Eastman Chemical plans expansion to ride boom in automobile industry

Eastman Chemical Co, the Tennessee-based specialty materials provider with nine factories in China, plans to further expand into the country's lower-tier markets.

It is planning fresh investments on new equipment and staff training over the next five years.

The company attributed its decision to China's ongoing consumption upgrade in the auto sector.

Many opportunities also come from China's status for the last nine years as the world's largest independent market for automobile aftermarket products, Eastman Chemical executives said.

Paint-protection film, or PPF, has emerged as a popular aftermarket product in the automotive sector in recent years as owners seek to protect the paint work on their vehicles.

China is the world's second-largest automobile market, trailing only the United States. Despite declining growth in the assembled car market, sales of high-end vehicles have continued to rise as Chinese consumers now expect more from their vehicles, said Zhao Zhiwei, commercial director for China of Eastman's Chemical Performance Film BU, a group firm.

Eastman offers a variety of film products for automotive and architectural installations designed for solar control, safety, and decorative applications. These come in a choice of colors, and have reflective capabilities and varying degrees of opaqueness. Eastman has been working with more than 2,000 certified dealers across China.

"After more than a decade of rapid development, the country's auto market has now gradually turned into a stock market of sorts," he said. "Car-owners nowadays have a far better understanding (of various automobile models, their features and technologies) and exercise better care than before."

Zhao said automobile buyers, be it first-timers or others, tend to preserve their vehicles' value with a view to command a decent sale price whenever they decide to resell. In this context, PPF is a quality solution for cars as it provides protection against scratches and corrosion, and enhances glossiness.

Shanghai-based Eastman China's launch of its latest product called V-Kool PPF was in Beijing in late February. The product distinguishes itself from others by using software for smart cutting. The software helps in automatic and efficient precision cutting of the film using industry tools. This has revolutionized the PPF segment.

Zhao said from a consumer perspective, greater income growth has enabled Eastman's Chinese customers to select from various paint protection products and services from global brands.

Eastman entered China in 1994 boosted by strong consumer spending on the Chinese automotive aftermarket services and the then emerging car culture in China.

Between 2015 and 2018, it gained handsome financial returns from PPF sales in the country. Domestically, its fast-growing markets currently are China's coastal provinces, including Guangdong, Fujian, Jiangsu, Zhejiang and Shandong provinces.

Supported by more than 50 manufacturing facilities across the world, Eastman produces a wide range of chemical products including new materials, fiber and gas treatment chemicals. It employs over 14,500 people globally and serves customers in more than 100 countries and regions. The company's sales revenue in 2018 was $10 billion.

Ye Shengji, deputy secretary-general of Beijing-based China Association of Automobile Manufacturers, said both China's new vehicle market and the used-car segment will see stable growth in the long term.

Though growth in China's auto market has been slowing, recent cuts in tariffs on imported vehicles and auto parts, and cuts in periodical repayment amounts of car loans would help the market to grow in the long run, he said.

"Young consumers in China no longer use a car for long years until it is beyond repair. Rather, they tend to change cars to keep pace with the evolution of automobile technologies. They want to experience the newest features as and when they are launched," he said.