Brief Report on the Economic Operation of China's Coatings Industry in 2025

Ibuychem Research Institute

In 2025, despite the Chinese coatings industry making solid strides on the path of high-quality development, the output of coatings saw a slight decline due to the dual pressures of weak downstream demand and intensified internal competition within the industry. The annual output of coatings was approximately 36.5 million tons, a decrease of 1.0% compared to 2024.

Figure 1 China's coating production and year-on-year growth rate from 2021 to 2025

In terms of main business income, the revenue of China's coatings industry in 2025 is estimated to be approximately 427 billion yuan, a decrease of 1.2% compared to 2024 (Figure 2).

Figure 2: Main Business Income and Year-on-Year Growth Rate of China's Coating Industry

However, due to the high-quality development of the coatings industry, industry profits have seen a significant increase. In 2025, the total profits of China's coatings industry amounted to approximately 28 billion yuan, representing a year-on-year growth of 11.6% (Figure 3).

Figure 3 Total profit and year-on-year growth rate of China's coatings industry from 2021 to 2025

2 Brief overview of imports and exports in the coatings industry

2.1 Overall import and export data of the coatings industry (Tables 1 and 2)

Table 1 Coatings Export Data of Coatings in 2025

Table 2 Import Data of Coatings in 2025

2.2 Analysis of import and export data in the coatings industry

Facing the industry dilemma of sluggish domestic market demand, prominent supply-demand imbalance, and intense price competition, "going global" has shifted from being an optional path for enterprise development to a necessary path for survival and long-term growth. Against this backdrop, Chinese coatings enterprises have been actively expanding into the international market, adopting a dual-driven model that combines product exports and overseas factory establishment. They are proactively exploring overseas growth opportunities, resulting in a continuous increase in the scale of product exports. In 2025, China's coatings exports reached a record high of 407,700 tons, marking a significant growth of 21.8% compared to 2024 and a doubling growth of 107.3% compared to 2020.

3 Analysis of the Development Characteristics of China's Coatings Industry in 2025

2025 marks a pivotal year for the deep adjustment and structural transformation of China's coatings industry. Amidst multiple external pressures, including the sustained downturn in the real estate sector, tightening environmental policies, and fluctuating raw material costs, the industry has completely bid farewell to the development model of scale expansion. Overall, it presents a core business pattern characterized by a slight decline in volume and revenue, improved profits, optimized structure, and intensified differentiation. It is steadily moving towards a direction of high-quality, high-value-added, and green development. The logic of industrial competition has also shifted from traditional incremental competition to value competition.

Overall operation: The divergence between total volume contraction and profit growth has emerged, with quality and efficiency becoming the core guiding principles.

The core operational characteristics of China's coatings industry in 2025 are total volume contraction and profit growth against the trend, which intuitively reflects the strategic shift from "scale supremacy" to "quality and efficiency priority". Product structure optimization and breakthroughs in high value-added fields have become the core support for profit growth.

Both production and revenue declined: The total output of coatings nationwide reached 36.5 million tons, down 1.0% year on year; the main business income was 427 billion yuan, down 1.2% year on year. The contraction at the aggregate level was mainly dragged down by traditional downstream demand, marking the official end of the industry's expansion phase.

Significant profit growth was achieved: the total industry profit reached 28 billion yuan, representing a year-on-year increase of 11.6%. Despite the decline in both volume and revenue, the profit increase bucked the trend, thanks to enterprises' breakthroughs in high value-added niche areas, product premiums brought about by green transformation, and efficient resource allocation following the optimization of industrial structure.

Market demand: Structural differentiation is significant, with the existing market and high-end industrial demand serving as growth engines. In 2025, the market demand for the coatings industry exhibited distinct characteristics of differentiation, namely "pressure on traditional sectors, growth in emerging sectors, and strength in the existing market." The adjustment of the demand structure has become an important external factor driving industrial transformation, and it has also forced enterprises to restructure their product systems.

Traditional architectural coatings have been severely impacted, becoming the primary cause of overall contraction: directly dragged down by the downturn in the real estate industry, the sales area of commercial housing in 2025 decreased by 8.7% year-on-year, and the newly started construction area of houses even fell sharply by 20.4%, directly leading to a sharp decrease in orders for ordinary architectural coatings. Their production share fell below the 10 million ton mark, becoming the core factor in the industry's production decline.

The rise of the existing housing market has led to a counter-trend growth in functional architectural coatings: the shift from "incremental development" to "existing operation" in real estate has driven the existing housing renovation market to become a new engine in the architectural coatings sector. By 2025, the market size of existing housing renovation is expected to reach approximately 3.34 trillion yuan, with old house renovation accounting for 40% of the home decoration market. Among them, art coatings have achieved rapid growth with their personalized and high-end attributes, with a market size of approximately 11.5 billion yuan, a year-on-year increase of 15%, making them the core growth point in the architectural coatings sector.

The demand for industrial and functional coatings is on the rise, becoming the core driving force for industry growth: The demand in downstream high-end manufacturing sectors such as automotive, new energy, marine, and container manufacturing is growing, driving the proportion of industrial coatings production to continue to increase, and becoming the core engine supporting the development of the industry. By 2025, the production of automotive coatings is expected to reach 1.74 million tons, an increase of 10.1% year-on-year. At the same time, the growth rate of environmentally friendly industrial coatings such as high-solids coatings, water-based coatings, and powder coatings is accelerating. Segmented functional coatings such as electroless refrigeration coatings and anti-corrosion coatings have also become new profit growth points. Both foreign and local leading enterprises are increasing their investment in technological research and development to seize this high-end market.

Cost-profit: Multiple cost factors are intertwined, and the compression of gross profit margins intensifies the survival of the fittest in the industry

In 2025, the cost side of the coatings industry exhibited a dual characteristic of falling raw material prices and rising environmental and labor costs. Changes in the cost structure further compressed the industry's average gross margin, with profit differentiation becoming the norm and accelerating the industry's survival of the fittest.

The prices of core raw materials have fallen sharply: The prices of core raw materials for coatings such as hydrochloric acid, styrene, titanium dioxide, acrylic lotion, and TDI have all experienced varying degrees of decline, with the decrease being 17.6%, 18.9%, 10.3%, 19.1%, and 7.2% respectively. The decrease in raw material costs has provided a certain buffer for the improvement of corporate profits.

Rigid rise in environmental protection and labor costs: Tightening environmental protection policies are pushing enterprises to increase their investment in environmental protection, resulting in a significant increase in the investment in VOCs treatment equipment per enterprise. At the same time, labor costs in the industry have risen year-on-year, and the rigid increase in environmental protection and labor costs has become an important pressure on enterprise operations.

The gross profit margin of the industry continues to shrink, with significant differentiation in profits: Affected by changes in cost structure and market competition, the average gross profit margin of the industry has declined from 22% in 2018 to 13% in 2025. The significant compression of gross profit margin has raised higher requirements for the operational capabilities of enterprises. Some enterprises that rely excessively on traditional architectural coatings and lack technological and product advantages have suffered net losses, while enterprises that have invested in high-end and environmentally friendly fields have achieved profit growth through product premiums.

Enterprise competition: pattern reshaping and intensified differentiation, with the head effect continuously emerging. In 2025, the competitive landscape of the coatings industry will undergo profound reshaping. Under the combined effects of cost pressures, demand differentiation, and policy constraints, differentiation among enterprises will intensify, the head effect will continue to emerge, small and medium-sized enterprises will accelerate their liquidation, and different types of enterprises will form differentiated competitive strategies.

Local leading enterprises: Industrial chain integration + technological innovation, continuously enhancing profitability: Local leading enterprises continuously enhance their core competitiveness through industrial chain integration, technological innovation, and channel optimization, while accelerating their layout in high-end fields such as green coatings and intelligent coating.

Small and medium-sized enterprises (SMEs): Multiple pressures are stacking up, making survival difficult and accelerating the process of elimination: SMEs are facing multiple issues such as high costs, shrinking demand, and financing difficulties. Lacking technological research and development capabilities and brand advantages, they find it difficult to meet the demands of high-end markets. Under pressure in the industry transformation, they become the primary targets of industry elimination.

International giants: Focusing on high-end, high-margin segments, seizing core markets: Leveraging their technological advantages, international coatings giants are further focusing on high-end, high-margin segments such as automotive coatings and powder coatings, steering clear of price competition in the mid-to-low-end markets, and firmly establishing their presence in the core market of high-end industrial coatings.

Small and medium-sized local enterprises: trapped in a low-end price war, squeezing the space for the middle tier: Some local small and medium-sized enterprises lacking core competitiveness are caught in a price war in the low-end market to compete for the remaining market share. This not only further compresses the industry's gross profit margin but also continuously squeezes the survival space of the middle tier in the industry, driving the competitive landscape towards a "top-heavy" evolution.

Development Driven: Dual-driven by Greenization and Intelligentization, Empowering High-quality Industrial Development

Under the dual influences of industry transformation and policy guidance, greenization and intelligentization have become the core driving forces for the development of China's coatings industry in 2025. They are not only key means for enterprises to break through cost and market bottlenecks, but also the core path for the industry to achieve high-quality development.

The green transformation is accelerating comprehensively, becoming the mainstream trend in the industry: The continuous tightening of environmental protection policies is driving coating companies to comprehensively deploy green products. Among them, the proportion of water-based coatings has increased significantly, and environmentally friendly coatings such as high-solids, powder, and solvent-free coatings have become the focus of product research and development and market deployment for enterprises. The green transformation has also brought significant product premiums to enterprises, becoming an important support for profit growth.

Smart manufacturing empowers cost reduction and efficiency enhancement, thereby improving enterprise operational efficiency: Enterprises are accelerating the upgrade of smart manufacturing, and the widespread adoption of automated production equipment has effectively reduced production energy consumption. The establishment of a digital supply chain system has improved the inventory turnover rate of enterprises and alleviated financial pressure. Simultaneously, an increasing number of enterprises are transitioning towards an integrated model of "coatings + construction services", evolving from mere product suppliers to comprehensive service providers, thereby enhancing product added value and customer loyalty.

Globalization layout: Accelerating overseas expansion, with Southeast Asia and the Middle East becoming core regions

In 2025, the globalization layout of Chinese coatings enterprises began to bear fruit. Against the backdrop of intensified competition and shrinking total volume in the domestic market, overseas expansion has become an important choice for enterprises to expand their market space, with industrial coatings becoming the core support for export growth.

Enterprises primarily focus on Southeast Asia and the Middle East as key regions for their overseas expansion. Leveraging the overseas dividends from China's high-end manufacturing industry, as well as the advantages of local coatings enterprises in cost-effectiveness and technical adaptability, industrial coatings exports have achieved significant growth, becoming a new growth pole in the industry. Meanwhile, local leading enterprises have also gradually increased their international market share through overseas expansion, promoting the global development of China's coatings industry.

The profound adjustment of China's coatings industry in 2025 is essentially a fundamental change in the industry's development logic. From the perspective of short-term business status, the industry is in a transitional period of pain. However, in the long run, the direction of industrial development is clear, and it will continue to evolve towards high added value, low environmental load, strong service integration, and high concentration. The core trends are mainly reflected in four aspects: continuous optimization of industrial structure and further improvement of industry concentration: the industry will continue to promote the process of reducing overcapacity and optimizing structure. Small and medium-sized enterprises lacking core competitiveness will accelerate their elimination, while leading enterprises will dominate the market competition landscape by leveraging their advantages in technology, brand, channel, and industrial chain integration. The leading effect of the industry will continue to be prominent.

Environmental protection and high-end development have become irreversible trends, with significant growth potential in niche areas: environmental protection policies will continue to tighten, green coatings will become the mainstream products in the industry, and the market space for non-environmentally friendly coatings will be further compressed; meanwhile, the growth rate of high-end industrial coatings, functional architectural coatings, and other fields will continue to be higher than the industry average, becoming the core competitive areas for enterprises.

Collaborative development of the industrial chain and enhancement of overall efficiency: Upstream and downstream enterprises will strengthen in-depth cooperation, integrating various links such as raw material supply, manufacturing, and coating application, to form a more comprehensive industrial chain system. This will effectively reduce the overall cost of the industrial chain and enhance the operational efficiency and risk resistance capability of the entire industrial chain.

Digital transformation is being comprehensively deepened, empowering enterprises with full-process operations: smart factories and digital production will become the focus of enterprise upgrades, and the expansion of online channels will become an important means of enterprise marketing. Digital technology will comprehensively empower all aspects of coating enterprises, including production, research and development, marketing, and services, becoming a key support for enterprises to enhance their core competitiveness.