Local player feels there is still room for growth
COLOURS set the tone for a place and, in any setting, one of the best ways to add colour is with paint.
As end users look into more creative approaches to colouring their space, paint makers, no doubt, are smiling broadly at the prospects in the paint and coating market here.
“The paint segment lost quite a lot of the coating market to wallpaper and tiles. So we are tapping into technology to offer solutions to suit market demands to get back market share,” said Nippon Paint Malaysia managing director Yaw Seng Heng.
The paint and coating market is generally broken down into three categories — decorative, industrial and special purpose.
Yaw estimates that the local paint and coating market is worth some RM2.2bil with the decorative segment making up slightly more than half the value.
Notably, the focus for most paint companies is the decorative segment which includes home and commercial use.
According to Yaw, Nippon, which set up shop in Malaysia in 1967, holds the lion’s share of the decorative market at
40% thanks to an aggressive marketing campaign over the last few years.
In Malaysia, the market is largely dominated by multinational companies including the likes of Akzo Nobel, which owns the Dulux brand; Jotun; and Nippon. Collectively, these players make up about 80% of the market.
Nonetheless, smaller local companies have also found a way to maintain a sliver of the pie.
One such company is Mr Paint Man Sdn Bhd, which started out as a retirement project for Soo Fee Wah. Having retired from a long career with an international paint brand, Soo thought it was time to pick up some basic skills in the industry.
Hence, the name ‘Paint Man’ for the paint services company. ‘Mr’ was thrown in for good measure as an added touch of professionalism, Soo recalled with a small laugh.
As a painter, Soo learned a fair bit about the challenges in using certain products and realised that there was a need to create something new for painters.
In 2006, Japan-based Kansai Paint, then new to the local decorative paint market, approached Mr Paint Man to help establish a local distribution network.
The two companies later formed a joint venture to formulate new products for the Malaysian market and eventually set up a manufacturing facility in Klang. This enabled Mr Paint Man to evolve from a paint services company into a producer.
Consumers may find it rather surprising to learn that there are local paint producers. Apart from Mr Paint Man, there are quite a few other local players that have fallen under the radar of consumers mainly because their brands are not known.
Soo acknowledges that the market is a tough place for local players as most lack brand awareness and did not have the budget to invest in promotional activities.
“We are a new player in the market and branding is important. But brand investment is tough. Smaller companies may not always be able to afford it and it is a long term effort,” he said.
Getting across the market
Soo noted that local consumers had little exposure to the various types of paint and, therefore, tended to rely more on brand names when making purchases.
“But smaller players like us do not have the brand strength so we have to establish a strong retail network where we rely on recommendations in hardware shops. Market surveys show that about 25% to 30% of consumers may change their minds at the hardware store following recommendations to suit their budgets and needs.
“Our strategy is to be competitively priced in the premium segment,” he said.
For Nippon, Yaw noted that innovation was key to growing its market share.
Among its efforts include deploying more than 1,000 units of its colour creations machine, which enables distributors to mix and produce new colours at the stores.
“Consumers want choices these days. And, although we can create new colours, our dealers cannot store 1,000 different colours at one go. So this machine helps us serve our customers’ detailed needs without over-burdening our dealers,” Yaw explained.
Nippon also set up a 12,000 sq ft showcase area, called the Re.think. Re.create Expo, at its facility in Shah Alam last year to educate and expose stakeholders to a wide range of uses for its solutions. The facility took up an investment of about RM1mil and Yaw noted that it has served the company well to inspire various stakeholders on the trends and products that Nippon is bringing to the market.
With its innovative efforts, Nippon is targeting to grow its market share from 40% to 60% in the near future and is eyeing double digit growth this year. The company made a revenue of more than RM500mil last year.
While its future targets are achievable, Yaw acknowledges that market conditions are tough.
The paint and coating market has grown highly competitive over the years as paint makers employ various strategies to enlarge their share of a pie that is growing by about 5% a year.
Nippon is also diversifying its markets by looking at other countries including Bangladesh, the Philippines and Pakistan.
“The growth prospects in these markets are very high. They have large populations but very low paint consumption,” said Yaw.
Mr Paint Man, on the other hand, will continue to focus on the domestic market as Soo believes there is still room to grow here.
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