China's architectural decoration coatings industry and its real estate market relevance.

As the opening year of the 12th Five-Year Plan, 2011 is destined to be a memorable year for China's real estate market. The state's vigorous promotion of the construction of affordable housing highlights the central government's real estate development core thinking of major adjustments, that is, housing supply mainly gradually changed from commercial housing to security housing and commercial housing supply two-track system. When it comes to reform, there must be pain. Since the beginning of 2011, the real estate market indicators deteriorated, the secondary trading market wait-and-see sentiment is strong. The housing sentiment index, which has been falling unilaterally for 15 months since May 2011, fell to 94.57 per cent in July 2012. Although there have been reports of a recent rebound in the property market, but then the Ministry of Housing and Construction reiterated that "the property market continues to limit purchases", the property market in the short term difficult to winter and spring!
, as an important supporting industry in the real estate industry chain, every fluctuation in the downstream housing market affects the pulse of the

coating industry. In the first half of 2012, the national scale above the construction
coating enterprises
to achieve production of 1.63 million tons, an increase of 5% over the same period last year, (growth data for the author based on the relevant data accounting income, with some websites described 11% growth rate is larger difference, but the author combined with the relevant market performance, think that the growth rate of 5% is also reasonable), the full-year
seveing coatings
production growth rate is expected to be less than 10%. In 2011, the output of architectural coatings reached 3.45 million tons, an increase of 8.45% YoY (since 2011 the scope of industrial statistics increased from 5 million yuan and above to 20 million yuan and above, the number of construction coatings production enterprises was reduced from 382 to 224, the growth rate data made necessary corrections). Compared with the growth rate of more than 220 percent in previous years, it can be said that the golden decade of architectural coatings has come to an end with the end of the golden decade of real estate.
1. Construction coatings production fell to single digits for the first time in a decade, a sharp drop
construction coatings production in 2011 was 3.45 million tons, up 8.45 percent year-on-year, the first time in a decade (2002-2011) that growth has fallen to single digits, down 26 percentage points from 34.5 percent in 2010. The market deteriorated further in 2012, with the output of construction coatings enterprises above the scale of 1.63 million tons in the first half of the year, up 5% YoY, and the growth rate of construction coatings production in 2012 is expected to be less than 10%. This fully shows that the downturn in the real estate market quickly spread to the entire architectural decorative coatings industry.
the decade from 2001 to 2010, Thanks to the pillar industry status of the real estate industry, China's construction paint production has maintained a rapid growth for ten consecutive years. From 2001 to 2010, the average compound annual growth rate of architectural coatings reached 22.0%, especially notably, from 2008 to 2010, the growth rate of construction coatings production showed an expanding trend, with annual growth rate of more than 20% for three consecutive years. But the country's property market regulation and control policy interrupted the rapid development of the construction coatings industry, building coatings production growth in 2011 saw a cliff-edge decline, from 34.5 percent in 2010 to 8.45 percent. Growth slowed to 5% in the first half of 2012.
2001-2011, China's architectural paint production as a proportion of the total paint production has been hovering around 30%. Phased look: 2004-2006, the proportion of building coatings production decreased monotony, during which
-industrial coatings
obtained rapid development, driving the entire paint production growth rate of more than 23% for three consecutive years. In 2007, the impact of the financial crisis, the growth rate of paint fell to 17.6%. Subsequently, as the real estate industry recovered, building coatings maintained a growth rate of more than 20%. From 2007 to the present, the proportion of building coating production to the total paint production has steadily increased. By 2010, the proportion of building coatings production had reached 36.4%. However, the growth rate of architectural coatings in 2011 was only 8.45 percent, well below the 16.4 percent growth rate of paint production, so in 2011 the proportion of building coatings production in total paint production fell to 32 percent.
of China's paint structure and Europe, America and Japan and other developed countries there is a big difference. As can be seen from Figure 2, the proportion of architectural coatings in the paint industry in Europe and the United States is more than 50%, Japan is slightly lower, but also about 40%. If the developed countries as a reference, China's architectural coatings accounted for a relatively low, with the gradual strengthening of decorative coatings consumption culture, there is reason to believe that in the future, China's architectural coatings will be further increased. It should be noted here that the sharp decline in the share in 2011 and the first half of 2012 was mainly due to the dramatic changes in the real estate market, not the norm of development.
II, the per capita use of paint increased significantly, and the gap with developed countries is still obvious
paint technology innovation, national consumption capacity is increasing, China's per capita use of paint also increased year by year. The author puts forward three index data to investigate the fluctuation of the per capita use of architectural coatings in China in recent years.
1 takes into account the consumption characteristics of the coating product, the annual usage is approximately equal to the annual output.
assuming that 2 customs import and export data show that in recent years, the annual net export volume of paint only accounted for 10-6 orders of magnitude of annual paint production, so the domestic residents of paint use is approximately equal to the annual output.
Based on the above assumptions, the following indicators are proposed:
taking into account that China's building coatings use groups are mainly urban residents, this paper for the first time put forward the concept of per capita paint use of urban residents, and added a hypothesis:
hypothesis 3 urban residents of building coatings use approximately equal to China's architectural paint use.
figure 3 shows that China's per capita paint use (CP) and per capita building coating use (AP) have maintained rapid growth over the past 11 years. The per capita paint use (CP) in 2011 was 8.0 kg, which is 5.7 times the per capita paint usage in 2001. The per capita use of architectural coatings (AP) in 2011 was 2.6 kg, 5.2 times higher than in 2001. Urban residents are the main groups used in China's architectural coatings, in this sense, if the per capita use of urban residents of architectural coatings to measure the current situation of china's architectural coatings use is more reasonable. The study showed that the per capita use of architectural coatings (APU) of urban residents was 5.0 kg in 2011 (5.5 kg per capita in 2010), which is 4.2 times that of 2001. According to accounting, china's population has grown by about 0.57% annually in the past 11 years, while the urban population has grown by about 3.4% annually over the same period. Considering the foreseeable future, the urban population size still maintains a relatively fast growth, which is bound to promote the stable development of China's architectural coatings industry.
China's paint per capita use in the past ten years, although the growth is very fast, but the gap with other countries is still obvious, the late growth potential is huge, which is also one of the main reasons for the international paint giants competing for the Deer Chinese market.
, the correlation between architectural coatings and real estate research
the development of architectural coatings can not be separated from the real estate industry, the study found that the output of architectural coatings and the real estate market has a very good correlation.
3.1 Correlation between the growth rate of construction coating production and the growth rate of real estate investment
The real estate industry is an important downstream industry of architectural coatings, so the pull effect of real estate investment on the construction paint industry is very obvious. The research shows that there is a clear positive correlation between the growth rate of construction coating output and the growth of real estate investment, and the trend of change is almost in line with figure 4.
3.2 units of completed area of building coatings use
In recent years, the performance of coatings continue to improve, consumer recognition of coatings is also increasing, coupled with coatings relative to stone, tiles and other decorative materials, in terms of energy consumption, cost and other advantages are obvious, so in the field of interior and exterior wall decoration, building coatings use more and more, the penetration rate is getting higher and higher.
currently for the use of architectural coatings in building decoration, there is no unified concept in the industry. This paper puts forward the concept of architectural coating coverage (prevalence rate) for the first time, and tries to approximate the proportion of architectural coatings in the architectural decoration market in China by using the amount of architectural coatings per unit completed area.
can be seen in Figure 5, from 1998 to 2003, the amount of architectural paint cover decreased monotony, while the development and use of tiles in the same period of high social recognition. From 2005 to date, the unit completed area of the building coating coverage has steadily increased, in 2010 the coverage rate of architectural coatings reached 4.6 kg / square meters, is 1.9 times in 2005, the annual compound growth rate of 13.9%. During this period, both from the government policy level, as well as the technical aspects of architectural coatings, are in favor of the direction of building coatings, so the share of architectural coatings in building decoration materials gradually increased. The decline in unit completion area coverage in 2011 was mainly caused by two reasons: First, the statistical calibre changed in 2011, the output of architectural coatings was not directly compared with 2010, and second, the decline in residential transactions directly affected the sales of retail construction coatings due to the distorted characteristics of the real estate market as a result of the purchase restrictions. So 2011 is an singing point and does not represent a trend change.
3.3 the correlation between the production of architectural coatings and the completed area
. Sec.3.1 mentions that the growth rate of construction coating production has a good positive correlation with the growth rate of real estate investment. In order to analyze the in-depth relationship between the output of architectural coatings and the real estate market, this paper studies the linear regression of architectural coatings with the amount of investment in real estate and the completed area of houses. The results show that the output of architectural coatings has a good linear correlation with the amount of real estate investment, while the linear correlation between the output of architectural coatings and the completed area of houses is not good, which shows that the output of architectural coatings is not a simple linear relationship with the completed area. In fact, the use of architectural coatings per unit completed area in China has increased year by year, as evidenced by the changes in the coverage of architectural coatings in Sec.2 in recent years. Driven by the increasing area of completion and the increasing coverage of architectural coatings in China, the growth rate of architectural coatings is significantly higher than that of completed area. Further research reveals that the output of architectural coatings and the completed area of real estate are related to the secondary curve, and the correlation coefficient R2 is up to 0.967.
3.4 Research on the correlation between architectural coating production and real estate investment
On the one hand, Sec3.1 shows that the output of architectural coatings has a good linear correlation with real estate investment, but on the other hand, the consumption of architectural coatings has a certain time lag relative to real estate investment and development. Based on these two points of judgment, the author believes that the amount of real estate development investment is very suitable as a leading indicator to judge the output of architectural coatings, according to the amount of real estate development investment estimates of the output of architectural coatings. Sec3.3's discussion does not take into account the time lag between decoration project and real estate investment, the industry's cycle of decoration project lag real estate investment is rarely described. In order to further study the relationship between real estate development investment and construction coating output, the R2 value of linear fitting correlation coefficient of 0 years, 1 year, 2 years and 3 years was systematically examined. It is found that the output of architectural coating lags the real estate investment for 2-3 years, and this cycle is more consistent with the experience of the industry. For research convenience, we chose a lag period of two years.
function relationship is:
building coating production (current year) (units: tons) - 0.010 x real estate investment (the first two years of the year) (units: 100 million yuan) - 19.32 (R2 - 0.2 993) (Equation 5)
Taking into account that the range of industrial statistics increased from 5 million yuan and above to 20 million yuan and above in 2011, the construction coating production data since 2011 need to be multiplied by the correction factor: 0 .9
i.e.: construction coating production (after 2011) (units: tons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 (R2-0.993) (Equation 6)
This is a good formula for predicting the output of architectural coatings, but since 2011 the property market regulation policy has seriously distorted the process of the real estate industry chain, especially in the secondary trading market, residential transactions fell sharply, It greatly extends the cycle between real estate investment and decoration projects. So this formula also needs to be on behalf of the real estate market to return to normal track after verification.
, some thinking about the architectural coatings
that the market is changing rapidly and strangely. The construction coatings industry, which is still struggling with rising raw materials and declining profitability due to increased competition, has had to face the challenge of falling revenues. Architectural coatings industry and where to go from, the author botched, put forward some views.
4.1 re-painting market is the foundation of sustainable development of the construction coatings industry
China's real estate market has continued to develop rapidly for nearly two decades, the era of explosive growth has become history. New building area of the future growth space is limited, the architectural coatings industry to continue high-speed development, need to seek a new breakthrough point, and re-painting market opportunities are huge!
estimated that China's urban housing market area of 19.43 billion square meters, and in 2011 the completed area of commercial housing 720 million square meters, nearly 27 times. If you take a ten-year re-painting cycle, the annual potential re-painting market is equivalent to 2.7 times the completed area, the cake is not attractive. From the construction stock market, since the end of the last century and the beginning of this century, the built-up area has gradually entered the re-painting (secondary decoration) demand release period. The recoit market can segment two main markets: the retail recoit market and the engineering facade recoiting market. The breakthrough of the former lies in color marketing, or it needs to cooperate with the relevant departments to solve the problem of the main body responsible for repair.
4.2 engineering channels are the new gold point
in China's architectural coatings market, retail business to Libang, Doles and other big brands to lead the market, and in the field of engineering channels, due to the characteristics of the domestic construction market, a long time many competitors, each has its own soup. However, in recent years, with the continuous improvement of the real estate market norms, a large number of strong retail brands to build engineering coating channels. Libang set up an independent engineering division, strong growth. Doles also last year to create an independent engineering channel sales department, Doles professional brand expansion is rapid. Haihong remains focused on the professional market, Jotun is looking for opportunities in the engineering channel, and SKK is accelerating the expansion of the channel. Other brands such as China Resources,
three trees
, Yass, Bauhinia flowers are also in the project to increase investment.
but the potential risks also require our attention: on the one hand, although the mainstream enterprise's engineering channels remain dependent.