The global economic turmoil has affected the Chinese economy, slowing its pace of development. However, the first half of 2009 has witnessed a gradual warming-up of China’s economy with the housing market reviving, infrastructure constructions booming and increasing demand in the automotive market. All these driving forces indicate that China’s paint and coatings market will be revived in the second half of 2009 and beyond.

Frost & Sullivan research shows that industry integration is the anticipated trend for the Chinese paint and coatings market. Leading multinational companies are expected to strengthen their competition by M&A, to improve distribution channels and to increase production capability in the short term. M&A activities between local companies are also forecasted to boom, as a way to improve competitiveness. The economic downturn accelerates the elimination of small companies and the expansion of leading companies.

Increasing regulations, especially those regarding environmental concerns, are expected to upgrade the industry in terms of technology, management, and marketing. EU’s REACH and Behavior Rules of Chinese Coatings Industry are the two key high-impact regulations for the Chinese coatings industry. Compliance to these regulations directly adds to production costs and lowers profit margins. However, it also has positive effects on the sustainable development of the market. Green products, which are healthy, environmental friendly, and energy saving are stressed.

End-user industries, including building, automotive, marine, oil, natural gas, chemical, furniture, and coil, will have different growth scenarios in the second half of 2009, According to Rodger Yang, cnalyst of chemicals, materials and food practice, Frost & Sullivan. For instance, the oil and natural gas industry will see a normal growth rate while building and automotive industries are estimated to grow quickly in the coming months due to Governmental stimuli. As a result, architecture coating and automotive coating markets are expected to have high growth rates in the second half of 2009.

Meanwhile, as export markets have shrunk badly during the economic downturn, some segmental coating markets have slowed down. For instance, the production of powder coating and wood coatings decreased in the first half of 2009 as a considerable percentage of the industry targets the export market directly or indirectly. The recession of foreign markets are forecasted to last, even till 2010. Thus, the powder coating and wood coating markets are expected to recover much slower compared to other segmental coating markets.

Frost & Sullivan forecasts the end application industries of the paint and coatings market to revive gradually in the second half of 2009. In 2009, the total paint and coatings market is expected to have a medium annual growth rate of approximately percent, in terms of production shipment.