in the coming years
18
Mega Trend in Paint & Coatings Industry
SMART Infrastructure:
Multimodal Transport
Hubs Providing Excellent
Air, Rail, Road
Connectivity to Other
Mega Cities
SMART
Technology:
Intelligent
Communication
Systems
Connecting
Home, Office,
iPhone and Car
on a Single
Wireless IT
Platform
Satellite Towns: Main
City Centre will Merge
with Several Satellite
Towns to form ONE BIG
MEGA CITY SMART Cars: Atleast 10% of
Cars will be Electric Vehicles.
Free Fast Charging Stations at
every half mile
SMART GRID:
Infrastructure to
Enable Real time
monitoring of
power flow and
Provide Energy
Surplus Back to
the Grid
SMART
Energy: 20%
of Energy
Produced in
the City will
be
Renewable
(Wind, Solar
etc)
SMART Buildings: At
least 50% of buildings will
be Green and Intelligent
built with BIPV. Around
20% of the buildings will be
Net Zero Buildings.
Source: Google Images
Snapshot of a SMART Mega City Plan in 2025
19
Key facts in APAC region
Economic
Outlook
Segment
Technology
Automotive
Marine
Protective
Green coating technology and high performance coating technology: low
VOC, multifunctional coatings, bio-renewable raw materials to energy
efficiency
GDP growth of Asia Pacific region was 7.1% in 2010, being the highest
compared to other regions. 2011 is expected to be 5.1%.
Country Major countres are China, India, Japan, South Korea
Growing markets are countries such as Indonesia and Vietnam
“Asia is where the growth of paint and coating industry is”