Recently, according to the Nihon Keizai Shimbun, Nippon Paint HD will acquire two Chinese coating companies as early as 2019. The two companies produce coatings for industrial products such as wind power equipment and containers. Nippon Paper has the largest share in China's architectural coatings market, but sales of industrial coatings are small. The company plans to enrich its revenue stream in the Chinese market by acquiring local companies.
Nippon Steel will acquire Shanghai Mecca Coatings Co., Ltd. and Mecca Coatings (Nantong) Co., Ltd. Nippon will acquire 70% of the shares of the two companies through its Chinese subsidiaries. The acquisition amount has not been announced, and the combined sales of the two companies are about 13.5 billion yen.
In China, due to the government's environmental protection measures, investment in wind power stations has increased, and demand for related coatings has continued to expand. Some analysts believe that the market scale of water-based coatings produced by the two companies with almost no solvents and low environmental burden will also expand. In addition, Chinese products account for 95% of the containers in circulation worldwide.
More than half of Nippon ’s sales in China (approximately 250 billion yen) comes from architectural coatings, and the “Nippon” brand operating locally has a high reputation. On the other hand, sales of industrial products account for only about 10% of China's business. With this acquisition, it is expected to expand to 16%.