Learning to Repaint: New Growth Opportunities in China’s Architectural Paint Market

Learning to Repaint: New Growth Opportunities in China’s Architectural Paint Market

China surpassed the United States as the largest national market for architectural paint in 2008 while the US construction industry was faltering. Construction activity in China and demand for architectural paint have grown rapidly since.

However, according to The Freedonia Group’s Global Architectural Paint, growth in the Chinese decorative paint market is expected to slow substantially going forward based on a weaker outlook for the construction sector. As a result, paint suppliers in China are seeking more stable growth opportunities that do not rely as heavily on volatile construction patterns.

Designing Ghost Cities: How Has Rapid Urbanization Impacted Paint Sales?

New housing and nonresidential construction activity account for particularly high proportions of paint sales in China. This pattern is common in rapidly urbanizing countries. Migrants that move from rural areas to urban centers for better jobs require infrastructure development and new, higher-quality housing.

Other factors are unique to China’s paint market. For example, most Chinese middle class citizens live in apartment buildings that have relatively short life spans. After 30 years, apartment complexes are considered old and are usually torn down and reconstructed rather than refurbished, contributing to a larger than average new construction market for paint and an especially small residential repainting market.

Moreover, many local government bodies have undertaken accelerated urban development plans. Instead of expanding existing urban areas, brand new cities full of high rise apartments have been built from scratch. The pace of development has been so fast, in fact, that many of these cities remain largely unoccupied and are not expected to support full populations for 15 to 25 years.

Whether these “ghost cities” are indicative of larger problems in China’s housing industry is up for debate, but the general consensus is that housing is oversupplied in at least some areas of the country and that new construction spending is expected to normalize from the major investments in expansion projects during the last decade.

Consequently, decorative paint firms that have previously geared their sales toward large-scale construction contractors are looking to Chinese consumers for new sales opportunities. The small residential repainting market offers significant room for growth; the challenge is trying to sell paint to a consumer base that isn’t used to buying it.

Targeting Chinese Consumers: What Are They Looking For and How Do You Reach Them?

Several multinational paint companies with operations in China, such as Akzo Nobel and Tikkurila, have responded to new market conditions with brand-oriented approaches that promote home decorating:

  • Tikkurila advertises its Beckers and Tikkurila paints as high-quality, environmentally friendly Nordic products and operates company-owned stores for each brand that offer design inspiration.
  • In 2016, Akzo Nobel introduced Dulux Forest Breath to the Chinese market, an anti-formaldehyde formulation that appeals to consumers who are concerned about air quality in their homes.

These products highlight characteristics that are important to Chinese middle class homeowners, namely premium quality, environmental sustainability, and personal wellness.

However, most Chinese consumers do not undertake DIY projects due in large part to historical and cultural preferences, relying on decorating companies instead. The homeowner chooses paint from a list of approved brands, and then the decorating service brings in contractors to apply the paint.

Brand promotion among Chinese consumers therefore requires a two-pronged approach:

  • appealing directly to homeowners such as in this ad for Dulux Forest Breath
  • building relationships with service providers

In some cases, paint manufacturers, including major supplier Nippon Paint, are teaming up with painting contractors to provide their own decorating services. Outlets where consumers can consult with company representatives – such as company-owned paint stores and websites like Nippon Paint’s iColor platform – are becoming increasingly important.

For More Information

For more information about the global architectural paint market, check out the Freedonia Group’s industry study, Global Architectural Paint, which offers:

  • historical data and forecasts
  • analysis of factors affecting demand
  • demand for architectural paint by market, formulation, end user, and region
  • analysis of global industry structure and market leaders

About the Author:

Ellen Kriz is an Industry Analyst at the Freedonia Group where she covers polymers and construction markets.