In the paint industry, although this year's targets have been met, the path to success has not been smooth. The market for architectural coatings is under constant pressure, with unregulated and non-brand companies continuing to disrupt the market through aggressive price wars. Established enterprises find themselves struggling to keep up, often absorbing increased costs without any real return. A senior executive from a well-known Chinese paint company shared this sentiment during a conversation with the author about this year’s performance in the paint market. Similar concerns are frequently voiced, but there seems to be little hope or action being taken.
Before discussing the current state of the real stone paint market, the author realized how tempting it is for businesses to cut corners. Even if a real stone paint product is just a few cents more expensive per kilogram than others, it might be rejected by engineering firms. Competitors who don't follow the rules can easily take over the business. In this environment, "regular" players are often outcompeted by "guerrilla" operators, with low prices being the main advantage. The author believes that smaller, less regulated companies typically have lower operational costs, which allows them to undercut their competitors. However, the reasons behind this situation are complex.
China is home to nearly 10,000 paint companies, most of which are small or medium-sized. Many operate in workshop-style settings, sometimes even sharing production facilities. These companies often invest very little in research and development or advanced equipment, resulting in significantly lower production costs. While they may offer cheaper products, the quality is often questionable, leading to serious risks for consumers. This is one of the main reasons why the paint market continues to face frequent quality issues and safety hazards.
Formal enterprises, on the other hand, bear the burden of corporate, social, and environmental responsibilities—such as R&D investments, better equipment, fair wages, taxes, and compliance. Unscrupulous companies avoid these costs entirely, allowing them to compete purely on price. When large-scale R&D and high-tech manufacturing investments are pitted against these rule-breakers, the formal enterprises' technological advantages and service quality become liabilities rather than assets. As a result, they are unable to compete fairly in the distorted market.
The rise of unregulated players stems from weaknesses in China’s regulatory framework and the lack of clear industry standards. Government enforcement has also been lacking. Recently, there have been some signs of progress, such as the upcoming release of the "Titanium Dioxide Industry Access Requirements (Revised Edition)" next year. This new policy aims to raise the bar for entry into the industry and impose stricter regulations. According to an industry analyst, improved access conditions could accelerate mergers and acquisitions within the titanium dioxide sector. If implemented strictly, these requirements could help regulate the industry and push out non-compliant companies, benefiting legitimate enterprises in the long run.
However, there are still major gaps. The "Administrative Measures for the Coating Industry" and the "Access Requirements for the Coating Industry," mentioned in the 12th Five-Year Plan, have yet to be officially introduced. Additionally, many standards remain incomplete or nonexistent, creating confusion in the market. For example, functional coatings lack clear guidelines, allowing companies to make exaggerated claims. This leads to a flood of misleading information, making it difficult for consumers to distinguish between genuine and false products. It also results in many companies failing quality inspections, further damaging consumer trust.
As a result, consumers are increasingly skeptical of domestic brands, favoring foreign alternatives instead. This perception harms the entire industry, including reputable local companies that are caught in the crossfire. They are powerless to stop the spread of substandard products and false advertising.
The "bad money drives out good money" phenomenon is becoming more evident in the paint industry. As noted by Jiuzheng Building Materials, if stricter regulations and quality controls are not enforced, honest and innovative companies will eventually be squeezed out by those who prioritize profit over ethics. Over time, this creates a cycle where fair practices are ignored, and only those who cut corners and manipulate the system thrive. This undermines the integrity of the entire industry and poses a serious threat to its future growth and development.
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