Douglas Bohn, of Orr & Boss Consulting Incorporated

The Asia Pacific paint & coatings market has remained the largest in the world but there have been significant changes in the market; especially in the post-COVID market with the China real estate market, and with it the China decorative paint market, falling. The United States tariff position is also creating uncertainty and is impacting the market. On the positive side, some of the economies in the region are growing at faster rates than the global average. The economies in South Asia, Central Asia, and Southeast Asia continue to grow. Also, some of these markets are showing growth in the premium portion of the market.

Asia Pacific Market

Orr & Boss estimates the total Asia Pacific paint and coatings market as 28 billion liters and $88 billion in 2024. The pie chart below shows how the market is split by sub-geography. Despite its struggles, the China paint and coatings market remains the largest in Asia and the largest in the world. India has surpassed Japan as the second largest paint & coatings market in Asia. 

Growth rates are quite a bit lower than they were in the pre-COVID era. But there are still some regions that offer above average growth opportunities. Volume across the region is expected to be flat this year and showing a slight improvement next year.

China Review

The decline in the China real estate market continues to result in lower sales of paint and coatings, especially decorative paint. The professional decorative paint market is down significantly since 2021. The decline in the China real estate market has continued this year and there is no sign of a rebound.

Our expectation is that the residential new build portion of the market will be down for several years to come and not recover until the 2030s. The chart below shows the trend line of investment in real estate. It continues to decline and shows no signs of a turnaround. The Chinese decorative paint companies that have been most successful are those that have been able to focus on the repaint portion of the market.

Manufacturing within China is also not growing. The expectation at the beginning of the year was that there would be some slight growth in manufacturing. But as the year has progressed, the manufacturing market has stayed flat to down in China. This is evidenced by the Purchasing Manager Index being below 50 for most months of the year.

The automotive industry and especially the EV portion of the market continues to grow in China. Growth this year is not expected to be as fast as in previous years, but it should grow in the 1-2% range. Also protective & marine coatings are expected to see some growth in the 1-2% range as well. Most other segments are showing declines in volume. As noted above, anything related to residential new build has declined and is expected to be flat or continue declining in the coming years.

India

In contrast to China, the India paint and coatings market continues to grow. Although the growth rate is not as fast as in previous years, it is growing and is growing faster than the global average. Despite having a population that is now larger than the China population, the paint and coatings market is quite a bit smaller than the China market. The total paint and coatings market is estimated to be 6.1 billion liters and $11 billion, which is less than 1/4th the size of the China market. This is one of the reasons that we remain very optimistic about the India paint and coatings markets; there is a lot of runway for growth. The economy is growing, the population is growing, and the urbanization rate is high, which is leading to high growth. The market volume growth is growing at a nearly 5% volume rate this year and is forecasted to grow at 6% next year due to all of these factors. Building and construction and infrastructure spending are all expected to increase in the coming years. The graph below shows industrial production in India and indicates the continued growth of the market, which should benefit the industrial coatings market. 

One issue impacting the India paint & coatings market is that two new companies have entered the market. These include JSW and Grasim. Both are increasing their market presence and are trying to increase their market share which is hurting the legacy players in the market. 

Another issue impacting the market is that there has been a downshifting of demand where customers that used to buy premium products are buying mid-tier, those that used to buy mid-tier are buying economy, and some of those that used to buy economy products have dropped out of the market. Recently, we have noticed a trend where the premium products have been able to maintain their position and the lower end products have grown with a slight decline in the middle tier. This trends is also occurring in out South Asia as well as Southeast Asia countries.

Japan

The paint and coatings markets in Japan is the third largest in Asia after China and India. Volume in the market has been stagnant to declining for many years as the Japan economy continues to struggle and the population has started to decline. Nonetheless, it remains a large market and there are profitable segments of the market. Furthermore, there are many large Japan-based industrial companies that have global operations. Being able to produce and sell paint in Japan to these companies can complement global sales and marketing strategies. 

This year, we expect the Japan paint and coatings market to be flat to be down about 2%. Through the first half of the year, industrial production in Japan was up about 1% while new building starts (both residential and commercial) were down by 5%. We expect the Japan decorative market to be down 2-4% for the year, while the industrial part of the market to be flat to perhaps slightly up.

South Korea

Like Japan, the paint and coatings market in South Korea is mature. Also, like Japan, there are numerous multinational companies operating in South Korea that have global operations. Even though there are some similarities with the Japan market, there are differences as well. Unlike in Japan, there has been some modest volume growth in the paint and coatings segment. Industrial production has been growing. This year, industrial production is up nearly 2% in South Korea. But given the overall economic environment, which includes slow global growth as well as continued uncertainty in the United States tariff position, we think that the South Korea market will be flat to down this year. Likely decorative
will be down while industrial will be flat to up.

Southeast Asia

Over the long term, we believe that Southeast Asia offers good opportunities in the paint and coatings market. The countries all have growing economies, growing and young populations, and are urbanizing at high rates. The countries in the region include Indonesia, Malaysia, Vietnam, Philippines, Singapore, Thailand, Myanmar, Cambodia, and Laos. Indonesia, Thailand, Malaysia and Vietnam are the largest countries in this region of the world.

The market has not grown as fast as previously believed. The inflation in the global economy has resulted in significant downshifting of demand where customers that used to buy premium products are buying mid-tier, those that used to buy mid-tier are buying economy, and some of those that used to buy economy products have dropped out of the market.

Recently, we have noticed a trend where the premium products have been able to maintain their position and the lower end products have grown with a slight decline in the middle tier. This market shares some of the same characteristics
with India. 

Central Asia

Central Asia consists of the countries of Kazakhstan, Tajikistan, Turkmenistan, Uzbekistan, Kyrgyzstan, Mongolia, Armenia, Azerbaijan, and Georgia. Armenia, Azerbaijan, and Georgia are not normally considered Central Asia, but in order to have all countries captured in our view, we include them as part of Central Asia. 

Central Asia is the smallest of the sub-regions in Asia at about 2%. But it is a growing market. We think that the paint and coatings market in these countries will grow by 3-4% this year and 4-5% next year. The largest and most important countries in this region are Kazakhstan, which is 38% of the market; Uzbekistan, which is 19% of the market; and Turkmenistan, which is 10% of the market. These three countries are 67% of the Central Asian market.

Like other regions, the decorative paint market is over 50% of the value of the market. Protective is also an important piece of the market, with some of these countries being oil producers and having mineral deposits.

Conclusion

The Asia Pacific coatings market remains the largest regional market in the world for paint and coatings. Like other regions, it has not grown as fast as in pre-COVID. The reasons for that vary from the decline in the China real estate market, the uncertainty caused by the United States tariff policy, as well as the after-effects of the run-up in inflation that impacted the paint market.

Despite the entire region not growing as quickly as previously, we continue to believe that some of these countries offer good opportunities. India, Southeast Asia, and Central Asia are growing markets with lots of runway for growth due to their growing economies, growing populations, and urbanizing populations. Also, we have noticed that in some of the markets, the premium portion of the market is maintaining its position as the value portion grows, and the mid-tier segment of the market slowly declines. Thus, paint and coatings companies focusing on the higher end segments do have the opportunity to grow in these markets. This is especially true in India, South Asia, Southeast Asia, and Central Asia.