The multi-party resonance coating industry is about to enter the era of "heavy profits"
the multi-party resonance coating industry is about to enter the era of "heavy profits"
December 2, 2016
[China coating information]
since 2016, the price of coating raw materials has continued to rise. Recently, the price trend and market demand of various raw materials from international crude oil to coatings have analyzed the market pattern of China's coating raw materials in 2016. It also said that among the products monitored in 2016, 91% of the coating raw material product prices rose, and only 9% of the raw material prices fell. Since then, there is news that China's paint industry will enter a "profiteering era". The so-called "profiteering era" only exists in the period of product shortage, poor information, extensive demand and rapid economic development, but now these conditions do not exist. Will there be "huge profits" in the paint industry in the future
with the end of the era of demographic dividend, the living space of enterprises has become smaller
since the reform and opening up, thousands of successful enterprises have been created by relying on the overdraft of low-cost labor and environmental resources. After more than 30 years of evolution, the market has gradually returned to rationality. In 2015, the demographic dividend entered a negative growth, the era of demographic dividend ended, and the economy showed a weak state. This has brought a fatal impact on the domestic coating market, which has experienced years of extensive development, blind expansion of production, serious homogenization, and low product technology content. With the soaring prices of raw materials in 2016, the living space of coating enterprises has been further suppressed
after surpassing Japan in 2003, with the momentum of rapid growth, China surpassed the United States in just a few years and became a major paint producer in the world. In the past two years, China's economic development has begun to slow down, and the problems existing in the coating industry have gradually emerged. In terms of technology, brand awareness and market share, at least, the current national paint brands cannot stand in the same line with foreign paint brands for the time being. Let's look at a set of data: in 2013, 30% - 40% of the 1.2-1.3 million tons of water-soluble architectural coatings were low-grade water-soluble architectural coatings. There are thousands of building coating manufacturers, and less than 3% of the enterprises with an annual output of 5000 tons. The main body of the civil building coating market is controlled by the wholly-owned companies in China of Nippon, ICI and other multinational group companies. The coating output of the two groups accounts for nearly 1/3 of the total material output of the country. There is a serious homogenization phenomenon in China's coating industry. Some experts said that at present, the scientific research funds of China's coating industry are less than 2% of the total sales, and the products are more than 90% the same - this is the current situation of China's coating industry. Although China is already the largest paint manufacturer in the world, most of the products produced by Chinese paint enterprises are at the middle and low-end level. It is no exaggeration to say that there are only a few coating enterprises with independent intellectual property rights and at the international leading level in China
with the rise of raw materials, it is more difficult for coating enterprises without technical barriers to survive.
after the bottom of titanium dioxide prices in 2015, titanium dioxide prices in China, one of the world's largest automotive markets, showed a year-round rebound. From 10900 yuan/ton at the beginning of January to 15300 yuan/ton at the end of November, an increase of 40.36%, an increase of nearly 5000 yuan per ton. In 2016, the supply of goods was basically tight. The market prices of important raw materials of coatings, polyester resin, epoxy resin, titanium dioxide and TGIC curing agent, continue to rise. In 2016, the price of coating raw materials showed a bottoming out and rising trend, especially since the second half of the year, most of the coating raw materials have shown a continuous upward trend, which has caused great pressure on the cost of coating production enterprises. What is worse, since October, the transportation cost has been affected by the new deal, which began to cause new cost pressure on coating enterprises
relevant data show that although the market demand of the coating industry did not increase significantly in 2016, the output showed an increasing trend. In the first three quarters of 2016, the total output of coatings in China reached 13.4504 million tons, an increase of 8.4% year-on-year. Overcapacity has become a common phenomenon in the industry. Businesses with excess capacity will inevitably start to compete, fight each other, deal with discounts and promotions, and sell at a low price. As a result, everyone feels that it is more and more difficult to earn money. This means that the turning point begins to appear! In other words, it is not that consumers are unwilling to consume, but that businesses have not created what they want, more than 3/4 of which are hot-air plastic granulator products
scientific and technological innovation has created a "lucrative" era in the paint industry
as people's living standards do not improve, people begin to pursue a high-quality life. From cosmetics to food, from building materials to furniture and other fields, the concept of "no addition" has been gradually introduced in 2011, and "no addition" products have been developed. Even paint products that have always taken colorful colors as their selling points have been added. For example, the "no addition" series wall paint of a commodity adopts "no addition purification technology", and formaldehyde, benzene and other volatile organic compounds are not artificially added in the product formula and production process to achieve the effect of layer by layer purification. The best business model must be born in the worst times. The future market must be dominated by the era of "heavy profits", and the premise is that products should have "heavy profits" capital. Businesses must create experience upgrading through design, technology, innovation and other means, so as to build the bonus of consumption increment
innovation, such as Ma Huateng's, directly destroys and subverts its own If you don't subvert yourself, sooner or later someone will subvert you. You might as well do it yourself. The essence of subversion is to create needs, rather than follow the trend to meet existing needs. This kind of disruptive innovation is most typical with apple. After you use apple and, you know that you have so many desires to be stimulated. It is these great products that create your needs. According to a research report released by strategyanalytics last week, Huawei, oppo and vivo have become the three most profitable smart vendors outside apple in the third quarter of 2016. Although Apple's sales share fell in 2016, there is still a big gap between the three Chinese companies and apple - according to the report, apple alone enjoyed 91% of the $9.4 billion profit of smart. This is the gap between innovation and imitation. Maybe others only need to sell one, that is, you can buy more than a dozen profits. The lucrative market comes from brand value and innovation. Apple's R & D spending has dominated the list for six consecutive years, with its R & D investment reaching $8.1 billion last year. But in fact, it is not the highest in the list. For example, the R & D expenditure of Google parent company alphabet reached US $12.3 billion, and the R & D expenditure of Samsung reached US $12.7 billion. The era of "generous profits" is the general trend, but it belongs to an enterprise that dares to innovate and meditates on research and development
for a long time, the "overcapacity" and "serious homogenization" of the coating industry have been well-known problems. However, without the drive of policies, it is difficult to fundamentally solve the problem. With the implementation of "supply side reform", various problems and contradictions existing in the coating industry will be intensified, and some small and medium-sized enterprises will even face a severe test of survival because of their inferior product quality. The large-scale rise in the price of raw materials in 2016 has had a great impact on China's coating industry. The products and enterprises that can survive in the future market must be competitive. However, if the enterprises that use plagiarism and imitation to survive are separated from the "blessing" of products and brands, they will be like fish that lose water. Like China's VCD, DVD, and even MP4 markets, enterprises that survive by imitation will eventually die
although we are a populous country, we were addicted to obtaining demographic dividends in the past, which led us astray. The end of the demographic dividend era is precisely the catalyst for China's economy to regain creativity. In the western world, there has been no population growth for a long time, but the economy has grown continuously for over a hundred years. They have proved by practice that the real driving force of economic development is "innovation", not "population growth". The low-cost labor force has been slowly disappearing, the tightening of national environmental protection policies, and the soaring raw materials have made it more difficult for enterprises without technology, research and development, and innovation to survive. And those enterprises with technical barriers, which are not easy to be replaced, still control the high profits of the industry
take this year's Red Star "titanium dioxide" in the coating industry for example. Although it has experienced 13 rounds of rising tide, the current price difference with foreign countries is still yuan/ton, but the profit margin of the same product is very different. The reason why the price of titanium dioxide abroad can be significantly higher than that in China is that its quality and production technology are difficult to surpass, while the quality of titanium dioxide in China is difficult to improve, and has always been hovering in the middle and low-end market. Therefore, the future must be an era of innovative products. Only by increasing the investment in product research and development, improving product quality, daring to innovate, cultivating professional and technical personnel, and increasing the technical content of products, can paint enterprises not be easily imitated, and the products in the future market can be more competitive, so as to improve the profit space
in the past, scale was more important than barriers; In the future, barriers are more important than scale. After an industry has experienced the "baptism" of winter, it means that the next spring is coming. All excellent business models must be born in the most chaotic era. The end of the extensive era of China's coating industry is bound to usher in a healthier and broader market. Its essence is a kind of "generous profits"