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Akzo Nobel Marks Boom in China Auto Coating Market

Published on 2002-05-22. Author : SpecialChem

With its huge population (1.3 billion and counting) and strong economic growth, China has always been a magnet for the automobile industry.

But for a long time, the market for motor vehicles was largely centered on a narrow band of customers-companies, government bodies and taxi operators.

All that has now changed. A widening pool of individual motor vehicle purchasers has led to surging demand for new cars. And just about every major auto manufacturer is getting in on the action. That rising demand-and expectation of future boom-influenced two sister Akzo Nobel businesses involved in the auto sector-BU Car Refinishes and sub-BU Transportation Coatings-to join another, Powder Coatings, in sharing output from a new production facility at Suzhou, near Shanghai.

Opened in August 2001, the plant, a USD 15 million investment by Car Refinishes, manufactures liquid coatings for that BU and Transportation Coatings. Production for Powder Coatings is done separately at the facility. The Suzhou plant has the capacity to produce 8 to 9,000 tons of liquid coatings and related materials annually, with extension possibilities. Output, currently at about 1,000 tons, is set to increase over the coming period.

Sharing the same plant makes sense, notes Philippe Audureau, Manager Asia Pacific of Transportation Coatings. "It is a matter of synergy. When you consider that these are businesses operating so far from base, there is a lot of interest in joining together, sharing competencies and saving money. And of course, the production scope which exists between Car Refinishes and Transportation Coatings can be exploited at a facility such as this."

Daniel Hsu, country manager Car Refinishes China, says: "The Suzhou plant was opened at just the right time. It will help us reinforce our strong and growing position in the market, giving us an advantage in terms of logistics, color choices, and research and development." Car Refinishes sells Sikkens brand coatings such as putties, fillers, primers and topcoats (Autobase and Autocryl). It has installed more than 650 color-mixing machines in the country, with 350 of these in special Sikkens mixing centers. The BU serves 1,000 bodyshop customers. Car Refinishes Instruction Centers (CRICs) in Guangzhou and Beijing also train 1,200 painters every year.

The Powder Coatings operation at Suzhou involves the manufacture of environmentally friendly powder coatings which are used on the wheel rims of motor vehicles, in general industry, on domestic appliances and in the IT sector.

"We are mainly focused on the East coast of China," explains Peter Pui, general manager for Akzo Nobel Chang Cheng (Suzhou). "In addition to the Suzhou plant, Akzo Nobel Powder also runs two other powder coatings factories in China, located in Beijing and Shenzhen, servicing the southern and northern markets respectively."

Most of the output dedicated to Transportation Coatings from Suzhou is used on plastic components for vehicles produced in China. Around 70 percent is used to coat vehicle bumpers and dashboards. Volkswagen is the main customer, but others are being secured.

A market has also opened up for Transportation Coatings in the railway sector-a sector with huge sales potential. The Chinese government has earmarked RMB 350 billion (roughly USD 43 billion) for spending on rail infrastructure. Makers of trucks and buses also number among the customers.

"The attractiveness of China's automotive industry to foreign investors is not new," says Audureau. "Such investments have been coming in for some time. But the number of such investments is increasing, even though it takes months, indeed sometimes years, to get the right partner and secure approval.

"What we find here is a microcosm of the world automotive market. That's why we have built this plant. It's a matter of responding to the needs of our customers and keeping ahead of competitors. To do that we need to be where our customers are, and provide the best level of service."

Source: Akzo Nobel


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