Due to increasing government emphasis on energy conservation and environmental issues, China’s emulsion polymers markets are witnessing growth, as emulsion polymers are environment-friendly and result in lower emissions than many alternatives.
Frost & Sullivan finds that the Chinese Emulsion Polymers Markets earned revenues of $2.29 billion in 2005 and estimates this to reach $4.77 billion in 2012.
“The Chinese government has recently released its strategic guidelines to build up a sustainable and harmonious society”, notes Frost & Sullivan Research Analyst Ms Louise Zhao. “Countrywide, the importance of energy-saving and environmental protection is being stressed upon and the government is imposing stringent criteria for the same.”
The strategic policy of the government guides the country’s industries in developing principles of energy saving and recycling of resources and is likely to promote significant market expansion. As a result, the potential application of emulsion polymers in adhesives and sealants, paints/coatings and inks, and in building and construction, especially in exterior insulation and finish systems (EIFS), appears promising.
Apart from this, rising awareness of volatile organic compound (VOC) issues among citizens is contributing to growing health concerns and the need for environmental protection. This is clearly reflected in their consumption activities in several applications. Thus, in the future, customer preferences are likely to result in increased use of emulsion polymers.
Meanwhile, emulsion polymer suppliers are eagerly exploring potential business opportunities that offer the possibility of substituting traditional solvent-based products in order to achieve market success.
Despite positive trends, market participants are encountering the critical challenge of spiralling raw material costs due to the global crude oil issues. As a result, shrinking industrial profits pose a significant restraint to commodity suppliers in the general-purpose product sector. However, certain niche markets with specialty products continue to offer profit potential.
“All participants are witnessing increasing raw material costs and intensifying competition,” states Ms. Zhao. “Domestic participants are no longer satisfied with price advantages of mass products. Technological breakthroughs and significant capital investments are key challenges that need to be overcome.”
On the other hand, disordered competition, price war and intellectual property rights (IPR) violation are major challenges threatening the presence of multinational companies (MNCs) in the specialty products sector. Ultimately, core competence in technology will determine profit margins.
In the context of domestic participants, technological innovation, which requires constant research and development (R&D) and significant capital investments, will become crucial. In addition, customised product innovation, reinforcement in market exploration and development, as well as optimised cost control will be essential. Logistics infrastructure and after-sales service are other critical factors imperative to promote market expansion.
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