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CONFERENCE

Vietnam Country Report

Vietnam’s paint and varnish industries continue to grow


Michael Tatarski reports from Ho Chi Minh City, on the factors behind the country’s
driving demand for paints and varnishes
MARKET REPORT

VIETNAM

Vietnam’s paint and varnish


industries continue to grow
Michael Tatarski reports from Ho Chi Minh City, on the factors behind
the country’s driving demand for paints and varnishes

V
ietnam’s construction and GRDS estimates that the Vietnam paints
manufacturing sectors are driving and varnishes sales will grow by 6.3%
demand for paints and varnishes as through 2019. The market is dominated by
economic growth remains healthy despite the category of polymer-based paints and
speed bumps last year. varnishes (non-aqueous). In 2016 these
While this key south-east Asian goods accounted for 54.5% of market
emerging market’s economic growth took share and will reach 56% by 2019.
a hit last year thanks to environmental Polymer-based paints and varnishes,
issues and weak global export demand, meanwhile, make up a negligible part of the
the country’s paints and coatings industry market, according to GRDS. In 2016 they
continues to grow. accounted for just 3% of market share, a
Estimates at the start of 2016 of gross figure set to drop to 1.6% in 2019. The other
domestic product (GDP) growth near two most prominent sectors are polymer-
7% have fallen to about 6.3% and, while based paints and varnishes (aqueous) and
that was lower than expected, it was an vinyl and acrylic polymer-based paints and
impressive figure compared to global varnishes (non-aqueous).
growth and reflected a significant amount Akihiro Kishi, Principal Analyst at the
of construction activity – both domestic Tokyo office of IHS Markit, the London-
and industrial. Vietnam’s GDP per head headquartered research firm, notes that
(in 2015) has now reached US$6022.60, Vietnam paint and coatings manufacturers
according to figures from the World Bank. have been responding to this increase in
Statistics provided by Euromonitor demand – production hit about 452Mlit in
International, the market research 2015, while another 48Mlit of paints and
company, show that production turnover varnishes were imported. This represents
for paint and vanishes hit roughly US$484M an average yr-on-yr growth rate in
in 2015, the last full year for which data production of 6%.
is available. Vincom Landmark 81: At an expected
This figure was up from 2014’s nnGROWTH SET TO CONTINUE height of 460m, it will be the tallest
US$470M in turnover. Euromonitor’s building in Vietnam, adding a new iconic
beacon to Ho Chi Minh City’s ever growing
definition of paint and varnishes includes Kishi predicted that growth will continue
skyline. Construction started in 2015 with
paints, varnishes and driers, prepared in the Vietnam paints and varnishes completion set for 2017
pigments, enamels and glazes and sector over the next few years. The four
printing ink. major decorative paint players in Vietnam, nnBUILDING BOOM
AkzoNobel, Nippon Paint, Jotun and
nnANNUAL GROWTH OF 6.7% Vietnam-based 4 Oranges will continue to Architecture and decorative wood coatings
FOR PAINT AND COATINGS play expansive roles in the country. will remain the primary consumers of paints
AkzoNobel, the Dutch manufacturing and varnishes, especially as Vietnam’s
Meanwhile, statistics from Global Research giant, has four coatings manufacturing major cities continue massive building
& Data Services (GRDS), the Finnish market facilities in Vietnam, which supply coatings to booms thanks to years of rapid economic
research organisation, claims that sales of customers throughout southeast Asia. The growth. In fact, the Ministry of Construction
paint and coatings in Vietnam hit US$564M company also announced plans in late 2015 says the construction sector grew 8.8% in
in value in 2016, an increase from nearly to open a new branch in Ho Chi Minh City, the first half of 2016, the strongest growth
US$530M yr-on-yr, good for annual growth while doubling the size of its powder coatings since 2010.
of 6.7%. Every category of paint is growing plant in the neighbouring province of Dong Enormous high-end housing
in value except for polyester-based paints Nai. This will help boost Vietnam’s coatings developments are altering the skylines
and varnishes (non-aqueous), which fell exports, which currently account for less than of the country’s urban areas and the
8.8% last year. 1% of production, according to Kishi. apartments housed in these buildings

12 APCJ •  February 2017


www.coatingsgroup.com

VIETNAM FEB 17.indd 1 27/04/2017 11:08


MARKET REPORT

will require large quantities of paints and City. In 2015, Samsung shipped roughly
varnishes. According to Kishi, architectural US$33bn in electronics exports from
and wood coatings account for more than Vietnam last year.
80% of the country’s coatings market. These plants produce goods, such as
Motor vehicle production is often mobile phones and television displays,
a major factor in coatings usage but which require polymer-based coatings.
Vietnam’s four-wheel automotive industry Samsung’s recent Galaxy Note 7 recall
is tiny. “Production is only around 200,000 fiasco will, however, likely dampen demand,
units/yr, compared to Thailand’s nearly as the cancelled handset was produced
2M annual units,” Kishi noted. Moreover, at the company’s factory in Bac Ninh
Vietnam largely imports the coatings used automotive imports and sales have grown Province, near Hanoi.
for its automotive industry so its impact at a dizzying pace this year. According to Most of Vietnam’s paints and varnishes
on the domestic coatings manufacturing the Vietnam Automobile Manufacturers’ imports and exports take place involving
sector is, in any case, limited. Association (VAMA), 243,675 vehicles Asian suppliers and buyers. Allen Irish, an
were sold in the first 11 months of 2016, analyst with the Washington DC-based
nnEXPORTS DRIVING up 36% from the same period in 2015. American Coatings Association, said that
MOTORBIKE PRODUCTION Increasing vehicles sales will lead to further according to the most recent data for trade
demand for coatings for vehicle repairs in this area between the USA and Vietnam,
That said, motorbike production in the and upgrades. the latter exported just US$45,000 to
country is a major coating consuming Another factor behind increased the former in 2014. Meanwhile, the USA
industry: “Motorbike production is demand for polymer-based coatings is exported US$3.7M in solventborne
increasing and this is driven by increased Vietnam’s electronics sector. “Samsung coatings and US$2.1M in waterborne
exports,” Kishi explains. “Exports of Electronics has moved some mobile phone coatings to Vietnam in 2014. Such small
motorbikes from Vietnam have increased plants to Vietnam from China so plastic figures highlight the regional nature of
more than 10 times in five years from coatings consumption for mobiles will Vietnam’s coatings industry.
31,000 units to 330,000 units.” This will increase,” Kishi said. In fact, the South  n
continue to drive increased demand for Korean electronics giant has poured
polymer-based coatings. US$15bn into the country over the past For more information, contact:
International News Services
Additionally, although automotive few years, building enormous production www.internationalnewsservices.com
manufacturing is comparatively small, facilities outside Hanoi and Ho Chi Minh

14 APCJ •  February 2017


www.coatingsgroup.com

VIETNAM FEB 17.indd 2 27/04/2017 11:08