CBI member, Akzo Nobel has made public its intention to expand its presence in Mainland China through acquisitions off the back of rising sales.
Sales in China - which is the company’s largest single market - rose to $1.7 billion in 2017. This growth has been attributed to a rise in demand from Chinese millennials for paints and home decoration products. According to Akzo Nobel’s China President, Lin Liangqi, the company is performing well because ‘sales of new homes have slowed in China [making it] the right time for [Akzo Nobel] to adjust their strategies in the big market.’
Millennials refer to those aged 24 to 38 years old and make up a market of 400 million consumers. As the cost of real-estate has risen over the last year, so has the demand for re-painting. As a result, the average household in China has begun to fall more in line with those in Western markets, choosing to repaint their homes every 3 years, compared to at least every 8 years in China.
Akzo Nobel is having particular success in China with its two brands, Dulux and Nippon Paint. Both owned by Akzo Nobel, they are the two best-selling foreign paint brands in China.
According to the China National Coatings Industry Association, China’s home repainting market could see annual sales of more than $14.5 billion in the next couple of years. With a wider range of colours and reputation for ecologically friendly products, Dulux (owned by Akzo Nobel) is well positioned to profit against domestic competition and brands which carry poor reputations following a series of scandals involving paints containing carcinogens and giving off poisonous fumes.
Akzo Nobel’s sales in China accounted for 12.3% of the company’s global sales. The company operates 15 factories in the Mainland and employs roughly 6,000 workers.
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