The Influence of WTO Entry on China's Coatings Industry

Six of the world’s top ten paint manufacturers have entered China, and 50 large-scale foreign-invested or Sino-foreign joint ventures have already reached the country. Judging from its size and attack strength, except for the “Nippon Paint” setting off a larger battle, the others are still at an early stage.

In the five years after China officially joined the WTO, it is expected that the world's coatings will enter the Chinese market and the investment will be greatly strengthened. The reduction of tariffs in China will greatly stimulate foreign paint manufacturers to sell their products and related raw materials directly to China. From the coating point of view, the major products that the world's paint agents sell to China in recent years are automotive coatings, high-grade exterior latex paints and polyester furniture coatings. From the point of view of sales of related raw materials for coating, colorants, titanium dioxide, polyester resins, acrylic resins, and coating additives are mainly used.

From the coating industry's point of view, China's total coating production in 1999 was about 2.8 million tons, and per capita consumption was still lower than the world average. In recent years, China’s economy is increasing at a rate of 8%. The state’s policies on stimulating domestic demand and developing the central and western regions have been introduced one after another. Foreign investors will even increase their investment. All this indicates that China’s paint market is facing unprecedented competition. .

Some paint companies have been affected by the world economy. They should be expected. There are about five situations:

First, some paint companies with unsatisfactory operations may become foreign product processing companies. Second, some foreign-funded coating companies have set up factories in the country with their strong financial advantages. They have covered advertising with huge amounts of paint products throughout the country and strive to attract a large number of consumers in a short period of time, which has reduced the regional market share of many domestic paint companies. Third, some foreign-funded coating companies have squeezed out some of the paint companies' regional markets with their product advantages, price advantages, and management advantages. 4. The foreign-funded enterprises have lost the technical and managerial talents of the coating companies with their favorable conditions, and even caused the loss of skilled paint operators. 5. The paint raw material market may be subject to greater impacts. With the reduction of tariffs, the prices of imported paint raw materials will also be gradually lowered, and the cost of raw materials for paint companies will also be reduced. For some paint companies with self-support import and export rights In fact, it will gain greater benefits through joining the WTO.

Manufacturers of paint raw materials, especially pigments, resins, and auxiliaries, need to take advantage of China’s accession to the WTO, aim at the international market, focus on the in-depth processing of products, implement quality strategies and brand strategy, and strengthen the domestic market. Strive for the export of its products.

Chinese paint companies lack advertising, and advertising is an important part of the product brand strategy. The price of brand-name products is generally 20%-25% higher than that of ordinary products, and paint companies should be able to afford advertising costs. Some paint companies do not pay attention to the use of advertising to communicate with consumers, and excessive reliance on paint agents to expand sales is difficult to last. Many short-term business concepts that many paint agents use for their profits have jeopardized the regional market of paint companies. Coating companies can only gain a foothold in the market for a long period of time only through publicity media and promotion services.

Small and medium-sized paint companies must first select products and identify the target market. Product varieties must be relatively concentrated, and must not be small and complete. The product sales area should not be too large, and the distribution should not be too dense. It is necessary to strive for local brand-name products, and seek a reasonable and scientific regional market; and avoid blindly overloading due to the mentality of eager to win, so that companies fall into the development trap.

There is a gap between our efforts in optimizing after-sales service and foreign companies. The coating companies that do the best in the world in after-sales service work may have to be ship coating manufacturers. The number of after-sales service personnel in these companies exceeds that of sales personnel. It can be said that where the company's marine coatings are sold, there are after-sales service personnel who are conducting construction technical guidance, supervision, and services. It is not enough for a general coating company to only have things to do, or to conduct regular consulting services.