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World investors began to pay attention to the Eastern European coating market

world investors began to pay attention to the Eastern European coating market

April 9, 2007

the politics and economy of Eastern Europe are closely related. Until the late 1990s, we can still see the impact of the "Soviet Union" model on the economies of various countries to varying degrees. Due to the influence of politics, the production and use of coatings in Eastern Europe have obvious fluctuations at different stages. From 1990 to 1993, paint production in various countries fell sharply to varying degrees, with an average decline of about 3 to 5 times. From 1995 to 1998, the economy of most Eastern European countries recovered, and the production and use of coatings gradually resumed their original quantity and scale, such as Russia, Ukraine, Poland, Slovenia and other countries. The production and use of coatings have exceeded the level of the Soviet era. In many aspects, these paint markets have become more developed and flexible. Facing the international market, they are also more open and have more extensive cooperation

the coating market in Eastern Europe, including regional markets, such as the Baltic countries, the Caucasus mountains and the Central Asian Republic - the former Soviet Republic (statistical results in 2002). Before 1990, members of CMEA were only allowed to maintain relatively low imports of coating materials, accounting for about 4% to 7% of the total consumption. Today, in the more developed countries in the region, the import volume accounts for 30% to 35% of the total paint market, while in the less developed countries, the import volume of paint even exceeds 40%

uneven paint consumption

compared with the current average level of paint consumption in Western Europe (15 kg/person), the per capita consumption of paint in Eastern European countries is less. At the same time, there are great differences in the per capita consumption of paint among countries in the region:

the per capita consumption of paint in the most developed countries, such as the Czech Republic, Poland and Hungary, is more than 10 kg, close to the level of Western Europe. Their coating market and industry have been integrated into the European structure. The market structure of these countries values the value of material quality. The local coating industry has seen the future of manufacturing raw materials, such as acrylic emulsion in the Czech Republic, titanium dioxide in Poland and organic pigment industry in Hungary, which are relatively influential industries

the second category of countries, including Russia, Slovenia, Slovakia, Croatia, Bosnia and the Baltic States, can generally be regarded as moderately developed countries, and their per capita consumption of paint is about 5kg, twice the level of Western Europe. In these countries, people usually consider more price factors, and the coating quality is the second. Therefore, the local coating price is relatively low

the third category of countries are those countries with very low paint consumption, such as Ukraine, Romania, etc., and some countries' per capita consumption is even less than 2 kg (such as Serbia and Montenegro, Caucasus mountains and Central Asian countries)

in the coatings sold in the second and especially the third category countries, the low price, comprehensive inspection specifications of various products and the specific inspection of unique goods must be specially designed! Poor quality coatings still occupy a considerable share, and household (DIY) and architectural coatings occupy a significant position. In Poland, Czech Republic, Russia and Croatia, the output of general industry, maintenance, protection, automobile repair and marine coatings is quite large. However, in many countries in the region, the domestic production of high-quality industrial machinery and equipment coatings and special-purpose coatings is still facing difficulties, so the market demand for these coatings is mainly occupied by imported coatings from Germany and Italy


the paint market in Russia remains the largest in the region. After 1991, the traditional paint manufacturing factory began to be privatized, but until 1995, the Russian economy was very depressed, and the paint production also plummeted, reaching the lowest level in the 1990s. After that, the demand for coatings and domestic production began to grow slowly, only slightly affected by the financial crisis in August 1998

since Putin came to power, Russia's economic situation has been improving day by day. In the past few years, the annual growth rate of Russia's gross national product has been 6% - 8%. In terms of the paint market, the areas of significant growth are machinery manufacturing (especially military industry), civil construction and household (DIY) paint industry

from 2002 to 2003, there were 450 to 560 paint manufacturers in Russia. The top eight traditional large-scale production plants (each with an annual output of more than 10000 tons) dominate the market, accounting for almost 50% of the total domestic paint production

there are about 20 to 30 medium-sized companies with an annual output of more than 5000 tons. Most of the production plants are located in the European part of Russia. Yaroslav is known as the coating capital of Russia (the three major coating companies of Yaroslav produce a total of about 30000 tons of coating). There are only a few small plants in the vast Siberia and Far East, the largest of which is the medium-sized Kolo towel coating plant (Omsk city). In 2003, the total consumption of paint in the country was 819000 tons (about 850million US dollars), with a per capita consumption of 5.5kg (4.5kg in 1999), while the largest consumption of paint was in 2002 (825000 tons)

there has been little change in Russian coating technology and products in the past 20 to 30 years, and the domestic coating output has declined slowly after reaching the maximum in 2001. The basic part of paint production is still DIY, architectural and general industrial coatings with relatively low quality (mainly alkyd and polyvinyl acetate types). Due to the lack of investment and the high cost of imported raw materials and process equipment, even the most powerful manufacturers are reluctant to introduce new technologies and processes, and increase research and development efforts in terms of coating performance and ecological characteristics (volatile organic compounds, toxicity and pollution components) to improve product quality. Therefore, it is difficult for domestic coatings in Russia to expand outward, and they can only be exported to several very neighboring countries, such as Ukraine, Kazakhstan and Belarus

with the impact of foreign high-quality coatings on the Russian market and the attention of local residents to environmental protection, the quality of Russian domestic coatings is gradually improving. Traditional paint manufacturers have made some efforts in the modernization of process equipment and improved the quality of raw materials (especially the use of more additives and organic pigments). At present, conventional solvent based coatings are still dominant, accounting for about 75% of the total output

despite its huge market capacity and good prospects, Russia has not been selected into the list of top choices for international investment. So far, Russia has only two traditional international partners tikkurila and AkzoNobel. These two international suppliers have decided to establish paint production plants in Russia, mainly producing architectural coatings. Several other companies, including BASF, are planning to develop the Russian automobile, coil coating, furniture and other industries with great potential by building production plants for nearby customers

as domestic coatings in Russia account for 67% of the total consumption of domestic coatings, Russia is still an important and promising market for international suppliers of high-quality raw materials (especially those materials that cannot be produced domestically or have limited production, such as titanium dioxide pigments, various organic pigments, additives, acrylic acid, ethylene and polyurethane resins and latex), and process equipment. On the other hand, Russia has signed tariff free trade agreements with Ukraine, Belarus and Kazakhstan to revitalize economic cooperation with its most industrialized neighbors

in the past few years, the total amount of coating used in Russia has increased, mainly due to the following factors: 1 The country broke ground on many large-scale construction projects in Moscow, Samara, St. Petersburg and several other major cities; 2. Improvement of public welfare (especially increasing the demand for high-end architectural coatings); 3. Increase in the consumption of industrial and special coatings in the military industry

with the recovery and steady growth of the economy, the Russian market has become increasingly prosperous, and the demand for coatings has also expanded significantly. Facing the demand for medium and high-grade coatings, the Russian coating industry has attracted more and more manufacturers to invest and set up factories. In 2006, many paint manufacturers in the Yangtze River Delta of China, led by the association, made a collective inspection of the Russian paint market for the first time and achieved good results


the coating market in Ukraine is increasing at an annual growth rate of 4% to 5%. The coatings mainly include industrial coatings (including powder coatings), automotive repainting, corrosion-resistant coatings and wood finishing, as well as architectural and DIY decorative coatings. However, the amount of paint used in Ukraine is still much lower than that in the 1980s. At present, the quality level of coating products produced in Ukraine is low, which is insufficient for international exchanges, and the production and development of domestic coatings are limited. Around 2000, most of the shares of traditional paint manufacturers have been sold to international investors, while several newly established paint manufacturers are wholly or partially owned by investors in Germany, Austria and Poland

about 50 to 70 companies in Ukraine produce coatings, while the top 15 companies produce almost 80% of the coatings (115000 tons), and the largest output is Lomonosov Coating Factory (annual output of 30000 to 35000 tons), himprom (also an inorganic pigment supplier) put into operation 18, lakma and snezhka ukraine The output of alkyd and latex paint is 100000 tons and 16000 tons respectively, accounting for 71% and 11% of the total output of paint respectively

due to the relatively limited resources of Ukraine, its economic development depends on international investment. In the past few years, several new companies based on international investment have been expanding in the market, especially polifarb and sniezka Ukraine (polish investment), Meffert hansafarben and jobI Ukraine (German investment) and BNS farba (Austrian investment)


traditionally, Belarus has a high demand for general and special-purpose coatings, OEM industrial coatings and various architectural coatings, but it has encountered economic difficulties since the financial crisis in 1998. This has brought great adverse effects to the paint Market: Although the total output of paint has increased slowly in the past few years, the consumption of domestic paint remains at the same low level

belarus has about 30 coating production companies. Under strict government control, the country's economic development mainly depends on domestic resources

Central Europe

Poland, Ukraine, the Czech Republic and Hungary ranked second to fifth in terms of the amount of paint used in Eastern Europe, with 410000 tons, 192000 tons, 130000 tons and 125000 tons respectively in 2002). In 2002, Poland produced almost 700000 tons of all kinds of paints (more than Russia). At present, as a major exporter, Poland provides paints to neighboring markets (Ukraine, the Baltic States, Belarus, Russia). In the past decade, the coating industry in Poland, Hungary and the Czech Republic has undergone active restructuring, and even established coating companies in neighboring Eastern European countries (Ukraine, the Baltic States)

although the Baltic countries (Shania, Latvia, Lithuania) have close ties with Finland, Switzerland and Poland respectively, the coating market is still at a relatively low level, and the main products are DIY (household) and architectural coatings of low quality. In Latvia, there is a high demand for industrial and special-purpose coatings. The Baltic States have low demand for high-cost/high-quality coatings (accounting for only 5-10% of the market,

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