Global coatings giant paints rosy China market picture

BEIJING - The chief of US company Axalta Coating Systems, the global paints and coatings manufacturer, said it planned to invest more in China, after the group successfully opened a massive technology center in Shanghai earlier this month.

Axalta chose Shanghai for its new 15,500-square-meter technology center, partly because the company's Asia Pacific headquarters is already located there. But also because the local government was very supportive in setting up the center, as the city positions itself as an innovation hub, said Axalta Chairman and CEO Charlie Shaver.

"Shanghai has impressive plans to set up an international sci-tech innovation center," he said.

The CEO said that his group was very bullish about Shanghai and committed to the city which was at the forefront of the development and application of technology in industry.

"The majority of our organic growth today comes from China," said Shaver in an interview, adding that coating business revenue growth in China grew at a much faster pace than in North America and Europe.

He admitted that the slowing Chinese economy to some extent weighed on the expansion of its industrial coating business, but the booming Chinese auto market was buttressing its transportation coating and refinishing businesses.

China's economy grew at 6.7 percent in 2016, its slowest pace in about a quarter of a century.

The Philadelphia-based company reported net sales of about $1 billion internationally in the first quarter of the year, driven by sales volumes growth of 8.9 percent year-on-year, with its transportation coatings net sales rising 2.1 percent to $421.4 million in Q1, it said in its quarterly report.

"The Chinese coating industry is very competitive, with major international and good domestic coatings players in the market, while consumers are demanding more innovation and local solutions," said Shaver, who has visited China once every quarter in recent years.

With a current employee base of 300 and capacity for 500, the new technology center joined Axalta's international network of four global technology centers and more than 30 laboratories.

In addition to laboratories, the new center houses a refinishing training center and color development center, the largest such facilities within the company. The laboratories include a coating R&D laboratory, a coating system testing laboratory, and a transportation application laboratory.

"Many customers in this region are interested in transitioning to sustainable waterborne coatings and spraying systems. The refinishing training center is equipped for such training," Shaver said.

He said that his group's Chinese team would have the opportunity to work with, share expertise and learn from international colleagues, as part of a single global R&D organization.

Shaver said that in practice that meant developing new coating applications, next generation paints and creating new colors.

Axalta, an industry leader in paint coatings for vehicles, buildings, and pipelines, has been doing business in China since 1984.

It has a waterborne coatings facility in its Shanghai Jiading plant, another plant adjacent to Jiading, a plant in Changchun in northeastern China, and five powder coating operations run with joint venture partners.

Shaver said his company, given its investment and business work with local partners over past decades, saw the market becoming increasingly sophisticated.

"Chinese clients know their business very well and are good at explaining their challenges in finding solutions. Chinese customers are becoming more sophisticated, and we are sharing the best global practices with Chinese local body shop owners," he added.

He said customer expectations in cities like Shanghai were different from those in smaller cities.

Shaver added that his company's combined investment in China has topped $100 million since 2013 and it plans to build a new factory in Nanjing in eastern China.

Xinhua