With the surge in raw material prices, paint companies are facing mounting pressure. Many small and medium-sized enterprises (SMEs) that once gained a foothold by offering low-cost products have lost their competitive edge as production costs soar. As a result, these businesses are struggling to survive, with many shutting down or shifting to different industries. In response to the rising costs, several companies have started to gradually increase their prices, helping to ease some of the market pressure.
At the same time, regulatory authorities have introduced stricter controls on the production, sale, and storage of hazardous chemicals. Initially, the "3C" certification became mandatory for wood lacquer products in the market. Any paint without this mark was prohibited from circulation. Later, fire safety inspections were intensified, requiring all companies to meet strict standards or risk losing their production licenses. Additionally, oil-based paint manufacturers were required to obtain a "dangerous chemicals safe production license," while storage and transportation of chemical raw materials also faced tighter regulations. These measures have further strained companies already struggling with rising costs.
The ongoing rise in raw material prices continues to put immense operating pressure on businesses. Market prospects are not as optimistic as expected, and company market shares are shrinking. Many firms are eager to find a way out of their current predicament but are unsure how to proceed. CEOs are feeling unprecedented pressure and confusion, unsure of the direction forward. Especially for companies producing architectural coatings, the competition from major brands has made survival increasingly difficult.
One of the main reasons behind the struggles of most companies is the high level of product homogeneity. To achieve better development, paint companies must first identify their unique competitive advantages. They need to rethink their positioning to avoid falling into the trap of excessive competition. In traditional business models, certain projects may not be profitable or add much value, and some internal processes might be redundant. However, due to long-standing habits, companies often fail to recognize these inefficiencies, leading to stagnation. This kind of inertia can hinder growth and prevent companies from adapting to change.
The paint industry is entering a period of restructuring. Companies—especially those that have faced setbacks in recent years—must continuously adapt to meet new demands. It’s crucial to eliminate outdated thinking and re-evaluate internal operations. Through optimization and integration, companies can redefine their future direction.
Repositioning products and focusing on niche areas can help reduce competition. Product homogeneity is a common issue in the coatings industry, but adjusting formulations, concepts, or product combinations can open up new market opportunities. While changing formulas is a common strategy, the short-term benefits may be limited due to the maturity of existing products and weak R&D capabilities in China's paint sector. Companies that adopt a technology- or cost-leading approach may see more significant impacts from such adjustments.
Many Chinese paint companies have focused on concept-driven innovation, such as "nano" or "photocatalytic" coatings. However, there are doubts about whether these products truly meet quality standards or if their nano-features are fully effective. Some companies still rely heavily on marketing gimmicks rather than real product innovation. A good product and formula are essential, but without a solid concept and packaging, it’s hard to succeed in the market.
Most paint companies have tried to expand their product lines extensively, but without sufficient resources or strength, they end up spreading themselves too thin. A better approach is to focus on a few specialized products. For example, Hideyoshi, known as the "kingdom of floor paints," has set a successful example by focusing on niche markets and achieving sustainable growth.
In addition to product differentiation, improving services is another key path for development. Service plays a vital role, especially in an industry where consumers often lack expertise. Companies that provide professional support and guidance can build trust and gain a competitive edge. For instance, China Resources Coating has long offered specialized coating services, setting a benchmark for customer satisfaction.
Finally, companies should differentiate themselves through innovative marketing strategies. There are typically three main channels: direct sales to professional users like furniture factories, traditional distribution through retailers or large stores, and specialized engineering projects. With major infrastructure developments in China, such as the Olympics, World Expo, and Western Development, there are numerous opportunities for coating companies. Choosing the right channel based on the company’s strengths can lead to greater success. For example, Dalian Zhenbang has built a strong reputation by focusing on fluorocarbon paint projects, becoming a recognized expert in the field.
In conclusion, the paint industry is at a critical turning point. Companies must adapt, innovate, and focus on what sets them apart to thrive in this challenging environment.
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