Asia Pacific Paint & Coatings Market

“ We Accelerate Growth”
Asia Pacific Paint & Coatings Market

What Lies Ahead!
Sheila Senathirajah, Senior Industry Analyst

Chemicals, Materials & Food Practise
17th February 2009
© 2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.
No part of it may be circulated, quoted, copied or otherwise reproduced without the prior written approval and consent of Frost & Sullivan.
Poll Question 1
During this economic downturn, do you anticipate the APAC Paint &
Coatings industry to fair better than the Western region Paint &
Coatings industry?
• Yes
• No
February 2009 2
APAC Paint & Coatings Market
Table of Contents
Slide No.
1 ASIA PACIFIC ECONOMIC OUTLOOK 3
2 ASIA PACIFIC PAINT & COATINGS MARKET ANALYSIS 7
3 MARKET DRIVERS & RESTRAINTS 12
4 INFLUENCING END-USER INDUSTRIES 15
5 INDUSTRY FOCUS 18
6 ABOUT PAINT FROST 22
February 2009 3
ASIA PACIFIC ECONOMIC OUTLOOK
February 2009 4
Macroeconomic Scenario
Asia Pacific Economic Outlook
Impact of crisis on APAC Paint & Coatings Market
The Market
• The credit crisis has contributed to a significant shift in the 2009 regional outlook.
Regions GDP (Annual Percent Change) for 2003-2013
• Frost and Sullivan anticipates that global economy will continue to deteriorate in the first half
of 2009
• This will be followed by a slow recovery in 2H 2009
• The Paint & Coatings industry in Asia will be affected by the global slowdown although we
forecast this will not hit the region as severely as in developed countries
• In the midst of the crisis we forecast Asia will also benefit as coating companies in the US and
EU come under significant cost pressures
• This presentation will review the current crisis, its impact on the Paint & Coatings industry and
the opportunities that will be created in 2009
February 2009 5
Asia Pacific Economic Outlook
GDP Growth of Key Economies

14
The Market
Wor l d
Regions
12 GDP (Annual Percent Change) for 2003-2013
GDP Growth
Eur opean
10
Uni on
%
Nor th
8
Amer i ca
Chi na
6
Indi a
4
SEA
2
0
Source: http://www.imf.org
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (World Economic Outlook, Oct 2008)
•Growth is slowing down worldwide but nonetheless, China will remain an engine for East Asia
and even for global growth.
February 2009 6
Crude Oil Prices
Crude oil prices 1998-2008 Crude oil prices Year 2008
Source:edition.cnn.com/2008
Effect of crude oil prices on the Paint industry

•Crude oil prices peaked in 2008
•More than 40% of the APAC paint industry is based on solvent based paints.
•Price increases of paint products ranged from 10-20%, higher for solvent based paints..
•Oil prices have gone down this year and this is likely to soften the price impact.
February 2009 7
ASIA PACIFIC
PAINT & COATINGS
MARKET ANALYSIS
February 2009 8
Asia Pacific
Market Size
APAC Paint & Coatings Market By Value

( 2003-2007 )
40
35.2
35
29.7
30 The APAC paint
24.6
USD Bill
25 market makes up
21.6
20
19.5 approximately 30-
35% of the global
15
paint market !!
10
0
2003 2004 2005 2006 2007 Source: Frost & Sullivan
Market Situation
• 2007 APAC paint market was valued at USD 35.2 Billion at 13.0 Million tonnes
• CAGR for 2003-2007 = 15%
• 2008- Slowdown began to be felt in 2H. Q4 negative growth. Overall growth rate at only 8-10%.
• 2009- Continued slowdown. Overall estimated growth rate 5-6%.
• 2010- Market to slowly recover.
February 2009 9
Asia Pacific
Market Split By Country
Value Split By Country Overview

China- 2nd largest market in the world after US.
ThailandAustralia
Malaysia 2% 5%New Zealand
Paint production has tripled in last 5 years to
2% 1% approximately 6Mtonnes
Korea
Vietnam
9% India- Growth market. Decorative : Industrial
Phillipines 1%
1% paint ratio (value) stands at 70:30.
Asean 5 -Combined represent 10% of the total
Japan APAC market. Much of the growth is seen
17% coming from Thailand, Indonesia and Vietnam.
Indonesia- is forecasted to be the fastest
China
Taiwan 46% growing paint market in Asia over the next 2-3
2% years and to be the 2nd largest growth market in
Indonesia
Asia volume wise.
3%
India
9% Japan- Mature and experiencing minimal growth
Hong KongSingapore
1% 1% Korea- mainly driven by decorative, automotive
and marine coatings (~50%of entire market)
Source: Frost & Sullivan
Note: Asean 5 consists of Vietnam, Thailand, Indonesia, Singapore and Malaysia
February 2009 10
Asia Pacific
Paint Consumption Per Capita
•Low paint consumption per capita in high growth market indicates there’s lots more to consume!!!
25
22.4
20
Kg per Person
15.1
15 14.3
11.2 11.5
10.6
10 9.0
6.7 6.5
4.7
5
2.9 2.6 2.8
1.2
0
New Zealand
Thailand
Phillipines
Indonesia
Hong Kong
Taiwan
Vietnam
Australia
China
Malaysia
India
Japan
Singapore
Korea
• World Paint consumption per capita is approximately 6.6kg/person

• NA and WE approximately 15-17kg/peron
• Largely untapped markets in Asia region-particularly India with its large population
and good paint market growth.
February 2009 11
Asia Pacific
Market Split By Application Segment
Value Split By Segment Overview

Decorative coatings
Other
Industrial •Largest individual segment
16%
•CAGR for 2003-2007 = 10.53%
Decorative
Coil
29%
3%
Can
• Industrial Coatings
2% •Good growth in emerging markets in
Industrial Asia region
Wood
•Due to attractive labour rates & export
12%
demand.
OEM
10%
Protec
10% Refinish
Marine Powder 4%
5% 9%
Industrial Coatings likely to see better
growth compared to decorative coatings.
February 2009 12
MARKET DRIVERS & RESTRAINTS
February 2009 13
Market Drivers
Greater • GHS and REACH

APAC is fairing better provide a more
Economic
than Western economies. standardized
Growth in
Platform of growth for approach to ensuring
APAC Shift to
world paint industry region chemical safety.
Environmentally
friendly & Safer
coatings
MARKET
DRIVERS
Continual
Industrial
Relocation
Increased
• Newer avenues of Infrastructure
manufacturing hubs Spending • Continued spending in
become attractive this area to bolster and
• Examples: Vietnam & boost economy
Thailand. • Move to urbanisation
February 2009 14
Market Restraints
• Drop in production growth • Lowered demand

Poor from Western
as of second half 2008 Economic
economies.
• To continue till late 2009 Outlook
Reduced
Export
Demand
MARKET
RESTRAINTS
Volatility in
Crude Oil
Prices
• Uncertainty leads to Unstable
fluctuating price hikes Political
• Raw materials make up Conditions • Continued uncertainties
50-70% of paint product affects investor and
costs depending on the consumer confidence alike.
technology used.
February 2009 15
INFLUENCING END-USER
INDUSTRIES
February 2009 16
Decorative Coatings
• APAC region makes up approximately 30% of the global Decorative market!
• Growth influenced by GDP growth, purchasing power, construction & refurbishment industry
• Post 2007, the global market is estimated to fall by approximately 30%. Decline due to reduction in
housing construction projects.
Growth Indicators
Country 2009 GDP Growth 2009 Per Capita Personal Steel Consumption
*IMF report as of Oct 08 Disposable Income Growth rate (%)
Housing prices
% Thousand USD CAGR (2005-2012) dropped 8-10% in
2009 to boost real
China 9.3 0.8 4.94 estate market
India 6.9 0.6 3.81
Growth dampened
Indonesia 5.5 0.7 3.46
by poor global
Thailand 4.5 1.7 1.59 economic outlook
and local political
Vietnam 5.5 Na Na tensions.
Market trend:
• ‘Green Products’ featuring low VOC & low odour
• Growth of Tinting & DIY market. ( APAC = 18% DIY , Westernised countries = 25-50%)
February 2009 17
Industrial Coatings
Protective sector to do relatively well followed by Marine segment. Demand from?
•The rising oil prices over the last year have led many oil firms to invest in oil drilling platforms.
•Also upcoming government driven infrastructure development projects.
•Continued growth of shipbuilding industry as well as trade activities. I.e: In South Korea, due to
back log of shipping orders signed in the earlier years, 2009 will show good projections. Impact
only felt next year since shipping orders for this year has really slowed down.
Automotive OEM coatings

• Heavily impacted due to reduction in car production
Industrial Wood Coatings

• Highly export market
• Sharp drop in demand from US and WE have reduced size of wood coatings market
February 2009 18
INDUSTRY FOCUS
February 2009 19
Technology Trends & Key Legislation
Technology Trends
1) Going Green
• Restricting levels of VOC’s and Eliminating use of hazardous heavy metals (lead/chromate)
• APAC ratio of solvent base and water base is 60:40
2) Smart Coatings
• Increased development into functional paints that interact with the stimuli in the environment.
• Generally requires the integration of nanotechnology.
Key Legislations
1) GHS (Globally Harmonised System of Classification and Labelling of Chemicals).

2) REACH (Registration, Evaluation, Authorisation and Restrictions of Chemicals)
Many countries in APAC are

on their way to
implementation.
February 2009 20
Growth Opportunities
Focus Countries
•Focus on environmentally friendly products
•Trend towards mergers and acquisitions and emergence of key local players
•Nov 08- RMB4 trillion stimulus plan to consists of massive infrastructure construction
and further financial policy adjustments.
CHINA
•New foreign investment (FDI) law •Government to promote country

as a shipbuilding nation
•Growth in infrastructure projects
INDONESIA VIETNAM
•Growingpopularity as a
•Tagged to be the fastest growing
manufacturing hub.
paint market in Asia over the next APAC
2-3 years. •Decorative market migrating from
FOCUS low tier to mid and premium tier.
INDIA
•Infrastructure Development to overhaul THAILAND •Key driver for paint industry growth
standard of living •Greaterscope for paints usage
•Regional centre for Japanese OEM’s given the huge population and
•Technological trends towards ‘Green growing affluence of Middle Class
products’. Thai government has Indians
initiated the eco-car project.
February 2009 21
CONCLUSION
Summary Points
Despite economic slowdown, growth in Asia is expected to remain resilient.

Overall 2009 growth projected stands at only 5-6%.
Growth of Industrial coatings is set to do better than Decorative coatings-

mainly in protective coatings segment.
Growth to come from domestic-oriented demand stemming mainly from

infrastructure development projects set in place by local governments.
Economic downturn tends to accelerate the elimination of small companies.

Trend towards Mergers& Acquisitions as well as emergence of key local
players (mainly China).
Technology trends towards ‘Green Products’ and “Smart Coatings’
February 2009 22
Poll Question 2
How confident are you that the Paint & Coatings market in the
APAC region will slowly start to recover by the second half of 2009?
• Very confident
• Somewhat confident
• No confidence
• Difficult to predict
February 2009 23
ABOUT PAINT FROST
(A Growth Partnership Service dedicated
to the Paint & Coatings industry)
February 2009 24
What is www.PaintFrost.com
www.PaintFrost.com is a one-stop-solution to get key insights on the Asia Pacific paint &
coatings market.
This is a very user friendly, interactive web base service, specially designed to support
your business and organizational decision-making activities.
Most comprehensive updated coverage covering 14 countries, 10 paint segments and

key metrics on market size, technology, market shares and more…….
Accessible worldwide, 24/7 through a username and password
Provides unbiased independent information supported by extensive primary research
Provides history as well as future trends and forecasts for the APAC paint market
Provides qualitative insights from paint experts who continuously track the market and
provide segment summaries
Easy to use report formats and data can be exported to Excel
February 2009 25
Key Deliverables- Coverage
REGION COVERAGE SEGMENTS

-14 Countries -10 Paint Segments
• Decorative Coatings
• Automotive OEM Coatings
Deliverables cover • Automotive Refinish
14 countries over 10 • Industrial Wood Coatings
market segment per
• Marine Coatings
country
• Protective Coatings
• Powder Coatings
• Coil Coatings
• Can Coatings
• Other Industrial Coatings
February 2009 26
Key Deliverables
Key A) Interactive Reports

Deliverables 1) Market Sizing & Forecasts
• Volume, Value, CAGR)
• Market Sizes are available for 4 yrs historical and 2 yr forecasts
• Updated yearly by Qtr 2 through primary research with over 300
interviews
2) Technology Shares
3) Company Shares
4) Tier Shares (Decorative market only )
B) Segment Summary Reports- 10 application segments
C) Company Profiles- 100 Regional & Local companies covered. Updated yearly
Additional Growth Indicators-Economic and end-use trends. Include GDP growth rate,
Deliverables population etc. Other industry trends including
• Yearly Analyst Briefing on paint outlook provided in addition to the above.

• Consulting hrs available on request
February 2009 27
Deliverables- Interactive Reports
Interactive Reports
Choose how you wish to
slice and dice the
market data.
February 2009 28
How Data is Presented-1/2
1. Market Size By Value and Volume 2. Competitor Split By Value Percent
•4year historical and 2 year forecast

data provided
This is the
type of data
and how it is
3. Technology Split By Volume Percent 4. Split By Tiers Volume& Value
presented
*Data can also be exported to excel.

*applicable for decorative market only currently
February 2009 29
How Data is Presented-2/2
2. Also provides a bar

1. Shows you an chart representation
overview of the of how big each
entire APAC country is in relation
market in terms of to one another.
volume and value &
CAGR.
3. Per Capita
Paint Usage is
also presented.
This indicates
the potential of
the market in
relation to paint
sales
Ideal for presentation at company meetings-especially regional based companies
February 2009 30
Deliverables- Segment Summaries
Market Summaries- are paint segment

overview reports provided in a pdf format.
They cover & review the entire
application segment in terms of market
drivers, restraints, competitive landscape,
regional outlook and technology trends.
These summaries can be downloaded and
are typically 7-9 pages long
February 2009 31
Deliverables- Company Profiles
Company Profiles are overviews of

an individual company provided in a
pdf word format.
It details out an individual
company’s financials, business
activities market share,
manufacturing and R&D locations
and strengths & weaknesses.
These profiles can be downloaded
and are typically 7-9 pages long
There are 100 profiles altogether

including key companies from China.
Companies listed are MNC’s as well

as local players
February 2009 32
Next Steps
Interested in the above deliverable and want to know more?
Please log on to the Paint Frost website at

www.paintfrost.com
Click on the ‘Contact Us’ button and leave us your details
Additionally you can also register for the following:
Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of

innovative growth opportunities (www.frost.com/news)
Frost & Sullivan’s next Chairman’s Series on Growth:

(http://www.frost.com/growthapac)
February 2009 33
Your Feedback is Important to Us
What would you like to see from Frost & Sullivan?
•Growth Forecasts?
•Competitive Structure?
•Emerging Trends?
•Strategic Recommendations?
•Others?
Please inform us by taking our survey.
February 2009 34
Q&A
Session
February 2009 35
For Additional Information
Steve Lee
Strategic Account Manager
Chemicals, Materials and Food, Asia Pacific
(65) 6890 0914
steve.lee@frost.com
February 2009 36
Disclaimer
Frost & Sullivan takes no responsibility for any incorrect information supplied to us by end-users or suppliers.
Quantitative market information is based primarily on interviews and therefore is subject to fluctuation.
This report contains valuable and confidential market information for the use by Frost & Sullivan only hence it is for
internal use and not for general publication or disclosure to third parties.
No part of this report may be given, lent, resold, or disclosed without written permission to Frost & Sullivan.
Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without the permission of Frost & Sullivan.
For information regarding permission please write to:
Frost & Sullivan

Chemicals, Materials and Food Practice
100, Beach Road,
#13-04/ 13, Shaw Tower,
Singapore 189702
February 2009 37

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“ We Accelerate Growth”

Sheila Senathirajah, Senior Industry Analyst

1 ASIA PACIFIC ECONOMIC OUTLOOK 3

2 ASIA PACIFIC PAINT & COATINGS MARKET ANALYSIS 7

3 MARKET DRIVERS & RESTRAINTS 12

4 INFLUENCING END-USER INDUSTRIES 15

6 ABOUT PAINT FROST 22

Impact of crisis on APAC Paint & Coatings Market

• This will be followed by a slow recovery in 2H 2009

GDP Growth of Key Economies

Crude oil prices 1998-2008 Crude oil prices Year 2008

Effect of crude oil prices on the Paint industry

APAC Paint & Coatings Market By Value

Value Split By Country Overview

Note: Asean 5 consists of Vietnam, Thailand, Indonesia, Singapore and Malaysia

Source: Frost & Sullivan

• World Paint consumption per capita is approximately 6.6kg/person

Value Split By Segment Overview

Greater • GHS and REACH

• Drop in production growth • Lowered demand

• APAC region makes up approximately 30% of the global Decorative market!

Protective sector to do relatively well followed by Marine segment. Demand from?

•Also upcoming government driven infrastructure development projects.

Automotive OEM coatings

Industrial Wood Coatings

1) GHS (Globally Harmonised System of Classification and Labelling of Chemicals).

Many countries in APAC are

•New foreign investment (FDI) law •Government to promote country

Despite economic slowdown, growth in Asia is expected to remain resilient.

Growth of Industrial coatings is set to do better than Decorative coatings-

Growth to come from domestic-oriented demand stemming mainly from

Economic downturn tends to accelerate the elimination of small companies.

Technology trends towards ‘Green Products’ and “Smart Coatings’

Most comprehensive updated coverage covering 14 countries, 10 paint segments and

Accessible worldwide, 24/7 through a username and password

Provides unbiased independent information supported by extensive primary research

Easy to use report formats and data can be exported to Excel

REGION COVERAGE SEGMENTS

Key A) Interactive Reports

B) Segment Summary Reports- 10 application segments

• Yearly Analyst Briefing on paint outlook provided in addition to the above.

1. Market Size By Value and Volume 2. Competitor Split By Value Percent

•4year historical and 2 year forecast

*Data can also be exported to excel.

2. Also provides a bar

Ideal for presentation at company meetings-especially regional based companies

Market Summaries- are paint segment

Company Profiles are overviews of

There are 100 profiles altogether

Companies listed are MNC’s as well

Interested in the above deliverable and want to know more?

Please log on to the Paint Frost website at

Click on the ‘Contact Us’ button and leave us your details

Additionally you can also register for the following:

Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of

Frost & Sullivan’s next Chairman’s Series on Growth:

What would you like to see from Frost & Sullivan?

Please inform us by taking our survey.

Frost & Sullivan

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