The Musashi Paint Group is implementing policies that focus on handling business risks in major markets and enhance business expansion in growing markets in order to achieve mid-to-long-term growth for its global business.
China is a major market that has been implementing stricter environment regulations for various industries. This has also affected the paint industry, including our Group companies, and ensuring compliance with those regulations has turned into a pressing issue.
In response, our company has come up with measures to avoid the risk of production suspension and bolster the development of environmentally friendly products by setting up a business in a safe location. Furthermore, Chongqing is a leading industrial cluster in China, and a wide variety of companies, such as automobile and IT, have businesses there, so establishing a business base in Chongqing also provides the Group with the opportunity to acquire new customers. (For more details on Chongqing, please refer to below.)
Many foreign manufacturers have set up a production base in Vietnam, or more specifically Hanoi, which is located in the growing market of Southeast Asia. The number of companies that have moved their production sites from China to Vietnam is also rapidly increasing. In addition to our existing factory in Ho Chi Minh, our Group has decided to launch a new production site in Hanoi. The new factory will help to meet the robust demand in the region, and similar to the new factory to be established in Chongqing, it will also focus on developing environment-friendly products. This will allow us to contribute to the protection of the environment in the region, as well as increase our Group’s brand power. (For more details on Hanoi, please refer to below.)
“Musashi Paint Group to Launch a New Factory in Chongqing, China”
The Musashi Paint Group has acquired 100% of the shares of Chongqing Alesco Kansai Paint Co., Ltd. located in Chongqing, China, on July 31. The Group changed the company’s name to Chongqing Musashi Paint Co., Ltd. and announced that it will launch a new factory that will commence operations in January 2021.
The last time our Group established a new production base in China was 16 years ago. Chongqing Musashi Paint Co., Ltd. has a site area of approximately 60,000 m2 and an annual production capacity of 10,000 tons, making this factory the largest out of the 11 production bases owned by the Group around the world.
*Purpose of launching a new factory
There are three main purposes for establishing a new production base this time.
The first is to ensure a stable supply system in all of China. In recent years, environment regulations are becoming stricter for various industries in China. This leads to a greater risk that our Group’s existing factories may receive a production suspension notice in order to curb air pollution, which will disrupt the stable supply of products. This new factory is located in a government-approved chemical industrial park, so it can serve as a backup site if production is suspended in existing factories due to air pollution.
The new factory not only meets environment regulations, but it also improves productivity through automation and reduction of manpower by conducting batch manufacturing of semi-processed resin paints, including water-based paints, that existing factories manufacture individually, and supplying those paints to each factory.
Secondly, by opening a factory in Chongqing city, which is a major manufacturing region in China, the Group hopes to establish a business base in the city in order to deal with customers swiftly. The Group does not have a business office in Chongqing, which is located in the southwest region of China, so customer enquiries have to be handled by the factories in Tianjin and Zhongshan. However, the establishment of this new factory will resolve that problem.
Our Group’s main customers are companies in the automobile industry, and Chongqing is one of the most important cities for that industry in China. In 2019, the city manufactured approximately 1.38 million cars, which is 9.8% of the manufacturing share by region. The country’s munitions industry and motorcycle industry were originally established in the city, and major automobile-related companies such as Changan Automobile, Changan Ford, and Beijing Hyundai eventually developed their businesses there as well. FAW and foreign automobile manufacturers such as Volkswagen and PSA Peugeot Citroën also entered the market in the neighboring Sichuan province, accelerating the growth of the automobile industry in the area.
In addition, Chonqing city also produced 40% of all laptops manufactured in the world in 2019, securing the number one spot for the sixth consecutive year. The production value of mobile phones also exceeded 100 billion yuan (approx. 1.5 trillion yen), with the city producing about 10% of all mobile phones manufactured in the world. Communication carriers, brands, OEMs, and related companies are integrated to create an industrial supply chain for smart devices. Printer manufacturers have also entered the market in Chongqing, so we need to provide a production and supply system in order to respond to requests from a wide variety of customers.
The third reason for launching a new factory in Chongqing is to enhance the functions of the Group’s products. Going forward, demand for products that take into account the environmental impact, in particular water-based paints, will increase in the Chinese market. To meet that demand, our Group will further bolster the development of water-based paints and various low VOC paints to improve our product performance and lineup. The new factory will be the central site that contributes to the increased production of environment-friendly products.
“Musashi Paint Group to Launch a Second Factory in the Bac Ninh Province of Hanoi in Northern Vietnam”
The Musashi Paint Group announced that it will build a new factory in Que Vo 2 Industrial Park located in the Bac Ninh Province as the Hanoi branch of Vietnam Musashi Paint Co., Ltd., which will commence operations in January 2021. This is the Group’s second production base in Vietnam, following the launch of its factory in Dong Nai Province, Ho Chi Minh City, in 2011.
The factory will have a site area of approximately 15,000 m2 and an annual production capacity of 1,700 tons. This is the first time that the Group is setting up two factories in the same country within the ASEAN region.
*Purpose of launching a new factory
There are three main purposes for establishing this new production base.
The first is the “China Plus One” strategy. Vietnam is connected to China in the north and the number of customers who have moved from China to Vietnam has increased in recent years. As China continues to implement strict environment regulations, more of our customers are entering neighboring countries and moving their production sites there, so we have decided to establish a base in northern Vietnam in order to handle such cases.
The second purpose is to enhance the existing service structure in Vietnam. In 2011, we launched our operations in Dong Nai Province, Ho Chi Minh City, which is located in the south of Vietnam, and we have increased the production amount by 2.5 times in the last five years. We have also received more orders from the northern part of the country in recent years, so we need to improve our production system and provide support to our customers from nearby.
The third reason is to acquire non-Japanese customers. Currently, 90% of our customers in Vietnam are Japanese companies, but we cannot expect high growth if we limit our business to Japanese companies. Our goal is to acquire big foreign companies as customers, such as Vietnamese conglomerate Vingroup, and Samsung Electronics and LG Electronics from South Korea.
Suppliers for Samsung Electronics are congregated in Yen Phong Industrial Park in the north of Vietnam; while the LG Group has invested over 220 billion yen in Hai Phong city, which is also located in the north, to boost the production of smartphones. Our new factory can access these industrial parks easily, and we aim to win new customers by stationing some of our employees from Korea Musashi Paint Co., Ltd. in Hanoi in order to handle Korean customers.
Musashi Paint Group:
Founded in 1958, the Group has a network of 14 companies in 10 countries and has established a system to develop and manufacture the same quality of paint all around the world. It specializes in plastic coating and provides a variety of products with unique characteristics to meet the demands of various industries, including automobile, mobile phone, household appliance, and computer.
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