BEIJING, China - Two recently released market reports by GCiS China Strategic Research, Beijing, China, offer more proof that the market in China for anti-corrosion coatings and waterborne coatings continues to offer great growth potential.

The market for anti-corrosion coatings in China was valued at RMB 30 billion at the end of 2010. The industry is growing at 13 percent annually, and growth is expected to continue due to economic recovery in downstream industries, a rise in domestic demand and awareness of quality issues. In the period between 2010 and 2015, growth is forecasted at 19 percent on average.

While domestic suppliers of anti-corrosion coatings control almost 60 percent of the revenues in this market, only large foreign conglomerates have the capacity to compete on quality and at scale. Domestic suppliers are mostly small manufacturers that are regionally active and benefit from long-standing customer relations. The market leaders are a handful of foreign suppliers – AkzoNobel, Jotun, Hempel, PPG – that generate up to 100 times the revenue of their domestic competitors.

The Chinese government aims to address this situation by stimulating market consolidation and eliminating outdated production capacity. Strict quality and environmental regulations force small domestic suppliers to innovate or die.

China’s waterborne coatings market was valued at approximately $2.3 billion in revenues, or roughly 1.2 million tons, at the end of 2010, according to a recent report by GCiS China Strategic Research.

Acrylic-based waterborne coatings make up around 90 percent of demand in the market. These are being widely used in architectural applications, where consumers are willing to pay a premium for low-toxicity paints, and the automotive sector, which is traditionally a key source of acrylic-based coatings demand.

The Chinese government is stepping up its restrictions on coatings with high-VOC content. This is currently being enforced in consumer-facing industries first and is expected to spread to industrial markets in the near future.

In real terms, the market grew by approximately 11 percent in 2010. Continued adoption, by regulatory-push or quality-pull, will see five-year growth continue at this rate.

GCiS China Strategic Research is a China-based market research and advisory firm focused on business-to-business markets. For additional information about the reports, visitwww.GCiS.com.cn.