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War of colors

Released at: 22:24, 30/04/2015

War of colors

Domestic paint makers are struggling to keep up with their foreign counterparts in a fiercely competitive environment.

by Nguyen Quynh & Son Ho

When talking to VET about key factors in selecting the best type of paint, Mr. Pham Truong Lam, an experienced builder, said that although he’s been in construction for 20 years he’s still not able to identify the best type because of the sheer number of brands in the market. Most people, he said, buy paint based on price and brand, with little attention paid to quality. While Vietnamese consumers may be just as confused as Mr. Lam when confronted by thousands of paints, increasing numbers of foreign paint makes have flocked to the country and joined the already large presence staked out by domestic suppliers, in what amounts to a “War of Colors”.

Crowded market

According to figures from the Vietnam Paint and Printing Ink Association (VPIA), from 2000 to 2012 the paint sector saw substantial growth, averaging 20 per cent a year. With favorable policies from the government, many foreign groups have come to Vietnam, carrying with them famous brands such as 4Orange, Dulux, Jotun and Nippon. Paint is used in almost every industrial sector and has played a role in Vietnam’s economic development over recent years, given the size of its growth. 

Although 2014 was a year of recovery for the real estate market, purchasing power remains weak. This has had a major influence on the paint market, with 2014 production not differing greatly compared to 2013. A report from VPIA showed that Vietnam’s construction paint market has about 60 manufacturers, both domestic and foreign. Of these, only 10 per cent are high-end brands but they have a market share of 65 per cent. Foreign players such as AkzoNobel, with Dulux, 4Oranges and its Mykolor, Boss, Spec, and Expo brands, and Jotun, Nippon and joint ventures like AlphaNam - Kansai Paint, are leading the market and continually investing to maintain their positions. Domestic paint makers have been overshadowed by their foreign counterparts, even though both produce their paint in Vietnam.

Mr. David Teng, General Director of AkzoNobel Paint Vietnam, said that the company has invested $14.197 million to expand production lines at its plant in southern Binh Duong province. The expansion is expected to be completed in 2016, making it the most modern paint plant in the country and the region, with a capacity three times higher than the original design.

Meanwhile, corporate social responsibility is a key focus of Kansai Paint, which offers products with the Singapore Green Label and Sirim Eco Label certification. “The goal of developing environmentally-friendly products does not stop at achieving Green certification,” said Mr. Nguyen Minh Nhat, Northern Sales Director and Chief Financial Officer at Kansai Paint. “It is also about conducting practical activities to provide a safe and healthy environment to consumers.”

Jotun Vietnam has increased its investment to $16.1 million, to expand and increase its capacity to meet market demand. It recently invested $1 million in implementing ERP resource management models, so it may operate more effectively in Vietnam.

With a capacity of 100 million liters per year, 4Oranges now has its eyes on the retail market and major constructions, while investing in services, distribution systems, and color mixing centers. It aims to increase the number of its color mixing centers to 2,000 throughout the country.

Expanding, though, is not enough, and foreign paint companies also work on innovating their product lines. With the business becoming more and more competitive, enterprises need to differentiate their products to help them keep their counterparts at bay and continue their smooth business operations. Color and function - two factors creating the success of a paint product - are therefore being improved constantly.

“Maxilite, AkzoNobel’s product line for the intermediate segment, recorded growth in 2014,” said Mr. Teng. “Meanwhile, Dulux - our premium product - has retained its leading position due to the prestige of the brand name and its quality and diverse colors.” AkzoNobel also conducts ongoing market research, he added, to identify any changes in trends and consumer preferences regarding decoration and color selection. “Around the Lunar New Year (Tet), we launched new color designs in accordance with the principles of ‘feng shui’, to provide optimism and confidence to customers in the new year,” he said. With Dulux Weathershield, AkzoNobel has also developed cooling technology that reflects heat away from exterior walls, reducing temperatures by 5 per cent.

Kansai Paint aims to launch product lines with high durability to reduce maintenance costs and maintenance work and to meet rigorous demands for quality, most notably its Weathercoat DC10. It has protective capacity and lasting color retention, for ten years. With this aim, Kansai has made a name for itself at large constructions such as VSIP Bac Ninh, Green Bay Towers in Ha Long city, and AEON mall.

In response, Jotun recently launched Jotashield, for e