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Domestic paint industry is facing an integration tide

Last year, I wrote an article titled "Clearly Recognize M&A Fever," hoping that domestic paint companies would take this trend seriously and find a development path that suits their own strengths. Unexpectedly, the M&A wave came faster than expected, especially with China Resources Coatings being acquired by Valspar in the U.S. This has once again shifted attention and thinking toward the future of coating companies. With global giants actively pursuing large-scale deals, every paint company must reflect on its own future: will it choose to grow through joint mergers and acquisitions, or wait for buyers to come knocking? The choice is crucial. Mergers and acquisitions are not the same as being acquired, but in many ways, they both lead to the same goal—growth and expansion. A clear example is China Resources and Mei Tushi. One was acquired, while the other became the acquirer. China Resources, at the peak of its business, was sold without much fanfare. Though some industry insiders were surprised, this move may have opened the door for a more powerful and rapid growth. In the future, China Resources could even surpass Nippon. If China Resources and Valspar invest 1 billion yuan in advertising, it's possible that China Resources could outperform Nippon through aggressive promotion. Of course, this is just a hypothesis based on our imagination. Whether or not advertising becomes a top priority for China Resources remains uncertain. More likely, China Resources will focus on improving its distribution efforts, aligning with its long-standing marketing strategies. It may enhance ground-level promotions and steadily increase sales of its decorative paints through major channels. At the same time, it could leverage Valspar’s capital and expertise in industrial coatings such as automotive and powder paints to rapidly boost overall sales and market presence. Under Valspar’s influence, China Resources might also expand quickly through capital operations and strategic acquisitions. Whether or not it remains a purely national brand, it will definitely perform better than it does now. Mei Tushi is another impressive company. In just ten years, it achieved over 300 million yuan in sales, a remarkable feat in the paint industry. What stands out is that Mei Tushi chose to grow organically rather than rely on external support. Initially, Aksu tried to acquire it, but Mei Tushi only agreed to sell 3A. It refused to be merged into one pot. Since last year, James Tu took bold steps by acquiring companies like Yangzhou Jinling, Beijing Sanqi, Zhejiang Haotai, and participated in Guangzhou Xiupan. It's now involved in environmental protection, coal, and other industries, doubling its strength. This requires not only financial power and management skills, but also courage and vision. Whether it's being acquired like China Resources or acquiring others like Mei Tushi, the key is to have unique strengths and excel in management and marketing. While Mei Tushi may not be as strong as China Resources, it's still among the top players in recent years. Especially in 2003, hiring senior professionals significantly boosted its brand awareness and influence. With solid sales and strong leadership from James Tu, Mei Tushi has the potential to attract other companies for acquisition. To follow in the footsteps of Mei Tushi, a company must first build internal capabilities and become strong. Opportunities won't wait. If a company lacks the ability to acquire others, it's hard to grow. It needs to stand out—whether through unique products, strong brands, wide distribution networks, or a listed shell. These factors can make a company a prime target during an M&A wave, allowing it to sell at a good price. Notably, distribution channels are among the most valuable assets. Brands like Garbo, Midea, Bauhinia, and channels such as Zhanchen, Changrunfa, Clivia, Xiupe, Zhujiang, Zhenbang, Starcoat, Oulong, Ivy, Haihong, Chenchen, Camel, Bardez, Mickey, Intertek, and regional channels like Acer, Three Gorges, Xiangjiang, and Lehua are becoming hot targets. Another example is Akzo Nobel's acquisition of Guangzhou Tuidede. After Tuidede reached around 100 million yuan in sales, Akzo Nobel kept the Boli brand and added its name to the trademark. They launched new packaging under the brand "Jie Jie Mei." Akzo Nobel saw value in Tuidede's strong engineering channel and its network of over 200 stores in South China. This shows that even when acquired by foreign investors, companies often retain their brands because they already have established networks and channels. These brand identities and cultures can be further expanded, using the investor’s influence to achieve greater success. With revenues below 300 million, coating companies are facing the inevitable trend of M&A. Whether to merge or be merged, how to implement your own strategy—now is the time to think clearly and act decisively.

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