At the end of 2010, the central government introduced a series of real estate market control policies. The restriction of purchase orders introduced in January 2011 pushed this round of real estate control policies to a climax; the central government subsequently introduced a wild and five-year 36 million security housing plan for 5 years. . It can be said that in 2012 China's real estate market has undergone earth-shaking changes. How does the change in the downstream real estate industry affect the architectural coatings industry? The author puts forward some ideas from his own point of view.
Winter in the housing market, the crisis has come
1, the real estate market is expected to be bad, the status of the industry may be shaken
The government is increasingly aware of the destructive nature of the transitional bubble in real estate that is detrimental to the country and the people's livelihood. It seems that it intends to abandon the pillar industry position in the real estate market. For a long time, with the capital chain, real estate companies have adopted the land finance and passed the banking system and kidnapped the entire country. Now, the government has realized the seriousness of the problem and tried to get rid of the financial constraints of the land.
Therefore, under this background, the real estate market is expected to turn bad in the short-to-medium term, and the confidence index of real estate entrepreneurs fell to 99.9 in the third quarter of 2011, far below the industry average of 129. It can be said that the real estate market has entered the winter and the future collapse is not impossible. The international mainstream view is basically also bearish on the Chinese real estate market
• Standard & Poor's first negative outlook on China's real estate industry rating (2011.6)
• Blackstone, the world's largest private equity firm, first divests China Real Estate (2011.9)
• Standard & Poor's issued a warning to the Chinese real estate market that the situation in the Chinese real estate market is not optimistic and that the liquidity pressure faced by real estate developers will increase in the next 6 to 12 months. (2011.9)
• The 2008 Nobel laureate Paul Krugman predicted that the real estate bubble and credit bubble in China are gradually eroding.
2. The developer bears trillions of debts and the industry chain risks expansion
Constrained by the proliferation of liquidity and inflationary pressures, the government shifted to implementing a robust fiscal and monetary policy after implementing the RMB 4 trillion stimulus plan. Banks began tightening silver, almost completely freezing developers. Recently, the news of the collapse of the private lending industry chain of Ordos real estate developers and the news of the running of the SMEs of small and medium-sized enterprises in Wenzhou has frequently revealed the seriousness of capital risks in the real estate industry.
With the advancement and deepening of regulation and control, the author believes that the real estate company's channels will continue to narrow and the cost will continue to climb. The asset-liability ratio of listed housing companies is particularly eye-catching and has become the sword of Damocles hung on top of real estate developers. As of October 30, of 108 listed companies in the real estate industry, 87 had debt ratios of more than 50%, accounting for 80.56% of the total. As of the end of the third quarter, 108 housing enterprises jointly shouldered nearly RMB 1 trillion (992.8 billion yuan) of debt, a 40% increase from the same period last year. The asset-liability ratio of the high-speed private-owned housing green city in the first half of 2011 was as high as 163%. In November, there were also bankruptcy rumours. Although its chairman later rumored, at the end of December 2011, he handed over the shares of his Shanghai king to SOHO China, stating his desire for money!
3. Increased concentration of the real estate industry and enhanced bargaining power
Due to the impact of funds, expectations, etc., small and medium-sized real estate developers may face a wash-up, and the market will be more focused on large-scale real estate companies. According to estimates from the China Real Estate Assessment Center, the concentration of the real estate industry in China has been increasing in the past three years. The author believes that this round of regulation and control policies will accelerate this process. In the first half of this year, some economists predict that 50% of real estate will exist in the next five years. The company will be washed out. Pan Shiyi also revealed in his microblogging that many projects actively contact SOHO and are willing to sell it.
While large-scale real estate developers tend to adopt a coal mining model to purchase raw materials and have stronger bargaining power, they will significantly reduce the profit margin of paint suppliers.
4, security housing or will pull down the grade of paint products, and bring pressure to focus on the supply
During the 12th Five-Year Plan period, the construction of social housing will occupy a major position. In addition to some performance projects, the government will avoid the use of high-grade paint in the procurement, and try to buy inexpensive products, which will lower the overall architectural paint product quality.
In addition, the protection of the housing is a major political activity. Due to the pressure of performance evaluation, a large number of affordable housing projects may be concentrated at the end of the year, which may challenge the centralized supply of paint companies.
5. The real estate market accelerates its transition to low-tier cities, and the uncertainty of architectural coatings access
Judging from the current land market, real estate investment and construction data, first-tier cities and key second-tier cities tend to be saturated, land transactions have declined sharply, and investment has weakened. The state also clearly pointed out that China's housing bubble mainly exists in first-tier cities and some second-tier cities. The author believes that the real estate market will use this round of regulation and control policies to accelerate the transfer to the western region, to the third-tier cities, and to the county and township primary markets. The transparency of this part of the market industry is not high, the large-scale coating companies do not have enough coverage, and the regional protection is very strong (local small-scale paint manufacturers). There is an uncertain risk to the entry of coating companies.
New opportunities for architectural coatings companies
1. The area completed in 2012 will not decrease significantly
Despite strict real estate regulation and control, commercial housing investment and construction started to show a certain degree of decline, but due to the huge construction area to promote, it is expected that the area completed in 2012 will not be a significant decline. At the same time, the protection of the housing will be completed by 5 million sets next year, which will push up the area of ​​construction to a certain extent and give building paint companies some breathing space.
2. With the help of this round of macro-control, the paint usage rate or acceleration in exterior wall finishes
With the end of the era of huge profits in the real estate market, real estate developers may no longer be impetuous. Developers may be more focused on cost control. Compared with other alternative products (such as glass curtain walls, tiles, stone, etc.), paint has a more cost advantage. As a result, architectural coatings may accelerate the market occupation of stone and ceramic tiles, and the proportion of coatings used in exterior architectural coatings may accelerate.
At the same time, as a government-led project, the concept of eco-environmental protection is more easily promoted. In the past few years, many local governments have issued policies concerning the promotion of paints in exterior wall finishes. Therefore, it is believed that similar policies are more easily implemented in affordable housing.
Talking about this point, I would like to talk about one point: about competition between industries. The current architectural coatings companies are basically competing within the industry, but now the market cake is limited, and the market share of large architectural coatings companies is unlikely to increase dramatically in the short term. If the industry overcomes difficulties, competition among the industry may be a good choice. In developed countries such as Europe, America, and Japan, the proportion of paints in exterior wall finishes is as high as 80-90%. In China, this proportion is less than 50%. A large number of exterior wall finishes are tiled, stone, and high-grade commercial buildings. Large-scale use of glass curtain walls, which means that the market share of alternative industries is still very attractive. Industry alliances are particularly important in developing industry competition. Such industry alliances can be either tangible or intangible. In short, the architectural coatings industry, especially the giants, need to unite to promote the development of the entire industry policy, (Dow has issued a report on the life cycle of architectural coatings and ceramics, and the environmental protection of coatings determines the superiority of ceramic tiles), and the industry alliance needs to shape paint consumption. Culture, guide re-painting culture and so on. In short, it is time to take into account the competition among industries.
3, residential hardcover (a decoration in place) or will be effectively promoted
China began to propose the concept of housing industrialization since 2001, but it has always been difficult to implement housing industrialization. According to the Ruihe Decoration IPO prospectus, only 8% of hardcover sales in China are currently sold, while developed countries have almost reached 100%. (Excerpt from Ruihe Decoration IPO Prospectus)
The standardization of affordable housing is high, and almost all of them are fully-furnished rooms, which is conducive to the promotion and application of interior wall coatings for engineering, and to the engineering coating market.
4. Increased concentration of the real estate industry is conducive to the healthy development of the entire supply chain
The construction market in China has always been a mix of fish and dragons and is full of fake and shoddy products. The increase in the concentration of the real estate industry will allow small property developers to exit the market. Large-scale real estate developers are more responsible, preferring to adopt a collective model to manage their own suppliers, and pay more attention to the added value of the brand's effect on the real estate. Therefore, we believe that the increased concentration of the real estate industry will be conducive to the healthy development of the entire supply chain. Under this general trend, local/medium and small scale and counterfeit coatings will gradually exit the market, and large paint companies may benefit from the reshuffle of the real estate industry.
5. Complete coating companies with channel construction will benefit from the industry shift in the real estate market.
The transfer of the real estate market to the second-tier and third-tier cities and the central and western regions means that the tendency of real estate declining is gradually clear. Against this backdrop, large-scale architectural coatings companies such as Nippon, Dulux, etc., due to the relatively well-developed channel layout in advance, have a significant brand pull effect, and may seize opportunities in this industry shift.
The question is how to look at the strategy of the bottom line cities. Should the three or four-tier cities or even the township market be touched? How to touch? It is worth thinking about our employees. Sports brand giant Adidas is also pushing for a low-tier city strategy. I think if a family is willing to buy ADDIDAS, then they should have the ability to buy Nippon Dulux. Many companies have also realized the opportunities in the vast third-tier cities as well as the urban markets. Dulux continues to expand the scale of its boutiques in China. SKK also abandons the provincial exclusive distributor agency model and expands its dealer base. Of course, if we establish channels and maintain the market and brand image, we will not pay attention to the inherent brand image when implementing the low-tier cities strategy.
Winter in the housing market, the crisis has come
1, the real estate market is expected to be bad, the status of the industry may be shaken
The government is increasingly aware of the destructive nature of the transitional bubble in real estate that is detrimental to the country and the people's livelihood. It seems that it intends to abandon the pillar industry position in the real estate market. For a long time, with the capital chain, real estate companies have adopted the land finance and passed the banking system and kidnapped the entire country. Now, the government has realized the seriousness of the problem and tried to get rid of the financial constraints of the land.
Therefore, under this background, the real estate market is expected to turn bad in the short-to-medium term, and the confidence index of real estate entrepreneurs fell to 99.9 in the third quarter of 2011, far below the industry average of 129. It can be said that the real estate market has entered the winter and the future collapse is not impossible. The international mainstream view is basically also bearish on the Chinese real estate market
• Standard & Poor's first negative outlook on China's real estate industry rating (2011.6)
• Blackstone, the world's largest private equity firm, first divests China Real Estate (2011.9)
• Standard & Poor's issued a warning to the Chinese real estate market that the situation in the Chinese real estate market is not optimistic and that the liquidity pressure faced by real estate developers will increase in the next 6 to 12 months. (2011.9)
• The 2008 Nobel laureate Paul Krugman predicted that the real estate bubble and credit bubble in China are gradually eroding.
2. The developer bears trillions of debts and the industry chain risks expansion
Constrained by the proliferation of liquidity and inflationary pressures, the government shifted to implementing a robust fiscal and monetary policy after implementing the RMB 4 trillion stimulus plan. Banks began tightening silver, almost completely freezing developers. Recently, the news of the collapse of the private lending industry chain of Ordos real estate developers and the news of the running of the SMEs of small and medium-sized enterprises in Wenzhou has frequently revealed the seriousness of capital risks in the real estate industry.
With the advancement and deepening of regulation and control, the author believes that the real estate company's channels will continue to narrow and the cost will continue to climb. The asset-liability ratio of listed housing companies is particularly eye-catching and has become the sword of Damocles hung on top of real estate developers. As of October 30, of 108 listed companies in the real estate industry, 87 had debt ratios of more than 50%, accounting for 80.56% of the total. As of the end of the third quarter, 108 housing enterprises jointly shouldered nearly RMB 1 trillion (992.8 billion yuan) of debt, a 40% increase from the same period last year. The asset-liability ratio of the high-speed private-owned housing green city in the first half of 2011 was as high as 163%. In November, there were also bankruptcy rumours. Although its chairman later rumored, at the end of December 2011, he handed over the shares of his Shanghai king to SOHO China, stating his desire for money!
3. Increased concentration of the real estate industry and enhanced bargaining power
Due to the impact of funds, expectations, etc., small and medium-sized real estate developers may face a wash-up, and the market will be more focused on large-scale real estate companies. According to estimates from the China Real Estate Assessment Center, the concentration of the real estate industry in China has been increasing in the past three years. The author believes that this round of regulation and control policies will accelerate this process. In the first half of this year, some economists predict that 50% of real estate will exist in the next five years. The company will be washed out. Pan Shiyi also revealed in his microblogging that many projects actively contact SOHO and are willing to sell it.
While large-scale real estate developers tend to adopt a coal mining model to purchase raw materials and have stronger bargaining power, they will significantly reduce the profit margin of paint suppliers.
4, security housing or will pull down the grade of paint products, and bring pressure to focus on the supply
During the 12th Five-Year Plan period, the construction of social housing will occupy a major position. In addition to some performance projects, the government will avoid the use of high-grade paint in the procurement, and try to buy inexpensive products, which will lower the overall architectural paint product quality.
In addition, the protection of the housing is a major political activity. Due to the pressure of performance evaluation, a large number of affordable housing projects may be concentrated at the end of the year, which may challenge the centralized supply of paint companies.
5. The real estate market accelerates its transition to low-tier cities, and the uncertainty of architectural coatings access
Judging from the current land market, real estate investment and construction data, first-tier cities and key second-tier cities tend to be saturated, land transactions have declined sharply, and investment has weakened. The state also clearly pointed out that China's housing bubble mainly exists in first-tier cities and some second-tier cities. The author believes that the real estate market will use this round of regulation and control policies to accelerate the transfer to the western region, to the third-tier cities, and to the county and township primary markets. The transparency of this part of the market industry is not high, the large-scale coating companies do not have enough coverage, and the regional protection is very strong (local small-scale paint manufacturers). There is an uncertain risk to the entry of coating companies.
New opportunities for architectural coatings companies
1. The area completed in 2012 will not decrease significantly
Despite strict real estate regulation and control, commercial housing investment and construction started to show a certain degree of decline, but due to the huge construction area to promote, it is expected that the area completed in 2012 will not be a significant decline. At the same time, the protection of the housing will be completed by 5 million sets next year, which will push up the area of ​​construction to a certain extent and give building paint companies some breathing space.
2. With the help of this round of macro-control, the paint usage rate or acceleration in exterior wall finishes
With the end of the era of huge profits in the real estate market, real estate developers may no longer be impetuous. Developers may be more focused on cost control. Compared with other alternative products (such as glass curtain walls, tiles, stone, etc.), paint has a more cost advantage. As a result, architectural coatings may accelerate the market occupation of stone and ceramic tiles, and the proportion of coatings used in exterior architectural coatings may accelerate.
At the same time, as a government-led project, the concept of eco-environmental protection is more easily promoted. In the past few years, many local governments have issued policies concerning the promotion of paints in exterior wall finishes. Therefore, it is believed that similar policies are more easily implemented in affordable housing.
Talking about this point, I would like to talk about one point: about competition between industries. The current architectural coatings companies are basically competing within the industry, but now the market cake is limited, and the market share of large architectural coatings companies is unlikely to increase dramatically in the short term. If the industry overcomes difficulties, competition among the industry may be a good choice. In developed countries such as Europe, America, and Japan, the proportion of paints in exterior wall finishes is as high as 80-90%. In China, this proportion is less than 50%. A large number of exterior wall finishes are tiled, stone, and high-grade commercial buildings. Large-scale use of glass curtain walls, which means that the market share of alternative industries is still very attractive. Industry alliances are particularly important in developing industry competition. Such industry alliances can be either tangible or intangible. In short, the architectural coatings industry, especially the giants, need to unite to promote the development of the entire industry policy, (Dow has issued a report on the life cycle of architectural coatings and ceramics, and the environmental protection of coatings determines the superiority of ceramic tiles), and the industry alliance needs to shape paint consumption. Culture, guide re-painting culture and so on. In short, it is time to take into account the competition among industries.
3, residential hardcover (a decoration in place) or will be effectively promoted
China began to propose the concept of housing industrialization since 2001, but it has always been difficult to implement housing industrialization. According to the Ruihe Decoration IPO prospectus, only 8% of hardcover sales in China are currently sold, while developed countries have almost reached 100%. (Excerpt from Ruihe Decoration IPO Prospectus)
The standardization of affordable housing is high, and almost all of them are fully-furnished rooms, which is conducive to the promotion and application of interior wall coatings for engineering, and to the engineering coating market.
4. Increased concentration of the real estate industry is conducive to the healthy development of the entire supply chain
The construction market in China has always been a mix of fish and dragons and is full of fake and shoddy products. The increase in the concentration of the real estate industry will allow small property developers to exit the market. Large-scale real estate developers are more responsible, preferring to adopt a collective model to manage their own suppliers, and pay more attention to the added value of the brand's effect on the real estate. Therefore, we believe that the increased concentration of the real estate industry will be conducive to the healthy development of the entire supply chain. Under this general trend, local/medium and small scale and counterfeit coatings will gradually exit the market, and large paint companies may benefit from the reshuffle of the real estate industry.
5. Complete coating companies with channel construction will benefit from the industry shift in the real estate market.
The transfer of the real estate market to the second-tier and third-tier cities and the central and western regions means that the tendency of real estate declining is gradually clear. Against this backdrop, large-scale architectural coatings companies such as Nippon, Dulux, etc., due to the relatively well-developed channel layout in advance, have a significant brand pull effect, and may seize opportunities in this industry shift.
The question is how to look at the strategy of the bottom line cities. Should the three or four-tier cities or even the township market be touched? How to touch? It is worth thinking about our employees. Sports brand giant Adidas is also pushing for a low-tier city strategy. I think if a family is willing to buy ADDIDAS, then they should have the ability to buy Nippon Dulux. Many companies have also realized the opportunities in the vast third-tier cities as well as the urban markets. Dulux continues to expand the scale of its boutiques in China. SKK also abandons the provincial exclusive distributor agency model and expands its dealer base. Of course, if we establish channels and maintain the market and brand image, we will not pay attention to the inherent brand image when implementing the low-tier cities strategy.
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