Nippon Paint China to Raise Prices by Up to 5% Amid Rising Costs and Market Challenges

On February 11, Nippon Paint China, through its wholly-owned subsidiary Nippon Engineering Materials (Guangzhou) Co., Ltd., announced a price increase for its entire TUB product line, effective March 15, 2025. The increase will range from 1% to 5%, citing fluctuations in raw material prices, escalating transportation costs, and stricter environmental regulations as key factors.

Nippon Paint emphasized that this decision aims to ensure high-quality product delivery and service amidst a challenging global economic environment. They expressed gratitude for their partners' continued support and commitment to providing excellent products and professional services. The company looks forward to maintaining close collaboration in 2025 to tackle market challenges together.

Prior to this engineering price hike, Nippon Paint had already raised retail product prices. In a notice dated December 13, the company announced increases for interior latex paint products starting January 1, 2025, with some latex paint prices up by 1% to 3% and certain wood varnish products by 6% to 9%. The driving force behind these increases was the rise in costs for key materials like titanium dioxide, resin, and emulsion.

Since entering the Chinese market in 1992, Nippon Paint has expanded its operations across various segments, including architectural coatings, automotive paints, and industrial coatings. Currently, the company operates over 74 production bases in mainland China and employs more than 11,000 staff, boasting over 50,000 exclusive stores nationwide. Over the past 32 years, Nippon Paint has consistently ranked as the top seller in China’s paint industry.

According to their financial report, Nippon Paint China achieved a 2024 sales revenue of 545.2 billion yen (approximately 25.84 billion yuan), marking a 12.9% increase year-on-year. However, operating profit was 60.6 billion yen, up only 0.7%, with a profit margin of 12.5%, down 1.4 percentage points from the previous year due to rising raw material costs.

In the architectural coatings segment, Nippon Paint China realized sales of 459.7 billion yen (about 21.79 billion yuan) in 2024, representing a 12.6% year-on-year growth. The TUC business benefited from increased sales, especially in lower-tier cities, while TUB sales declined by 15% amid a sluggish real estate market. Overall, the growth in architectural coatings was driven primarily by retail business performance.

Looking ahead to 2025, Nippon Paint anticipates a 5% to 10% increase in overall sales revenue. The TUC business is expected to grow by approximately 10%, supported by channel and customer network expansions, especially in lower-tier cities. TUB revenue is projected to increase by about 5%, with contributions from infrastructure, public housing, and government projects.

The Chinese paint market has faced challenges recently, particularly in architectural coatings due to the downturn in the real estate sector and insufficient domestic demand. As the largest architectural coatings enterprise in China, Nippon Paint strives to balance increasing sales with improving profitability, now opting for price hikes to enhance its profit margins.

Analysts suggest that the decision to raise engineering product prices stems from ongoing pressures in the real estate market and rising material costs expected in 2025. This price adjustment could alleviate cost pressures and bolster the company's profitability.

Nippon Paint's strong positioning in cost competitiveness is attributed to its increasing scale, which enhances its bargaining power for key raw materials, as well as its well-established supply chain and advanced digital operations, enabling cost reduction and improved responsiveness.