CLEVELAND - Market research firm Frost & Sullivan has released a new report,Strategic Analysis of the Paint and Coatings Market, to its offering.

The report predicts that the $43.52 billion paint and coatings market in the Asia-Pacific region will reach $53.55 billion in 2011, growing at a CAGR of 11 percent.

The paint and coatings market in the Asia-Pacific region has improved due to growth in the end-user segments of construction, commercial, public buildings and residential real estate. The buoyant economic conditions in most Asia-Pacific countries, especially in China and India, have had a bearing on the investment in these sectors and thereby on the paint and coatings market. The high inflow of foreign investments in these two countries and their reduced operating costs are greatly helping to increase the profit margins of operators in those countries. However, in countries such as Vietnam, Indonesia and the Philippines that have lower purchasing power there is insubstantial demand for premium-grade and high-performance paints. Paint manufacturers' margins will also feel the pinch of the rising prices of raw materials.

Stringent environmental regulations have a role to play in limiting global paint trade, as the restriction on the use of hazardous materials in paint composition limits product innovation. Foreign investors will also be deterred by the unstable social, economic and political situation in a country. Domestic participants will have to find a way around investors' hesitation, as they will be eager for higher spending on brand development and management of products, as Asians prefer well-recognized brands. One way to engage foreign companies is through merger and acquisitions with local companies, said the analyst of this research. Such alliances will reduce foreign investors' cost of setting up a distribution hub in the country and enhance product penetration in the local market. Companies could collaborate with national research centers to reduce the cost of R&D and ensure that product quality meets international standards.

Manufacturers in the more affluent countries have a more optimistic outlook, as consumers are highly appreciative of product innovations. Rising environmental awareness and the demand from the middle class population have popularized eco-friendly coatings. Most of the decorative products available in the market are water based and have low or almost zero levels of VOC emissions. Dirt-resistant paints that are more durable are proving to be significant revenue generators, as are innovative heat-reflective paints in the tropical countries. Manufacturers will be looking to create a type of OEM coating product that can withstand various temperature and humidity conditions, noted the analyst. This will save manufacturers time and costs on the production of customized industrial products.

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