Looking at home in a bright new way

Customers visiting a Nippon paint store in Ningbo, Zhejiang province in East China.[Photo/China Daily]

Painting firm sees opportunities in China's big urbanization drive

Every day, new homes are being built during China's rapid urbanization. But, for Wee Siew Kim, chief executive officer of Nipsea Group, it is the old homes he cares more about. After all, Asia's leading paints and coatings producer has prioritized a renewal strategy for both interior and exterior walls in the Chinese market.

China has prospered in the past 20 years and a lot of its buildings were built 10 or 20 years ago. These buildings today may not look so new. Indeed in need of a lick of paint. Nipsea Group has showed strong interest in being part of the effort to renew them.

"I think as more people come and live in cities, more and more buildings will be built," Wee said. "If the trend is accepted by everybody, the next trend, coupled to urbanization, is renewal,"

The annual overall revenue this year in the China market would increase by more than 15 percent year-on-year to exceed 10 billion yuan for the first time, he told China Daily.

Wee's confidence comes from the country's continuous economic growth, as indicated by the growing gross domestic product and the country's urbanization drive.

The total production of coatings reached 12.72 million tons in 2012, up 11.79 percent compared with a year earlier. China is the world's largest manufacturer of coatings, official data from the National Bureau of Statistics showed.

Nipsea Group, set up as a joint venture by Japanese paint maker Nippon Paint Co and Singaporean Wuthelam Group in 1962, now ranks as one of Asia's leading paints and coatings manufacturers.

It has grown to take charge of Nippon Paint's business in Asia now as well as running businesses in other sectors, such as auto and powder coatings.

Having joined the group in 2009, Wee has witnessed rapid growth in recent years and will not be surprised to see a decent performance in China by the end of this year.

The China market contributed more than 60 percent of Nipsea's total sales in Asia last year. The figure is expected to remain the same this year. Nippon Paint China is enjoying the fastest growth rate in revenue among the company's other markets in Asia.

"With the deepening progress of urbanization in the country, the construction sector will act as a major growth engine for the paints and coatings industry," said Wu Yanhuan, of Beijing S&P Information Consult Co Ltd, a consultancy committed to providing solutions to enterprise strategic developments.

The Chinese are becoming more and more aware of the need for a "green" lifestyle, a fact that can be indicated by the figures demonstrating the growth rate of environmentally friendly paint products, Wu said.

In July, paint production rose nationally 3.4 percent year-on-year, while "green" products showcased an average increase of close to 10 percent from a year earlier, she said.

Some action has been taken toward this goal. Nipsea is now working with Chinese real estate developers closely to start renewing the living environment, some of them more than 10 years old.

"We not only give the property owners a whole new environment they are happy with, but also increase the overall value of these properties and the surroundings," said Wee.

Last year, the coating market experienced a slowdown because of the government's policies to regulate an overheating property market.

Despite the decline in decoration orders from new building supervisors resulting from the government's price-control measures on the real estate market, there is still considerable market potential for renovation or redecoration among residential buildings completed at the end of the last century or at the beginning of this century, Guo Xihong, an industry analyst, told Cinic.org.cn.

This year China's property market has gained momentum. In the first three quarters, investment in the property market nationwide rose 19.7 percent year-on-year to reach 6.11 trillion yuan. And residential investment reached 4.2 trillion yuan during the period, up 19.5 percent from the previous year.