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"Nine Situations" of China coating industry in 2011
       In the face of adversity in 2011, China coating industry continued to grow at a double-digit growth rate. There are "nine situations" presented in the market at the time as the coating enterprises strive to develop.

       1. The situation where a coating agent operating only one brand starts to face challenge whereas it becomes trendy for a coating agent to represent multiple brands for complementation. As a result, coating brands and coating agents are badly in need of each other as one party is strongly sought after by the other party, and vice versa, as scarcity commodity. 
      Simply representing one brand is no longer an option for any coating agent, but a critical problem affecting their survival. Coating companies are to be prepared not to demand any coating agent to sign the exclusive agency agreement; but to tolerate the non-exclusive agency by any coating agent. Meanwhile, it is to any coating company’s best interest to integrate resources of coating agents to the maximum degree possible while seizing the resources of coating agents and aiming to become the strategic partner for any coating agents through efforts of brand management, brand output, management output and culture output. However, some coating companies continue to insist on the practice of exclusive agency while coating agents who if representing multiple brands may face boycott during business streamline by the coating companies. Yet on the other hand, being “mercenary” coating agents’ eyes only “see profit” first. After all, who is in the business to lose money? Neither do the coating agents, nor the coating companies.
In their respective market segments, a good coating brand is hard to find for proper management, whereas it is even harder to locate an excellent coating agent for any coating company. Either brand or agency has become important strategy; i.e. it is extremely difficult for coating companies to open up market due to the obstacles in looking for suitable agency to dedicatedly promote their brands.
       2. Coating agents start to act “independently of” coating companies as marketing channels for coating has collapsed. 
It is inevitable for the sinking of coating marketing channels as the industry develops. The coating marketing channels start to collapse as they go through deeper and deeper levels of sub-distribution agencies. During economic crisis, coating companies have no choice but to be restricted by the “One agency for one region” principle to avoid any brutally market conflicts within the same region. Therefore, the coating companies have formed strategic partnerships with coating agents at the municipality and county level, which in turn have formed strategic partnerships with coating agents at the township and village level. Consequently, a “vertical distribution system” with Chinese characteristics has shaped up in the market. Some coating agents of sizeable scale may even have the say about the coating companies’ policies. Market segmentation and separatism is a sign of progress on market economy evolution. For China's coating brands, the next wave of battles most likely take place in the second and third tier markets. As it stands, it makes a pressing issue for the coating companies to quickly and efficiently establish the commanding heights for the markets to come.

3. The market consumption is to gradually return to reason while the market is to be dominated by quality products.
The coating industry has gone around from being about product oriented, image oriented, marketing oriented, culture oriented to being about product oriented only again. As a result, coating companies will shift their gears from focus on store fronts and on marketing to centering on products. That is a more rational consumption behavior and the next consumption trend.

4. We attach the same importance to operating quality as to operating performance.
With low threshold, coating industry is easy to enter by as few as three people, yet is hard to outgrow to as big as maintaining continuous profitability. Some coating companies especially focus on expanding scale and increasing sales yet totally ignore the product quality, thus failing to grow big owing to the inferior operating quality. Although expansion of enterprise’s scale may help promote sales under the circumstance of a white-hot market, it is hard to sustain the development if lacking backup by excellent products. As for bosses of enterprise and agencies of vision, sustainable development is fundamental. Therefore, product quality and operating quality have drawn attentions from production enterprises as well as from product agencies, as business profitability weights heavier than business scale.

5. Cross-industrial alliance catches the trend.
Whether it is a joint operating model of brands or a strategic partnership cooperative model between brands, it is foreseeable that industrial giants are likely to join hands to maximize the use of resources. For example, coating brand may form cross-industrial alliances with property developers or with furniture enterprises, or it may form strategic alliance with a decoration company; etc. All kinds of cross-industrial alliances may help realize the rapid increase of sales, bringing advantages of costs and profits to both parties of the alliance.

On December 26th last year, Huarun Paints, the leading brand in the coating industry, made announcement to join the Champions League, the first Pan Home Industry Alliance in China. Included in the Champions League comprises Guangdong Dongpeng Ceramic Co., Ltd., OPPEIN Home Group Inc., NVC Lighting Holding Limited, Nature Home Holding Company Limited, Guangdong Vanward New Electric Co., Ltd. and Huarun Paints Holdings Co., Ltd. According to Mr. Jin Xin, the Vice President of Huarun Paints, joining the Champions League on invitation serves as the best “win-win model” where each member, the brand name companies, within the League may complement each other through different industries while allowing direct yield of profits to consumers as a result of the “cuddle up for warm up” effect — i.e. each member company benefits from the saving of overlapped costs while consumers benefit from the saving of all member companies as a whole — Therefore, from the benefit point of view, each member company wins, so does the society as a whole. With the help of the platform Champions League, Huarun Paints looks forward to sharing many aspects of resources, such as sales channels, customer clusters, service ideas and brand communications, with other fellow member within the League, so as to carry on innovative scientific and research technologies, to promote service quality and to enrich the product competitiveness. Thus far, there are 315 regional Champions League across China. The League has gradually evolved from the initial straightforward unity for marketing to long-term brand alliances. Through collaboration with the terminal parts of the country along with resources sharing, it is now a reality to integrate and promote discounts offered by different brands, different products and different periods. Hence a truly integrated marketing platform is created. 

The proactive approach of “cuddle up for warm up” has been appreciated by industries as it is a practical marketing strategy that is well worth of notice by industries. The Champions League is not merely a unity of brand name companies out of formality, it is a shoulder to shoulder alliance out of unity, cooperation and integration.



 

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