An on-line survey of CCM - cnchemicals.com · Titanium dioxide plays a major part in the pigment production in China. Since 2009, China has become the biggest titanium dioxide producer

An on-line survey of CCM

Executive summary-----------------------------------------------3

Introduction to this project --------------------------------------5

Methodology -----------------------------------------------------6

Overview of pigment industry in china -------------------------7

Influence of PEST factors on China's pigment industry -------11

Competition and sales in China’s pigment industry----------39

Purchasing of pigment and business situation of pigment’s downstream industries in China-------------------------------------------------49

Asian pigment industry in the eyes of China’s players--------61

Conclusions and business opportunities ------------------------69

Generally, most of the pigment manufacturers and distributors in China consider the pigment industry in the country

achieved a positive profit margin during 2011-2013. However, the expectations upon the future profit of pigment industry

is diverse. Some believe it will improve; some believe not. Particularly, among respondents dealing with four varieties of

pigments, the highest proportion claiming a negative profit margin in the past three years comes from the titanium

dioxide players. However, most of the players believe the profit margin will improve in the following years.

Facing the PEST factors in the outer environment, the pigment manufacturers believe that technological factor plays the

most important role both in 2011-2013 and 2014-2016. They assess the R&D input on the industry showed an uptrend

during the last few years. And manufacturers of different varieties of pigment have different R&D focuses. For example,

improving product quality is the emphasis in the organic pigment industry, while increasing unit output and developing

high-end products are the focuses in the chrome pigment industry. Regarding the future technology innovation, most of

the players believe the processing technology for pigment may affect the industry most in the future.

In addition, both manufacturers and distributors of pigment estimate that the competition in the industry would be

fiercer in 2014-2016 compared with 2011-2013. At present, multinational brands are the major competing products for

most of the pigment manufacturers except those producing titanium dioxide which consider other domestic brands to be

their competing products. In the high-end pigment market, the development of domestic-made products shows a

positive trend; 50% of the pigment distributors reckon the share of domestic pigments is increasing, while the rest

consider it keeps stable. To pigment manufacturers, price is the major focus of competition, while to pigment distributors

quality is the top focus.

Furthermore, most of the manufacturers and distributors claim their business have kept stable in the

domestic market during the last few years. In 2011—2013, coating is the fast-growing downstream

market to manufacturers of chrome pigment, iron oxide and titanium dioxide, while plastic is the fast-

growing to organic pigment manufacturers. Downstream consumers of pigment consider the

performance of pigment is their main concern during purchasing and they believe organic pigment will

have the fastest growth in their purchasing in the future, followed by titanium dioxide.

In the eyes of China's pigment players, the profit margin of Asian pigment market is positive during the

last few years, except the titanium dioxide market. They assess the share of the Asian market in their

export business generally keeps stable. Southeast Asian market will be the one of greatest potential in

the industry in the future.

In the future, CCM believes that the organic pigment industry will be the variety of greatest business

opportunities, as it is less influenced by the slowing down economic growth and shrinking government

projects in China. The market has not been mature and quality is still the focus of competition. Moreover,

the purchasing amount of organic pigment has kept increasing and is estimated to embrace the fastest

growth among four pigments according to the downstream industries.

Pigment manufacturer

Pigment distributor

Downstream consumer

Titanium dioxide

Iron oxide

Chrome pigment

Organic pigment

Domestic pigment

Imported pigment

Coating

Plastic

Ink

…

Value chain of pigment industry

Raw material supplier

End user

Participants in the survey

Targets of questionnaire design

To understand the influence of PEST factors and responses of enterprises

To understand the profit trend

To understand the competition trend

To understand the sales & downstream trend

To know the general development trend of Asian pigment market

To understand the profit trend

To understand the competition trend

To understand the sales & downstream trend

To know the general development trend of Asian pigment market

To understand the trend of pigment purchasing

To understand the changing trend of pigment suppliers

To understand the development trend of pigments’ downstream industries

CCM sent nearly 400 questionnaires to manufacturers, distributors and downstream consumers of pigment in

China. Follow-up telephone interviews have been made to seek more detailed opinions from them. To ensure

that people answering the questionnaire have as much knowledge as possible of the products they are dealing

with and that their answers reflect the overall situation in China, the analysis excludes any response that seem

irrational after telephone interviews.

Types of companies answering questionnaire

Interviewee Received QualifiedOverall

pool (N)Confidence

interval Deviation

Pigment manufacturer

67 54 200 90% 10%

Pigment distributor

32 28 500 85% 15%

Downstream consumer

52 47 > 2000 85% 10%

Total 151 129

After years' development, China has become the largest pigment producer in the world. However, just like

other industries in China, the pigment industry is also confronted with a series of problems like overcapacity

and product homogeneity in the domestic market. In addition, with the changing of the outer environment,

different pigments face different business opportunities and threats, resulting in different business growth

during the last few years.

Titanium dioxide plays a major part in the pigment production in China. Since 2009, China has become the

biggest titanium dioxide producer in the world. From 2011-2013, the growth of titanium dioxide industry in

China has slowed down, the output of which rose from 1,802,980 tonnes to 1,987,237 tonnes at a CAGR of

4.99% (Source: CCM’s database).

Following titanium dioxide, iron oxide pigment is the second largest pigment by consumption in China.

However, due to the gloomy domestic demand, the output of iron oxide decreased from 654,000 tonnes to

640,000 tonnes from 2011 to 2013 (Source: Iron oxide Branch of China Coating Industrial Association).

The output of chrome pigment peaked at 57,600 tonnes in 2012 and then fell to 56,460 tonnes in 2013 as

affected by the shrinking application in overseas market (Source: Chrome pigment Branch of China Coating

Industrial Association).

The development of organic pigment in China also fluctuated during the last few years. After the continuous

decrease in output in 2011 and 2012, the output of organic pigment in 2013 recovered to 211,220 tonnes

(Source: CCM’s database).

Survey findings

Generally, more than 80% of the pigment manufacturers and

100% of the pigment distributors consider China’s pigment

industry had positive growth in 2011-2013.

In 2011-2013, 36% of the pigment manufacturers think the

average profit margin was 0-5%; 27% choose 5%-10%.

Relatively, 50% of the pigment distributors assess the profit

margin at 5%-10%.

Comparing the profit assessments in 2011-2013 and 2014-

2016, it can be found that 38% of the pigment manufacturers

hold an optimistic attitude, believing the profit margin will

increase in 2014-2016. On the contrary, only 29% of the

pigment distributors hold this opinion.

Views of all pigment respondents

Views of all pigment manufacturer respondents Survey findings

Only 67% of the titanium dioxide manufacturers consider a positive

profit growth in 2011-2013. Opinions on the profit margin in 2014-

2016 are diverse. 48% of the respondents estimate the profit

margin would improve, while 33% estimate a decrease.

Iron oxide manufacturers share similar views. Opinions on the

future profit margin are diverse. 45% of the respondents estimate

the profit margin would improve, while 27% estimate a decrease.

100% of the players of chrome pigment and organic pigment

assess a positive profit growth in 2011-2013. And most of them

estimate a stable profit margin in 2014-2016.

Survey findings

67% of the pigment distributors running domestic

pigment business have a pessimistic attitude towards the

future profit margin of pigment business in 2014-2016.

On the contrary, only 12% of the distributors running both

domestic and imported pigment business have a

pessimistic attitude. The rest 38% and 50% are optimistic

and neutral to the future profit in 2014-2016.

Views of all pigment distributor respondents

Interviewee: pigment manufacturers in China

No.1

• Technological factor

• Average point: 3.78

No.2

• Social factor


No.3

• Economic factor


No.4

• Political factor


No.1

• Technological factor


No.2

• Economic factor


No.3

• Social factor


No.3

• Political factor


Respondent’s views, 2011-2013 Respondent’s views, 2014-2016

It is found that the technological factor is the most important factor influencing China’s pigment industry in the eyes of manufacturers. In addition, it is also believed that the economic factor will play a more important role in the future.

Generally, the political factor plays an important role in the economy of China. On one hand, the

policies issued by the Chinese government have strong impact, positively or negatively, on many

industries in the country. On the other hand, the government, to some extent, participates in the

economic activities directly. During the last few years, government procurements have taken an

inevitable share in some industries in China.

The overall political environment is stable in China. As a one-party state, the general political

environment of China is stable, without obvious changes. In addition, the term of government in

China lasts for 5 years officially, but usually 10 years in practice. Therefore, its general policies

show a coherent trend.

2013 is the election year of the Chinese government. With the new government coming into

power from 2013, it can be found that the policy direction is different from the last term. Though

both governments are concerned about the economic development, some economic policies are

adjusted obviously, which have exerted some impact on the pigment industry in China.

Sub-sector2011-2013 2014-2016

Average point Ranking Average point Ranking

Titanium dioxide

3.33 No. 4 4.00 No. 3

Iron oxide 3.64 No. 3 3.91 No. 2Chrome pigment

3.83 No. 2 3.50 No. 3

Organic pigment

3.43 No. 2 3.57 No. 4

Assessment change of importance of political factor Titanium dioxide & iron oxide manufacturers consider the political factor will play a more

important role than other factors in the future.

In the eyes of chrome pigment and organic pigment manufacturers, the political factor will

play a less important role in the future.

Pigment manufacturers' view on the importance of political factor to sub-sectors of China's pigment industry in 2011-2013 and comparison with 2014-2016 (5=most important, 1=least important)

Note: The ranking is based on the importance of political factor, economic factor, etc. to the sub-sector; that some factors’ ranking repeats indicates they have the same importance.

As the pigment industry in China has confronted with overcapacity problem during the last few years, the industrial

guide policies mainly focus on restricting projects of low efficiency and high pollution, and promoting projects

adopting advanced technology during 2011-2013.

Titanium dioxide industry

According to the Twelfth Five-Year Plan (2011-2015) for Resource Comprehensive Usage & Industrial Development

of Vanadium and Titanium, current titanium dioxide production lines adopting sulfuric acid process shall be modified

and upgraded under the premise of strictly controlling the amount of new capacity; constructing, modifying and

expanding projects adopting chlorination process are encouraged.

According to the new Entry Criteria for Titanium Dioxide industry in China issued in 2013, the newly established

titanium dioxide enterprises shall possess a capacity of more than 50,000 t/a (sulfuric acid process) or a capacity of

more than 60,000 t/a (chlorination process).

Iron oxide industry

According to the Catalogue for Guiding Industry Restructuring, construction of iron oxide projects with a capacity of

less than 10,000 t/a is under restriction.

Chrome pigment industry

According to the Catalogue for Guiding Industry Restructuring, construction of yellow chrome pigment projects is

under restriction.

Organic pigment industry

According to the Catalogue for Guiding Industry Restructuring, construction of organic pigment projects is under

restriction. Besides, according to the Twelfth Five-Year Plan (2011-2015) for Dye Industry, R&D capability for high-

end organic pigment shall be strengthened.

Views of all pigment manufacturer respondents Views of pigment manufacturer respondents by variety of pigment

Survey findings

Generally, 46% of the respondents consider the policies help promote the development of high-end products.

Specifically, 38% of the titanium dioxide manufacturers, 64% iron oxide and 57% organic pigment manufacturers

consider the policies mainly help promote the development of high-end products. In addition, 43% organic pigment

players and 33% titanium dioxide players also think the policies ease the overcapacity problem of low-end products.

In the eyes of 50% chrome pigment players, the policies mainly help strengthen the market concentration.

Financial/monetary policies, 2008-2011

Since the global financial crisis broke out in 2008, the Chinese government has implemented loose monetary

policies and positive financial policies to maintain the fast economic growth. During this period, a large

number of investment in infrastructure projects was initiated by the government. In addition, under the

support of local governments, many enterprises expanded their capacity. Though the series of investment

had stimulated the growth of some industries in China and pulled up the economic growth, most of these

projects, which do not have economic efficiency , could not generate income but become a burden for the

enterprises.

Financial/monetary policies, 2012-now

2012 witnessed the start of changes of the financial and monetary policies. In 2013, along with the election

of the new government, the direction of these policies changed directly. The new government take long-

term economic growth and industrial upgrade as priorities, replacing short-term economic growth.

Therefore, the government conducts prudent monetary policies. In addition, it reduces administrative

investment and loose supervision on the market, aiming to let the market adjust and develop by itself.


Survey findings

Generally, the respondents’ views upon the influence of new financial and monetary policies are diverse.

57% of the titanium dioxide manufacturers consider these policies restrain their pigment business.

55% and 67% of the iron oxide players and chrome pigment players respectively consider these policies promote

their pigment business.

57% of the organic pigment players think the economic policies have no substantial influence.

Policies on environmental protection in China are becoming stricter in order to cope with ever severe

environmental pollution. In April 2014, the amendment of the Law of Environmental Protection obtained the

approval from the Standing Committee of National People's Congress; it is considered to be the strictest law

on environmental protection in China and is will be enforced in Jan. 2015 as planned.

In practice, the local governments strengthen their monitoring and punishment upon environmental

pollution. For example, Shandong government rejected the approval of more than 1,500 projects which may

cause pollution within Shandong area during 2011 to 2013. Jiangsu government conducted a series of

examinations on enterprises and shut down nearly 1,000 which caused severe gas or water pollution in 2013.

Under the backdrop of strict regulation on environmental protection, some industries generating heavy

pollution are facing industrial reshuffle. Leading companies are forced to increase their investment in their

sewage system, while some players which could not afford the cost of waste treatment quit the market. In

addition, some players transfer their production bases from East China to Northwest China where the

policies on environmental protection are relatively loose.

In the pigment industry, the incidents on pollutions in pigment enterprises occur from time to time. In 2013,

one of the leading players of titanium dioxide, Chongqing Titanium Industry Co., Ltd. of Pangang Group,

was reported to discharge its sewage water into the Yangtze River directly, which has aroused attention from

the public.

Survey findings

78% of the pigment manufacturers made investment in pollution reduction in 2011-2013.

57% of the organic pigment players reduced pollution through improving production technology, while 45% of

the iron oxide players did this through improving sewage equipment.

Among the players planning to reduce pollution, they are inclined to improve sewage equipment to achieve the

goal.


In the past decade, China has witnessed a rapid economic development; the average GDP growth climbed to 10.20%,

which was much higher than the global average－3.80%. This favorable macro-economic environment provides

sufficient funds and generates a strong demand, which decreases the systematic risks from oversea market as much as

possible.

However, due to the emerging of accumulative structural problems in the domestic economy and the continuously

gloomy overseas demand, the economic growth of China also slowed down in 2011-2013, which has affected many

industries in the domestic market.

Comparison between growth rates of global and Chinese GDP based on constant prices, 2003-2013

Source: IMF WEO Database

Sub-sector2011-2013 2014-2016


Titanium dioxide

3.67 No. 1 4.19 No. 1

Iron oxide 3.55 No. 4 4.00 No. 1Chrome pigment

3.83 No. 3 3.50 No. 3

Organic pigment

3.43 No. 2 3.86 No. 2

Assessment change of importance of economic factorManufacturers of titanium dioxide and organic pigment consider the importance of economic

factor will keep stable among PEST factors.

Iron oxide manufacturers reckon that the economic factor will play an important role in the

future.

In the eyes of chrome pigment manufacturers, the economic factor will play a less important

role in the future.

Pigment manufacturers' views on the importance of economic factor to sub-sectors of China's pigment industry in 2011-2013 and comparison with 2014-2016 (5=most important, 1=least important )

Note: The ranking is based on the importance of the political factor, economic factor, etc. to the sub-sector; that some factors’ ranking repeats indicates they have the same importance.


Survey findings

It is found that the disappointed economic environment in China did affect the pigment industry. 51% of the

respondents consider the situation that their customers reduced orders or were in arrears with payment occurs

sometimes.

The answers of titanium dioxide players are slightly diverse. 19% of them said the situation happen frequently,

while another 19% said they haven’t met such a situation in 2011-2013.

Survey findings

Most of the respondents show a neutral attitude towards the future GDP growth of China. 73% of the players

consider the GDP growth rate in 2014-2016 will be 7%-8%.

Chrome pigment players are optimistic to the future economic growth—67% believe the future growth rate will

be more than 8%, while the titanium dioxide players are comparatively pessimistic—19% believe the future growth

rate will be less than 7%.


Survey findings

65% of the players reckon that the growth rate of China’s pigment industry will be similar to that of the GDP in

2014-2016.

Organic pigment players are relatively optimistic to the pigment business—29% think the industrial growth will

higher than the GDP growth, and the rest think that both will be similar.

Comparatively, titanium dioxide players are relatively pessimistic. 43% of them think the industrial growth will

lower than the GDP growth, and 52% consider both will be similar and the rest 5% reckon the industrial growth will

be higher. Views of all pigment manufacturer respondents Views of pigment manufacturer respondents by variety of pigment

Sub-sector2011-2013 2014-2016


Titanium dioxide 3.67 No.1 3.76 No.4

Iron oxide 3.91 No.1 3.82 No.3

Chrome pigment 4.17 No.1 4.00 No.1

Organic pigment 2.86 No.4 4.00 No.1

Background

The general social environment in China has been changing along with the economic development during the last decade.

The increasing urban population and disposable income of residents are changing the consumption preference of residents.

In addition, influenced by the development of the internet industry, the consumption patterns of residents are also

changing.

Assessment change of importance of social factor

Titanium dioxide and iron oxide players think that the importance of social factor to the pigment industry will decrease in

the future, while the organic pigment players hold an opposite opinion.

Chrome pigment producers consider social environment the most important factor to the industry both at present and in

the future.

Pigment manufacturers' views on the importance of social factor to sub-sectors of China's pigment industry in 2011-2013 and comparison with 2014-2016 (5=most important, 1=least important)


Background

At present, more and more consumers in China are concerned about the concepts of being environmental friendly

and healthy during purchasing. Thus, downstream markets of the pigment industry are more inclined to adopt

environmental friendly and non-toxic materials to make pigment so as to fit this market trend.

Survey findings

53% titanium dioxide, 73% iron oxide and 71% organic pigment manufacturers consider this social trend helps

promote the sales of their pigment.

On the contrary, 67% of the chrome pigment manufacturers think this trend restrains the sales of their pigment.


Survey findings

41% of the pigment players choose to develop green & healthy products; 29% choose to add the environmental

friendly & healthy concepts in marketing.

Among the pigment players choosing the above two options, 60% of the organic pigment players and 48% titanium

dioxide manufacturers prefer product development, while 33% iron oxide and 67% chrome pigment players prefer

concept marketing.


Background

On-line sales, both B2B and B2C, flourish in China. During 2011－2013, the transaction value of the B2B on-line

market has risen from RMB4.9 trillion to RMB8.2 trillion at a CAGR of 29%. Under this circumstance, many pigment

manufacturers also established their on-line stores for the promotion of their products.

Survey findings

Generally, the pigment manufacturers show a positive attitude to the customers obtained from on-line promotion.

They have higher recognition of the quantity of customer than the quality. They think on-line promotion have

brought numerous customers, but comparatively the business generated by these customers are not so satisfying.

Views of pigment manufacturer respondents by variety of pigmentViews of pigment manufacturer respondents by variety of pigment

Survey findings

Generally, the pigment manufacturers show a cautiously active attitude towards the future input on on-line

promotion. 46% of the respondents estimate their on-line input will increase in 2014-2016; 31% think it will keep

stable.

Different from other three sectors, 43% of the organic pigment players estimate their input on on-line sales will

decrease slightly in 2014-2016.


Sub-sector2011-2013 2014-2016


Titanium dioxide 3.52 No. 3 4.19 No. 1

Iron oxide 3.82 No. 2 3.82 No. 3

Chrome pigment 3.83 No. 2 3.83 No. 2

Organic pigment 4.43 No. 1 4.00 No. 1

Background

Generally, the overall technological environment in China is improving. With the development of the domestic

enterprises, they begin to enhance their R&D capability, aiming to compete with multinational players in the high-end

market. Under this circumstance, they establish R&D teams and conduct technological cooperation with universities

and institutes. During the last few years, the number of applications for technological patents in China has maintained

a fast growth. After years’ endeavor, some leading enterprises have successfully achieved remarkable revenue

through technological innovation and creativity.

Assessment change of importance of technological factor

The titanium dioxide players consider the technological factor will become more important in the future.

Players of iron oxide and chrome pigment consider the importance of technological factor will keep stable.

Organic pigment players think technological factor ’s importance will decrease but it’ll still be the most important

factor in the future.

Pigment manufacturers' views on the importance of technological factor to sub-sectors of China's pigment industry in 2011-2013 and comparison with 2014-2016 (5=most important, 1=least important)


Survey findings

51% of the respondents think the R&D input of China’s pigment industry kept increasing in 2011-2013, while

47% think it was stable.

Among the pigment manufacturers, 71% of the organic pigment players and 57% of the titanium dioxide players

consider the R&D input have kept increasing during the last three years. Comparatively, respectively more than 60%

of the chrome pigment players and iron oxide players think the R&D input have kept stable.



Survey findings

The response of this question is diverse.

33% of the titanium dioxide manufacturers focus on decreasing pollution and 23% on increasing unit output.

30% of the iron oxide manufacturers focus on increasing unit output and 25% on decreasing pollution.

50% of the chrome pigment manufacturers focus on increasing unit output and 38% on developing high-end

products.

43% of the organic pigment manufacturers focus on increasing product quality.


Survey findings

The response of question is diverse.

57% of the titanium dioxide players consider innovation of production technology for pigment may affect their

pigment business in the future.

Players of other three pigment varieties consider processing technology for pigment may affect their pigment

business in the future.

Among the players of four varieties of pigments, iron oxide player are the group that have the greatest concern

on production technology for raw materials, which give no concern on production technology for substitute.

Political factor

- Titanium dioxide manufacturers have similar assessments on the importance of political factor both in 2011-2013 and 2014-2016.

- More than 70% consider guiding policies on industrial upgrade help the development of high-end products and ease the overcapacity problem of low-end products.

- More than 50% consider the tighten monetary/financial policies have restrained the sales of pigment.

- More than 80% have improved their production technology and sewage equipment to decrease pollution.

Economic factor

- Titanium dioxide manufacturers consider that economic factor is the most important factor from the past to the future.

- More than 80% have suffered order reduction or arrears of payment due to the disappointed economic environment in 2011-2013.

- More than 80% estimate the future growth of China’s GDP will keep stable and believe the growth rate of the pigment industry will be similar or lower than the average GDP growth.

Social factor

- Titanium dioxide manufacturers consider the importance of social factor will decrease in the future.

- Facing the increasing green & healthy concern in the end-use market, about 50% consider this trend has promoted their pigment business and they plan to develop green & healthy products to fit the market trend.

- Most respondents show a positive attitude towards the customers brought by on-line promotion. And they estimate their future input on on-line sales will keep stable or increase slightly.

Technological factor

- Titanium dioxide manufacturers consider the importance of technological factor will increase in the future.

- More than 50% consider the R&D input in the industry is increasing. Decreasing pollution and increasing unit output are two major focuses for R&D activities in the industry; altogether 56% of the respondents choose them.

- More than 50% estimate production technology for pigment may affect the industry in the future.

Political factor

- Iron dioxide manufacturers consider the importance of political factor will increase in the future.

- More than 60% consider the guiding policies on industrial upgrade help the development of high-end products.

- More than 50% consider the tighten monetary/financial policies have promoted their pigment business.

- More than 70% have invested money to decrease pollution, mainly through improving their sewage equipment.

Economic factor

- Iron dioxide manufacturers consider economic factor to be more important in the future.

- More than 40% have sometimes suffered order reduction or arrears of payment due to the disappointed economic environment.

- Most than 60% estimate the future growth of China’s GDP will keep stable and believe the growth rate of the pigment industry will be similar to the average GDP growth.

Social factor

- Iron dioxide manufacturers consider the importance of social factor will decrease in the future.

- Facing the increasing green & healthy concern in the end-use market, more than 70% consider this trend has promoted their pigment business. More than 60% plan to add the concepts in marketing and develop green & healthy products to fit the market trend.

- Most respondents show a positive attitude towards the customers brought by on-line promotion. And more than 60% estimate their future input on on-line sales will increase.


- Iron dioxide manufacturers consider the importance of technological factor will comparatively decrease in the future.

- All respondents consider the R&D input in the industry is increasing or stable. And unit output increasing and pollution decreasing are two major R&D focus in the industry.

- More than 40% estimate processing technology for pigment may affect the industry in the future; more than 30% choose processing technology for raw materials.

Political factor

- Chrome pigment manufacturers consider the importance of political factor will decrease in the future.

- 50% consider the guiding policies on industrial upgrade help to strengthen the market concentration.

- More than 60% consider the tighten monetary/financial policies have promoted their pigment business.

- More than 60% have improved their production technology and sewage equipment to decrease pollution.

Economic factor

- Chrome pigment manufacturers have similar assessments upon the importance of economic factor both in 2011-2013 and 2014-2016.


- More than 60% estimated the future growth of China’s GDP will keep increase and about 80% believe the growth rate of the pigment industry will be similar to the average GDP growth.

Social factor

- Chrome pigment manufacturers have similar assessments upon the importance of social factor both in the past and the future.

- Facing the increasing green & healthy concern in the end-use market, more than 60% consider this trend has restrained their pigment business and plan to add green and healthy concepts in marketing to fit the market trend.

- Most respondents show a positive attitude towards the customers brought by on-line promotion. And more than 60% estimate their future input on on-line sales will increase.


- Chrome pigment manufacturers have the same assessments on the importance of technological factor both in the past and the future.

- All respondents consider the R&D input in the industry is increasing or stable. And increasing unit output and developing high-end products are two major focuses for R&D in the industry.

- 50% estimate processing technology for pigment may affect the industry in the future; more than 30% choose processing technology for substitutes.

Political factor

- Organic pigment manufacturers consider the importance of political factor will decrease in the future.

- More than 50% consider the guiding policies on industrial upgrade help promote the development of high-end products and the rest consider they ease the overcapacity problem of low-end products.

- More than 50% consider the tighten monetary/financial policies do not have substantial influence.

- More than 70% have invested money to decrease pollution, mainly through improving their production technology.

Economic factor

- Organic pigment manufacturers have similar assessments on the importance of economic from the past to the future.


- 100% have estimated the future growth of China’s GDP will keep stable. About 70% believe the growth rate of the pigment industry will be similar to the average GDP growth, and the rest believe the former will be higher.

Social factor

- Organic pigment manufacturers consider the importance of social factor will increase in the future.

- Facing the increasing green & healthy concern in the end-use market, more than 60% consider this trend has promoted their pigment business and plan to develop green & healthy products to fit the market trend.

- Most respondents show a positive attitude towards the quantity of customers brought by on-line promotion and a neutral attitude towards the quality of them. And more than 50% estimate their future input on on-line sales will decrease.


- Organic pigment manufacturers think technological factor’s importance will decrease but still be the most important factor in the future.

- More than 70% consider the R&D input in the industry is increasing. Improving product quality and decreasing pollution are two major focuses for R&D in the industry.

- More than 40% estimate the processing technology for pigment may affect the industry in the future and nearly 30% choose processing technology for substitutes.

Interviewee: pigment manufacturers & distributors

in China

Survey findings

Generally, the pigment players estimate the competition will be fiercer in 2014-2016 than that in 2011-2013.

Among the pigment manufacturers, iron oxide players are the group that describes the competition as the least

fierce , while the description of organic pigment players is the opposite. In addition, titanium dioxide players are the

group describing the most fierce competition in the future.

Among the pigment distributors, the competition level evaluated by the distributors of domestic & imported

pigments is higher than the one from those solely distributing domestic pigments.

Views of all pigment manufacturer respondents Views of all pigment distributor respondents

Survey findings

Multinational brands are the major competing pigment to manufacturers.

Nearly 50% of the manufacturers consider multinational brands the most competing products to them, while more

than 40% think regard other domestic brands as their major competing products.

Typically, multinational brands are the major competing products to the manufacturers of organic pigment,

chrome pigment and iron oxide, while other domestic brands are the major competing products to the

manufacturers of titanium dioxide.

View of all pigment manufacturer respondents Views of pigment manufacturer respondents by variety of pigment

Survey findings

Generally, the market share of domestic-made products in China’s high-end pigment market is increasing.

More than 60% of the distributors running the business of domestic pigment believe the market share of

domestic pigment in the high-end market was stable. Comparatively, more than 60% of distributors running the

business of both domestic & imported pigments believe the market share was increasing.

Views of all pigment distributor respondents Views of pigment distributor respondents by variety of pigment

Survey findings

There are some recognition gap between pigment manufacturers and pigment distributors. The former considers the

competition focuses on product price, while the latter chooses product quality.

More than 50% of the chrome pigment and iron oxide players respectively believe their pigment market competition

focuses on price.

Organic pigment players believe quality is also important in the competition; the share of this option among all choices is

the highest among the pigment manufacturers.

Chanel/relation competition only exists in the iron oxide and titanium dioxide markets as claimed by manufacturers; there is

no channel/relation competition in the organic pigment market and the chrome pigment market.

To distributors, the major focus is product quality. What’s more, competition on quality is more important than the one on

price to distributors selling domestic pigments compared with those dealing with both domestic & imported pigments.

Views of pigment manufacturer respondents by variety of pigment Views of pigment distributor respondents by variety of pigment

Survey findings

All in all, the sales in the domestic pigment market was stable in 2011-2013.

There are about 40% titanium dioxide, iron oxide and organic pigment manufacturers respectively evaluate that

their sales volume of pigment have increased in the domestic market in 2011-2013.

Iron oxide players are the only group gives an evaluation of no decrease among the pigment manufacturers,

while at least 10% of the manufacturers of other three kinds of pigments respectively say their sales decreased in

2011-2013.

More than 80% of the distributors selling domestic pigments say their sales kept stable, while more than 60% of

those selling both domestic & imported pigments evaluate that their sales increased in 2011-2013.


Q: Please describe the sales situation of your pigment business in the domestic market in 2011-2013.

Survey findings

Compared with the domestic sales, the sales situation of pigment business in overseas market is more diverse.

More than 40% of the titanium dioxide manufacturers claim that their overseas sales have increased.

More than 60% of the iron oxide manufacturers claim that their overseas sales have kept stable, while the rest

claim an increase.

40% of the chrome pigment players claim their overseas business have kept stable; another 40% say it decreased.

To organic pigment manufacturers and all pigment distributor respondents, about 50% of them claim their

oversea business is stable.


Note: Four respondents who don’t run overseas business are excluded.

Note: Three respondents who don’t run overseas business are excluded.


Survey findings

Generally, coating is the fastest-growing downstream industry in the pigment market to most of the pigment

manufacturers except organic pigment players, while architecture is the fastest to pigment distributors.

For organic pigment manufacturers, plastic had the fastest growth in 2011-2013.

Architecture had the fastest growth to distributors of domestic pigments, with more than 40% choosing it, while

distributors reckon that plastic was the one with the fastest growth in 2011-2013.


Survey findings

To different pigment manufacturers, the choices are much different.

To the organic pigment manufacturers, coating, rubber and architecture witnessed the slowest growth;

architecture is the top choice for iron dioxide manufacturers; chrome pigment manufacturers choose coating and

ink; coating is slowest-growing to titanium dioxide manufacturers.

To distributors of domestic pigments, paper-making is slowest-growing, but to distributors of both domestic &

imported pigments, both paper-making and ink witnessed the slowest growth in 2011-2013.

Competition

Generally, the pigment players, both manufacturers and distributors, estimate that the competition would be fiercer in

2014-2016 compared with 2011-2013.

Multinational brands are the major competing products for most of the pigment manufacturers except those producing

titanium dioxide which consider other domestic brands to be their competing products.

In the high-end pigment market, the development of domestic-made products shows a positive trend, 50% of the

pigment distributors reckon the share of domestic pigments is increasing, while the rest consider it keeps stable.

To pigment manufacturers, price is the major focus of competition, while to pigment distributors, quality is the top focus.

Sales

Most of the manufacturers and distributors claim their business have kept stable in the domestic market during the last

few years except the distributors of domestic & imported pigments, most of who claim their business have increased.

Compared with the domestic market, the sales situation of pigment business in overseas market is more diverse. About

50% of manufacturers of iron oxide and organic pigment and pigment distributors respectively evaluate their oversea

business keep stable, while more than 40% of the titanium dioxide manufacturers evaluate increasing, and 40% chrome

pigment manufacturers evaluate decreasing.

In 2011—2013, coating is the fast-growing downstream market to manufacturers of chrome pigment, iron oxide and

titanium dioxide, while plastic is the fast-growing to organic pigment manufacturers.

Paper-making is the slowest-growing among the downstream markets to distributors of domestic pigments, while ink

and architecture are said to be so by the distributors of both domestic and imported pigments.

Interviewee: downstream consumers of pigment in

China

Survey findings

The sales situation in the domestic market witnessed an uptrend, with 57% respondents claiming their business

is growing in the domestic market.

80% of the respondents in the plastic industry say their sales increased in the domestic market, while the rest

20% describe it as stable.

60% of the makers of ink and other downstream products describe an increasing sales in the domestic market.

Comparatively, most of the respondents in the coating industry assess their business is stable in the domestic

market.

Views of all pigment purchaser respondents Views of pigment purchaser respondents by variety of downstream product

Survey findings

About 50% of the respondents of pigment’s downstream industries assess their sales situation in the

overseas market is stable.

40% of the respondents in the plastic industry describe that their export business is increasing during the

last few years. On the contrary, 40% of the respondents dealing with other downstream products of

pigment describe their export business as decreasing.

Note: Those respondents not involved in overseas business are excluded.


Survey findings

More than 60% of the respondents believe that their business will still grow in the future, and near 30%

believe it to be stable.

80% of the respondents in the plastic industry evaluate their business will keep growing in the future; this

proportion is the highest among the four kinds of respondents. On the contrary, the respondents in the

coating industry is the group with the lowest proportion giving an evaluation of keeping increasing－only

about 40%.


Survey findings

Generally, most of the respondents in the downstream industries of pigment estimate the competition

will become more intense in the future.

Among the downstream industries, the competition level evaluated by the coating players is lowest;

players dealing with other pigment’s downstream products give a highest evaluation.

Views of pigment purchaser respondents by variety of downstream product

Survey findings

Nearly all of the respondents in the downstream industries of pigment have adjusted their product

structure, mostly through increasing the share of high-end products.

This trend may lead to the increasing purchasing of high-end pigments from the downstream industries

for making their high-end products.


Survey findings

The purchasing of titanium dioxide showed an uptrend in the

plastic and ink industries during 2011-2013, while that in

coating and other downstream industries kept stable.

The purchasing of iron oxide kept stable in the coating,

plastic and other industries. However, 50% of the ink

respondents claimed their purchasing was decreasing during

2011-2013.

The purchasing trend of chrome pigment showed a

downward trend in the coating and other industries. In

addition, parts of the respondents claim they do not purchase

this pigment.

The purchasing of organic pigment is prosperous in various

downstream industries; most of the respondents claim their

demand for organic pigment was increasing in 2011-2013.


Survey findings

During the last few years, the downstream

industries of pigment have been more

inclined to purchasing domestic-made

pigments than the imported ones.

More than 40% of the coating and plastic

respondents and more than 60% of ink and

others respondents claim their purchasing of

domestic pigments was increasing.

Comparatively, most of the respondents

claimed that their purchasing of imported

pigment was stable.

Furthermore, among the four downstream

industries, the ink industry shows an obvious

trend of turning from purchasing imported

pigments to domestic ones.


Survey findings

67% of the respondents consider that performance of pigment is the major concern of the downstream

industries.

Part of respondents in the coating, ink and other downstream industries considers the price of pigment is the

main concern of them, which takes up 14% of the total number of respondents.

Brand is the least consideration during the purchasing, which is mainly caused by the inferior brand construction

in China’s pigment industry.

Views of pigment purchaser respondents by variety of downstream productViews of all pigment purchaser respondents

Survey findings

In the past three years, more than 50% of respondents

have ever changed their pigment supplier, which indicates

most of pigment manufacturers hadn’t set up long-term

relationships with their customers.

Among the downstream industries, the coating industry

has the smallest share in changing pigment supplier, while

the ink industry is the opposite.

Survey findings

On the whole, the number of respondents who have

established long-term relationships with their suppliers

have remained stable and there has been a growing

tendency in the past three years. About 45% of

respondents haven’t changed their long-term suppliers,

and about 45% say they had increased the number of

long-term suppliers.

In the downstream industries, there are 75% of

respondents in ink industry saying they had increased

the number of long-term suppliers.



Survey findings

Overall, organic pigment and titanium dioxide are expected to have the fastest growth, with 47% and 32%

of respondents respectively making such an assessment.

In terms of each downstream industries, coating, plastic and others industries mainly estimate organic

pigment will have the fastest growth in the future, while the ink players prefer titanium dioxide.

Views of pigment purchaser respondents by variety of downstream productViews of all pigment purchaser respondents

Business situation

In the past three years, the sales situation of pigment’s downstream industries in the domestic market have seen a

growing tendency except coating which is claimed to keep stable by a large proportion, while the export business of the

downstream industries kept stable except plastic which is described to have a slight growing tendency.

Most of respondents believe that the competition in the industry they involve in will be more intense, and they choose

to increase the share of high-end products to cope with the competition.

Most of respondents believe that their business will grow in the next few years, and those respondents from the plastic

industry are the most optimistic to their business.

Purchasing situation

Organic pigment has been the most popular among the four pigments mentioned in the downstream industries in the

past three years.

Compared with foreign brands, domestic brands have been more popular in the downstream industries in the past three

years.

The performance of pigment is the most concern of the downstream industries.

Most of respondents had changed their supplier, and the number of long-term supplier has been increasing in the past

three years.

The purchase amount of organic pigment is expected to have the fastest growth, followed by titanium dioxide.

Interviewee: pigment manufacturers & distributors

in China

Japan

Generally, the pigment industry in Japan has witnessed a negative growth during the last few years.

Iron oxide is the pigment with the largest production in Japan. In 2011-2013, the output of iron oxide in the

country has kept increasing slightly from 145,234 tonnes to 146,698 tonnes. Though Japan’s total export of iron

oxide showed a downtrend due to the gloomy overseas demand, the large consumption in the domestic market,

which increased from 4,211 tonnes to 8,438 tonnes in 2011-2013, has offset this part of decrease (Source: the

Ministry of Economy, Trade and Industry (METI) of Japan). In addition, Toda Kogyo Corp., the leading company of

iron oxide in Japan, saw a revenue growth of its pigment business from JPY13.39 billion to JPY14.21 billion

during 2011-2013 (Source: the company’s annual report)

As one of the important production and export countries of titanium dioxide in Asia, Japan’s output of titanium

dioxide declined from 214,417 tonnes to 173,904 tonnes in 2011-2013 (Source: METI, Japan). In addition, the

major manufacturers of titanium dioxide in Japan like Ishihara Sangyo Kaisha Ltd. (ISK), Tayca Corporation and

Sakai Chemical Industry Co., Ltd. also experienced a decline in business revenue, which is mainly caused by the

gloomy demand from Chinese market.

The output of organic pigment like azo pigment and phthalocyanine pigment decreased slightly under the effect

of weak overseas demand and strong domestic demand. Though the general output of organic pigment

decreased, the major players of organic pigment in Japan like DIC Cooperation still gained growth in their

pigment business spurred by the concern on health both in Japan and the global market.

South Korea

The general pigment industry in South Korea shows an upturn. The gross output value of the pigment and dye

industries in the country increased from KRW1.83 trillion to KRW2.35 trillion during 2010-2012 (Source: KOSIS, South

Korea)

Just like Japan, the manufacturers of titanium dioxide in South Korea are also confronted with revenue decrease. The

revenue of titanium dioxide from Cosmo Chemical Co., Ltd., the leading player of the product in South Korea,

decreased from KRW139 billion in 2011 to KRW124 billion in 2013 (Source: annual report).

India

According to related surveys, the output value of Indian pigment & colorant industry (including the dye industry) was

USD3.4 billion in FY 2011 with export accounting for 68%. Pigment consumption in India stood at 700,000 tonnes in

2011, of which 115,000 tonnes was used for coloring and special effect (Source: the Ministry of Statistics and

Programme and Implementation).

Compared with China and Japan, India’s pigment industry is dominated by organic pigment which has embraced a

positive market during the last few years. Most of the major manufacturers of pigment in India have recorded revenue

growth during the last few years.

Clariant Chemical (India) Limited.’s revenue of its pigment & colorant business rose from Rupee3.8 billion to

Rupee5.3 billion during 2011-2013 (Source: the company’s annual report).

Meghmani Organics Limited.’s revenue of its pigment business rose from Rupee2.7 billion to Rupee3.3 billion during

2011-2013 (Source: the company’s annual report).

Sudarshan Chemicals Industries Limited.’s revenue of its pigment business rose from Rupee6.6 billion to Rupee7.0

billion during 2011-2012 (Source: the company’s annual report).

Survey findings

To most of the pigment manufacturers, the share of Asian market in their export business keeps stable.

Among the pigment manufacturers, no iron oxide players claimed the share of Asian market decreased in their

export business, while more than 30%, the highest proportion, of the titanium dioxide players describe a

decreased share.

To pigment distributors, Asian market’s share in their export business mainly keeps stable and increases.

Views of all pigment manufacturer respondents

Note: Those who don’t export are excluded.

Views of all pigment distributor respondents

Survey findings

Generally, the pigment manufacturers estimate the profit

margin of Asian pigment industry was positive in 2011-2013.

However, there are near 40% titanium dioxide players

considering the Asian pigment business had a negative

profit margin.

More than 40% of the titanium dioxide, iron oxide and

organic pigment respectively believe the profit margin will

increase in 2014-2016.

60% of the chrome pigment players believe it will keep

stable.

Note: Those who don’t export are excluded.

Views of all pigment manufacturer respondents

Survey findings

All of the pigment distributors believe the profit margin of Asian pigment industry was positive in 2011-

2013.

However, 50% distributors tend to be pessimistic towards the profit margin of Asia’s pigment industry in

2014-2016 when compared to that in 2011-2013.

There are about 20% distributors estimate the profit margin of Asian market will be negative in 2014-2016.

Views of all pigment distributor respondents Views of all pigment distributor respondents

Survey findings

The majority of the pigment manufacturers and pigment distributors, especially more than 60% of the

manufacturers of chrome pigment and titanium dioxide, do believe that Southeast Asia would be the largest

potential pigment market in Asia. In addition, East Asian market is also the concern of pigment players.

Views of pigment manufacturer respondents by variety of pigment

Views of pigment distributor respondents by variety of pigment

Survey findings

Generally, the pigment manufacturers in China both focus on the domestic market and the overseas market.

Iron oxide players are inclined to develop the domestic market.

Titanium dioxide and organic pigment players are inclined to develop the overseas market.

Chrome pigment players show no obvious preference between domestic market and oversea market.

About 40% of the titanium dioxide players take no measures to respond to the changing domestic and overseas

markets.

View of each species of pigment manufacturer respondentsView of total pigment manufacturer respondents

Conclusively, China’s titanium dioxide industry has been confronted with some difficulties during the last

few years. Among respondents dealing with four varieties of pigment, the highest proportion claiming a

negative profit margin comes from the titanium dioxide players. However, most of the players believe the

profit margin will improve in the following years.

Facing the changing external environment, the titanium dioxide manufacturers are mainly concerned about

the economic factor, no matter in the past or the future. They believe the GDP growth of China will keep

stable in the future but the growth of the general titanium dioxide industry may be similar or even lower

than the GDP growth.

The titanium dioxide manufacturers consider other domestic brands are the major competing products to

them, which is much different from the opinions of manufacturers dealing with other three varieties of

pigments. In addition, price are the major focus in the China’s titanium dioxide industry. And the players

estimate the future competition will become much fiercer.

The domestic sales of the titanium dioxide industry are generally stable, while the overseas sales are

increasing. In addition, the coating industry is the one described as both fastest-growing and slowest-

growing by the titanium dioxide players among downstream industries, which indicates the sales of titanium

dioxide to coating producers have become more and more concentrated in China during the last few years.

To titanium dioxide players, they are optimistic to the future profit growth of Asia’s pigment industry and

believe Southeast Asia will be the consumption market of greatest potential in Asia.

Conclusively, most of the iron oxide manufacturers consider the profit margin of the industry was positive

during 2011-2013. However, the development trend of the iron oxide industry in their eyes is more diverse. Part

of the respondents believe the future profit margin will increase, while some of them believe it’ll decrease or

even become negative in the future.

Facing the changing external environment, the iron oxide manufacturers believe that social factor has been the

most important factor influencing the industry during the last few years. They consider the green & healthy

concepts have promoted the sales of their products, and show a positive attitude towards both the quantity and

quality of the customers brought by on-line promotion. The manufacturers believe economy will become the

factor of biggest influence in the future. They estimate the future growth of China’s GDP will keep stable and

the growth of the iron oxide industry will be similar to the GDP growth.

The competition level in the iron oxide industry is the lowest among the four varieties of pigments, which is

estimated to become fiercer in the future. At present, competition from both domestic & multinational brands

and rivalry on price are the major focuses for the domestic iron oxide manufacturers.

More than half of the iron oxide players estimate their sales both in the domestic market and the overseas

market are stable, while the rest give an estimation of increasing. In addition, the coating industry is the fastest-

growing downstream industry to the iron oxide players, while architecture is the slowest.

The iron oxide manufacturers consider the profit margin of the industry in Asia is positive and they are

optimistic to the future profit growth. In addition, Southeast Asia is the pigment consumption market of

greatest potential in Asia in the future.

In conclusion, the chrome pigment market has been running well during the last few years, with all the

respondents describing a positive profit margin in the industry, and most of them estimate the future profit

margin will be stable.

The chrome pigment manufacturers assess social factor affect the chrome pigment industry most among the

PEST factors both in the past and the future. They believe the green & healthy concern in the end-use market

has restrained the sales of their pigment products and plan to add green and healthy concepts in marketing to

fit the market trend. In addition, most of the manufacturers show a positive attitude towards the customers

brought by on-line promotion and estimate their future input on on-line sales will increase.

Chrome pigment players consider the competition level will become slightly fiercer in the future. At present, the

major competing pigment products in the market to them are still the multinational brands. In addition, price

competition, followed by quality competition, is the major focus in the chrome pigment market.

Most of the chrome pigment players assess their domestic sales have been stable during the last few years, but

there has been an obvious decrease in the overseas sales. At the same times, the coating industry is the fastest-

growing downstream market to them, while the ink industry is the opposite.

Most of the chrome pigment respondents estimate the general profit margin of the pigment industry in Asia

has been positive during the last few years and believe it will keep stable in the future. In addition, they assess

Southeast Asia, followed by East Asia, to be the consumption market of greatest potential in Asia in the future.

The profit situation of organic pigment industry in China has been good during the last few years, with all of

the respondents claiming a positive profit margin in the industry. And most of the respondents believe the

profit situation will keep stable in the next few years.

The organic pigment manufacturers consider technological factor has the greatest influence upon the industry.

Most of the organic pigment manufacturers consider their R&D input has been increasing during the last few

years; improving product quality and decreasing pollution are two major R&D focuses in the industry. In

addition, they believe processing technologies for pigment and substitutes may affect the industry in the

future.

The competition has been fierce in the organic pigment industry during the last few years, which the

manufacturers believe will be intensify in the future. To the domestic organic pigment producers, the major

competing products are the organic pigments under multinational brands and other varieties of pigments. In

addition, price and quality are both major focuses in their market competition.

Most of the organic pigment manufacturers claim their pigment business is stable or even increase both in the

domestic and overseas markets. The plastic industry is the fastest-growing downstream market to their organic

pigment business. While coating, rubber and architecture have the slowest development.

Most of the organic pigment respondents estimate the general profit margin of pigment industry in Asia has

been positive during the last few years and believe it will increase in the future. In addition, they assess

Southeast Asia market and East Asia are the consumption markets of greatest potential for the organic

pigment industry in Asia in the future.

To seize the business opportunities of the organic pigment industry

Among the four major varieties of pigments, CCM estimates organic pigment has the greatest business

opportunities in the next few years.

Firstly, with the popularity of green & healthy concern in the end-use market, the consumption of traditional

dyes and chrome pigment will decrease gradually. Organic pigment, as a substitute for them, will embrace

great business opportunities.

Secondly, compared with inorganic pigments like titanium dioxide, organic pigment relies less on the general

economic growth. During the last few year, its domestic sales and overseas sales have still remained stable or

increased in spite of the disappointed economic growth in the domestic and overseas markets. Therefore, it is

not so affected by the slowing economic growth of China as other pigments.

Thirdly, the production technology and R&D ability of domestic organic pigment manufacturers are relatively

weak. At present, China’s organic pigment manufacturers consider technological factor as the most

important factor to the industry and focus on the production technology for improving their product quality.

In addition, the industry competition focuses both on price and quality of the product, which is much

different from the situation of other varieties of pigments, for which manufacturers mainly focus on price

competition as the product quality has already been mature.

Fourthly, most of the downstream consumers of pigment assess their purchasing of organic pigment has

shown an uptrend during the last few years. In addition, they also estimate organic pigment will embraced the

fastest growth in their future purchasing.

Continuous growing domestic & overseas market

Organic pigment

Less impact from the slowing Chinese economic growth

Less impact from prudent financial/ monetary policy

Benefits from rising green & healthy concern in end-use

market

Uptrend of purchasing in downstream market

Quality-focused market competition

Competition mainly against multinational brands

Relatively weak production technology of domestic players

To follow up the trend of technology focus

According to the survey, technological factors are considered to be the most important factors among PEST

factors, no matter during 2011-2013 or 2014-2016.

Under this circumstance, more and more input is invested in the R&D of the pigment industry. However, the

R&D focuses are so different among the different sub-sectors of the pigment industry. Manufacturers of titanium

dioxide and iron oxide focus their R&D on decreasing pollution and increasing unit output, while chrome

pigment manufacturers mainly focus on the research on increasing unit output and developing high-end

products; and organic pigment manufacturers focus on increasing their product quality.

Regarding the future technological innovation, titanium dioxide manufacturers consider the production

technology for pigment (the chlorination method) may affect their business most, while the manufacturers of

other three varieties of pigments all believe the processing technology for pigment may affect their business

most in the future.

Though China has become the biggest production country of pigment in the world, the inferior processing

technology has restrained its products, which are mainly those relatively low and middle-end goods. At present,

the manufacturers of pigment in China are still focusing on increasing unit output so as to survive in the price-

competing market. However, it is estimated that more and more pigment players in China will shift their focus to

processing technology for pigment which will bring higher profit margins.

China’s pigment industry

Political factor


Social factor

Economic factor

Decreasing pollution

Increasing unit output

Titanium dioxide

Increasing unit output


Iron oxide

Chrome pigment

Increasing unit output Developing high-end products

Improving product quality


Organic pigment

Most important ones among PEST factors

both in 2011-2013 and 2014-2016

Increasing R&D input

Current R&D focus

Future innovation

Production technology for pigment

Titanium dioxide

Processing technology forpigment

Production technology forraw materials

Iron oxide

Chrome pigment


Production technology forsubstitutes


Production technology forsubstitute s

Organic pigment

• To catch up with the quality-oriented market trend

• According to the survey, it is found that most of the pigment manufacturers believe China’s pigment market

still focuses on price competition.

• However, other participants in the markets seem to have different opinions. Pigment distributors believe the

competition in China’s pigment market focuses on product quality at present. In addition, the pigment

downstream industries like coating and plastic industries also consider the performance of pigment is their main

concern during purchasing.

• It is believed this recognition gap between the pigment manufacturers and distributors & downstream

consumers will bring in some business opportunities to the market. Those players who shift their focus of

competition from price to quality may catch up with this market trend and win the battle of the pigment industry.

Previous

trend Future

trend

To prepare for the possible changes in Chinese market

Since 2013, the market situation in China has shown a trend of changing. Firstly, the fast economic growth of

China which has lasted for a decade is slowing down. Secondly, the new government has adjusted their

direction of financial/monetary policies to become more prudent, claiming that there would be no more

expansionary policies or large-scale investment in the short-term. Under this circumstance, it is estimated that

the real estate or architecture projects raised by the government would decrease dramatically, which will lead

to a decrease in business opportunities to China’s pigment industry, especially to pigments heavily relying on

macro-economy.

Therefore, the pigment suppliers in China should change accordingly with this market trend and put more

emphasis on projects funded by private capital and increase input to seize the sales opportunities. In addition,

according to the survey, the domestic market is still the focus of China’s pigment suppliers. With the

shrinking business opportunities and more and more severe overcapacity problem in the low-end market, the

competition in the industry may become fiercer in the future. Players should also enhance development of

high-performance products and seize the market opportunities in the overseas market.

To enhance on-line promotion

On-line sales, both B2B and B2C, develop very rapidly in China. During 2011- 2013, the transaction value

of the B2B on-line market has risen from RMB4.9 trillion to RMB8.2 trillion at a CAGR of 29%. Under this

circumstance, many pigment manufacturers have also established their on-line stores for the promotion

of their products.

According to the survey, most respondents show a positive attitude to the customers brought by on-line

promotion and more than 50% of the respondents plan to increase their input on on-line promotion in

the future. Thus, those players without on-line website or store of their own should not just focus on the

traditional distribution channel but enhance their input on on-line sales.

1) CCM guarantees that the information in the report is accurate and reliable to the best of its knowledge and experience.

CCM defines the report as a consulting product providing information and does not guarantee its information is completely in

accordance with the fact. CCM shall not have any obligations to assume any possible damage or consequences caused by

subscribers' any corporate decisions based upon subscribers' own understanding and utilization of the report.

2) The complete copyright of the report is and will be held by CCM. Subscribers shall not acquire, or be deemed to acquire

the copyright of the report.

3) The report provided by CCM shall be only used as source of subscriber's internal business decisions and shall not be used

for any other purposes without CCM's prior written consent, unless stated and approved in license contract signed by both

parties. Subscribers shall not distribute, resell and disclose the whole report or any part of the report to third parties and shall

not publish any article or report by largely or directly copying or citing the information or data based on CCM's report without

the prior written consent of CCM.

4) "Single User License" means that there shall be only ONE person to receive, access and utilize the report. Subscriber can

present the content of the report that marked the source from CCM to their internal colleagues for their internal

communication and utilization, but cannot share the whole report to other individuals. Any citation, distribution, reselling and

disclosure of the report as well as its partial content to any third party are prohibited, including but not limited to their parent

companies or subsidiaries.

5) "Corporate License" means that subscriber shall not cite, distribute, resell the report or disclose information of the report to

any third party without CCM's prior written consent, except subscribers' affiliates controlled with ownership of more than 50%

of shares.

Documents

An on-line survey of CCM - cnchemicals.com · Titanium dioxide plays a major part in the pigment production in China. Since 2009, China has become the biggest titanium dioxide producer