JIAXING, Zhejiang: Dutch Akzo Nobel, the world's leading industrial coatings supplier, announced yesterday that it will invest about US$150 million in China in the next five years to produce more coatings for local markets.

"As a market with a huge population and so many construction projects under way, China provides great potential opportunity for our business," said Rudy van der Meer, a member of the board of management of Akzo Nobel.

He told China Daily that Akzo Nobel is negotiating with its Chinese partners in Langfang, North China's Hebei Province and Guangzhou in South China's Guangdong Province about new coating projects.

"We need more plants to produce more coatings for the China market," he said.

In the past five years, the Dutch company has put US$150 million into China to launch 18 projects, including three involving industrial coatings.

"But it is not enough," he said.

One of the company's new coatings plant - at a cost of US$10 million in its first phase - was put into operation during the weekend in Jiaxing, Zhejiang Province. It has a designed capability to turnout 50,000 tons of industrial coatings annually.

These coatings can be used for furniture, construction and plastic industries as well as electronic products.

A source with the newly-built Akzo Nobel Coatings (Jiaxing) Co Ltd in the Jiashan Economic Development Zone said that a large majority of coatings would be sold in East China.

"Our raw materials will be purchased globally and 30 per cent of the products will be exported to Southeast Asian countries," the source said.

Akzo Nobel set up a plant in Dongguan, Guangdong Province, last year to produce 40,000 tons of coatings annually. A plant in Tianjin started operation on July 13, this year which has a designed capacity of yielding 30,000 tons of coatings annually.

As its biggest project in China at present, the Jiaxing plant is expected to expand next year if demand continues growing, she said.

"Further investment to be injected into the plant depends on our sales. But the space for expansion is already available," said the source.

Van der Meer is confident of the market, saying that the current coating output from the three plants is unable to meet the growing demand.

Statistics show that at present, China consumes one litre of coatings per capita each year, a figure much smaller than the 15 to 20 litres per capita in Western Europe.

"If consumption is raised to five litres per capita, it will be an enormous figure for us," he said.

China is now the fifth largest market for Akzo Nobel, which is witnessing an increase of 10 per cent to 20 per cent in its sales of industrial coatings.

The growth rate is much higher than the 3 per cent to 4 per cent in the United States, he said, adding that "China is expected to become the company's largest coating market in the near future."

(China Daily 07/19/2004 page10)