The hottest financial crisis and a good opportunit

Financial crisis: a good opportunity for the rise of national paint enterprises

financial crisis: a good opportunity for the rise of national paint enterprises

April 3, 2009

[China paint information] from the acquisition of China Resources paint by American Valspar in September 2006 to January 2009, Australian auspicious company officially announced the completion of the wholly-owned acquisition of new Opel chemical (Shanghai) Co., Ltd. in just three years, Foreign coating giants have set off a wave of mergers and acquisitions. Facing the crazy attack of foreign giants, China's young coating enterprises have exclaimed: the wolf is coming

the occurrence of the subprime mortgage crisis and the outbreak of the financial tsunami finally let us find the answer that the international paint giants rushed to the Chinese market a few years ago. It turned out that these prairie beasts smelled the terrible wind like military ants and ran to the Chinese market to take refuge. And the Chinese sheep, who were originally terrified of the arrival of foreign paint giants, finally found that these wolves from the West were not terrible, but came to China out of a desire for life, and there was no big threat. At the same time, due to the damage of the nest, these international giants are busy repairing their backyards, and finally become more willing than able to seize the Chinese market. China's paint enterprises have also obtained a rare opportunity to rise because of the raging financial storm

there is a large demand for coatings in China's emerging markets

coating giants' safe haven from the subprime mortgage crisis

Why do international coating giants suddenly rush into China's coating market, which has been developing steadily for more than 20 years? Many people attribute it to China's huge market. However, the subprime mortgage crisis that broke out in early 2008, and then triggered the global financial tsunami, may be the root cause for many European and American giants to seize the Chinese market. These well-informed and sensitive international giants may have long smelled the shock that triggered the financial tsunami (the subprime mortgage crisis), so they hurried to seize the Asia Pacific emerging markets led by China, trying to seek new havens to resist the crisis

in fact, the foresight of the European and American coating giants has also made them avoid the bad luck of Big Macs such as Fannie Mae and Freddie Mac and SAIC Motor, which has only been slightly affected. For example, according to the 2008 financial report released by Sunway, the company's consolidated net sales for the whole year was $7.98 billion, a year-on-year decline of only 0.3%; Eastman's 2008 financial report showed that the company's annual sales volume was $6.7 billion, a year-on-year decrease of only 1%; PPG in the United States even created a sales record again under the influence of the subprime mortgage crisis. Its annual sales reached US $15.8 billion in 2008, of which the sales in the fourth quarter hit a record of US $3.2 billion, and the cash income from operating businesses increased by nearly 40%; In addition, the American Valspar company, which successfully acquired China Resources Coatings, the largest national coating enterprise in China, in 2006, its sales revenue in 2008 increased by 30% over 2007, reaching US $3billion

however, most international coating giants were relatively slow to respond and did not turn China and other emerging countries into safe havens as soon as possible. For example, BASF, the world's largest chemical company, announced measures to reduce production and shorten working hours at the end of last year, shutting down New Jersey paint plants in the United States and plastic plants in South Korea. Since the announcement of production reduction, BASF's global factory operation rate has averaged less than 75%, 200 people have been laid off, and the working hours of about 1800 employees have been shortened. Even AkzoNobel, the world's largest paint supplier, which has already expanded the development of the Chinese market, had to close its wood paint factory in the United States and carry out large-scale layoffs. Dow Chemical will cut about 5000 full-time jobs, close Gaocheng, which can streamline and cost effectively operate 20 production facilities in the region, suspend about 180 factories, cut about 6000 contract workers worldwide, and sell a number of non strategic businesses. Using the UV activated loctite adhesive, Huntsman announced on January 23 that it would cut staff and stop production to cope with the crisis. The company plans to cut 1175 jobs, accounting for 9% of its total employees, and close the titanium dioxide plant in Grimsby, UK. Rohm Haas announced that 900 people would be laid off, accounting for about 6% of the total staff

to a certain extent, the booming emerging markets such as China have saved a few coating giants from the global financial tsunami

foreign giants are busy repairing the main battlefield of Europe and the United States

the pace of seizing the Chinese market is temporarily blocked

despite this, after all, the main battlefield of these international coating giants is still in Europe and the United States, so the impact is still very large. For example, in 2008, the US cyanate company lost as much as US $385million, and its sales in the fourth quarter of 2008 was only US $698million, a year-on-year decrease of 22.5%. It lost US $350.7 million in the fourth quarter, while its profit in the same period of 2007 was US $47.6 million. The profit of Rohm Haas, a Philadelphia based supplier of special raw materials, decreased by 82% year-on-year to $32million in the fourth quarter. Even for a giant like Xuanwei in the United States, although the overall sales continue to increase, the profits have decreased. In terms of the company's retail business, due to the shrinking demand of DIY market, the annual sales volume was $1.27 billion, a year-on-year decrease of 3%, but the profit decreased significantly by 37.4%, of which the sales volume in the fourth quarter was $245.6 million, a year-on-year decrease of 7.1%, and the profit decreased by 42.4%

as a result, these international coating giants must be busy repairing the European and American markets on the one hand, and have no time to look east; On the other hand, due to declining profits or even losses, it is unable to continue to expand the Eastern market. "Those who win Europe and the United States will win the world". Even enterprises with small losses, considering the European and American markets as the strategic focus of enterprises, will take advantage of the extraordinary period when the vitality of competitors is damaged, and adopt extraordinary policies to compete for the territory of old rivals

the tide of international coating giants recedes

National coating enterprises usher in new opportunities for development

when the financial tsunami hit, wolves from the West retreated like the tide, and the survival pressure of domestic national coating enterprises was suddenly reduced. Although the market demand has declined, the sales of most national brand coating enterprises have achieved a high-speed growth of about 20% - 30% in the past 2008. According to preliminary statistics, the total sales volume of coatings and paints in 2008 increased by less than 9% compared with that in 2007. This reflects that the development speed of most international coating giants in the Chinese market cannot match that of domestic brand enterprises, and the competitive pressure of foreign brands faced by domestic national coating enterprises is decreasing

of course, the real estate construction in China has been greatly affected by the excessive development of the real estate market in the past two years, which was driven only by the movement process

"by the end of February this year, the vacancy of commercial housing has increased from 136million square meters last year to 200million square meters, and it is likely to exceed 200million square meters or even reach 300million square meters by the end of the year. If there is no effective stimulus policy, it is very likely to reach 400million square meters", Ren Zhiqiang, chairman of Beijing Huayuan Group, said, "The organic structure has been calculated. Some areas take 23 months, and some even take as long as 70 months to digest."

however, as China's population transfer is still not over, even if the urbanization rate slows down in the future, its improvement will still bring huge space to the development of the real estate industry and even the national economy. The investment in affordable housing for new urban population and original residents ensures that Kevlar, China's real estate, is actually a commercialized registered trademark investment in aramid fiber composites developed by DuPont in the United States for a long time in the future, and there is still a large rigid demand. According to preliminary estimates, the annual real estate investment of 1.5 trillion is the bottom line. Below this level, China's urbanization process will stop. Such an investment scale will still bring a lot of opportunities to the coating industry

on the other hand, the increase in the trading volume of second-hand houses has also brought great opportunities to the old house renovation and decoration market. In Beijing, Shanghai, Guangzhou and other big cities, data show that second-hand housing transactions have exceeded first-hand housing. Therefore, the decoration of old houses will bring a lot of market demand to the paint industry in the future

statistics show that the total output value of China's building decoration industry exceeded 1.5 trillion yuan for the first time in 2007, which is equivalent to the scale of real estate investment. With the rapid growth of China's economy and the vigorous development of related industries, the construction and decoration industry has increasingly shown its great development potential. The market growth space is increasing at an average rate of about 20% per year. It is estimated that the total output value of China's construction and decoration industry will reach about 2.1 trillion in 2010

experts believe that although the domestic economic situation in 2009 is not optimistic, with the proposal of the 4trillion investment plan, the decoration market brought by the public buildings of transportation hub stations such as highway stations, airports and railway hub stations in China is very huge

taking railway hubs as an example, according to the plan, during the "Eleventh Five Year Plan", the railway system will invest 150billion yuan to build or rebuild 548 passenger stations, and build six hub and ten regional passenger transport centers in the country. It is estimated that the decoration market share of railway hub stations alone will reach more than 70billion yuan

the international paint giant retreats like a tide, which can bring opportunities for Chinese national paint enterprises to recuperate