paint & coating industry Overview
High-end paint market layout is expected to accelerate
In 2022, China's economic development is faced with the triple pressure of demand contraction, supply shock and weaker expectations, combined with the recurrence of the epidemic in many domestic places, the real estate market continues to decline, and the paint market demand shows an obvious decline. At the same time, the price fluctuation of the main raw materials used by coating enterprises is aggravated, the pressure of raw materials is more prominent, facing huge profit pressure.
Due to the price rise of upstream raw materials, combined with the repeated impact of the epidemic, paint companies began to increase the price of their products, and even most of the enterprises carried out multiple rounds of price increases. In the face of fierce market competition and sluggish market demand, although they have raised their product prices, most of the enterprises still can't completely control the cost pressure caused by rising raw material prices. Not only the revenue is declining, but also the profit is being compressed.
On the one hand, the paint market is in a downturn, on the other hand, the comprehensive operating costs are rising, and at the same time, the paint enterprises in the low-end market and difficult to break through, and the high-end market can obtain brand premium and higher profits. Therefore, it is expected that in 2023 paint enterprises will compete to layout high-end market, not only can obtain higher profits, but also can resist raw materials and labor costs rise and other adverse factors.
The key to the rise of independent brands is to achieve a breakthrough in the middle and high-end. By expanding the product line, the development of high-end products has become a clear strategy of many Chinese self-owned brand paint enterprises. Through high-end products, coating enterprises can not only improve product profits, but also gain further recognition from consumers through reshaping brand image. In the complex and changing market environment, high-end is not only a breakthrough for independent brands to achieve brand advancement, but also a shortcut to achieve profitability in the future.
The introduction of a series of policies, such as supply-side reform, has provided opportunities for the high-end of independent brands. In terms of the market, reform and opening up have accumulated a large number of talents, technologies and resources over the decades, providing support for the high-end development of independent brands. In recent years, Chinese consumers have become more pragmatic, forcing foreign brands to come up with more cost-effective products. In this environment, foreign brands have been increasingly priced down. Self-owned brands are under great pressure in the price decline of foreign brands. Self-owned brands have only two choices, either to continue to go down or head up, but more enterprises choose to go up.