China’s chemicals sector encompasses the organics such as coatings, plastics and lubricants, and the inorganics such as fertilizers, gasses and advanced ceramics. It is a huge and highly complex sector, which, if accompanied with sufficient information can act as a powerful proxy for China’s entire economy. Individual markets vary from near monopolies in upstream petrochemicals, to the many thousands of suppliers of a basic paint. High growth is a common feature of chemicals markets. While participants regularly express concern about over-investment (and over-capacity), domestic demand has consistently kept abreast and growth is expected to remain in double digits for at least the next five years. Low pricing, once the sole consideration of customers, is increasingly taking a backseat to quality factors such as lifespan, durability and, with regulatory nudging, environmental concerns.
Market Opportunity Matrix for Synthetic Coating Resins Suppliers by Product
All of the major international suppliers are competing in this sector and many strong domestics, aspiring to be the Chinese BASF or DuPont, have emerged. As with other sectors, the Chinese government is squeezing out the small, low-end producers and supporting future domestic leaders. While the multi-nationals may control much of the high-end of the market, the middle-end is contested by foreign, local private and state-owned firms alike, with significant merger and acquisition activity also characterizing this sector.
Going forward, trends in China’s chemicals industry point to a greater level of innovation for the local market, the emergence of domestic conglomerates in the global market and stronger environmental protection controls.
Note: Growth rate is relative to target product average
Below is a list of products that GCiS have experience in. Target products are not limited to this list.
- Amines and other intermediates
- Battery chemicals
- Ethylene oxide (EO) and propylene oxide (PO)
- Fire retardant chemicals
- Flavors & fragrances
- Fungicides in diverse crop applications
- Industrial coatings and additives (water based coatings, powder coatings, anti-corrosive coatings, auto coatings, wood coatings, etc.)
- Industrial gases
- Inks and additives
- Insulation, adhesives, and other construction chemicals
- Lubricants and additives
- PTFE products
- Silicone and other sealants
- Specialty graphite
- Synthetic fabrics
- Water/Waste water chemicals
- Wood chemicals
Client Needs & Project Background
A large European supplier of adhesives used in a range of construction applications did not have a large presence in the China market but was looking to expand its presence there, to reach a wider range of customers and increase overall sales. The company did not have local production, though it did have a small but effective sales network, and a well-known brand. It needed to understand its opportunities in this market, and how it could best compete with its direct competitors.
This project was both comprehensive and strategic, with the research focusing on much of the value chain- direct competitors, channel players, and customers (mainly contractors), as well as influencers. For contractors, this included both commercial and infrastructure specialists, as the products have application in both areas. With customers, there was a heavy focus on field research. In the end, the research showed that opportunities for this firm were mixed, with the best opportunities being in specialty areas such as airports and other high-end projects, as well as certain types of commercial buildings in Tier 1 & Tier 2 cities. Despite the fact that the company has a strong brand, its prices were considerably higher than those of its direct competitors, its prices were rather higher than those of its direct competitors, and its existing channel infrastructure was insufficient. GCiS recommended that to be competitive in this market the firm would first have to build a better and wider ranging sales and channel structure. In the final report we provided concrete suggestions on how to do this.