Ship Coatings Industry Transfers to Southeast Asian Market

In recent years, the shift of manufacturing industries including paints to Southeast Asia has become the focus of attention of all walks of life, and the phenomenon of “southeast flight” in manufacturing industry is closely related to the current rising production costs in China; seeking lower costs is a “lower Nanyang's first cause.

Since the mid-1990s, Vietnam’s economy has gradually entered a fast-growing track, and the average annual growth rate of marine coatings has reached 8%. ADB expects that Vietnam will become one of the fastest growing economies in Asia in the future. The prosperity of the construction market has brought tremendous business opportunities to the Vietnamese building materials industry. The Ministry of Construction of Vietnam stated that Vietnam’s building materials industry has made considerable progress. The annual growth rate of 17% has enabled Vietnam to enter the world’s rapid development of building materials.

The rapid growth of the Vietnamese building materials market in marine coatings has also attracted the attention of international giants. The earliest paint brand that entered the Vietnam market was Nippon Paint. The brand is now the most famous paint and paint brand in Vietnam. In 2004, AkzoNobel, the world's largest paint manufacturer, invested and set up a plant in Ho Chi Minh, Vietnam, specializing in the production of decorative coatings. On June 6, 2006, the global shipbuilding and industrial protective coating company, Denmark Hempel Coatings, officially completed the construction of a paint factory in Vietnam Singapore Industrial Park near Ho Chi Minh City in Vietnam. The coating plant will produce coatings for shipbuilding, chemicals, steel buildings and other areas, especially marine coatings.

In addition to exploring a broader market for marine coatings in Southeast Asia, the search for lower costs is also one of the main reasons for the shift of manufacturing to Southeast Asia. “Compared to Southeast Asian countries, China’s average labor cost is much higher. In addition, with pressures on exchange rate fluctuations, rising prices of raw materials, and increasing costs for ecological and environmental protection, other painters are constantly increasing pressure. It is even more difficult for China’s paint manufacturing companies to make money. The above-mentioned Southeast Asian countries have objectively become the investment destination for the industrial transfer of foreign-funded coating companies.” An industry source stated that compared with China, ASEAN countries have cheaper labor and land prices. For example, in Cambodia, the wage cost of a production line worker is about 400 yuan, and it does not cover food and shelter; at the same time, the land price is only US$1 per square meter, which is very attractive to labor-intensive enterprises.