2015 was a critical year for the implementation of the Air Pollution Prevention and Control Action Plan in China. Significant policy advances were seen in many areas that year, especially in the comprehensive control of volatile organic compounds (VOCs).
Figure 1: China VOC Control Policy System
These policies mainly affect the operations of companies in the chemical, packaging, printing, and coatings industries. These VOC control policies are pushing companies to adopt and industrialize new technologies, including high-solid, solvent-less and waterborne technologies at an unprecedented speed.
SAI has carried out a comprehensive review of recent VOC regulations and assessed how these policy changes may affect business in the mentioned industries. During this research, it was discovered that although the general trend of VOC control is very clear, there are still a few complications that businesses need to consider when looking at VOC-related policies:
- VOC control policies in China form a comprehensive system. Emission standards alone have three levels: national level, regional level, and sector level. A company’s VOC emissions must comply with standards of all three levels.
- Emission limits vary between regions, and the actual execution and enforcement of these limits also varies. For example, cities such as Beijing execute the VOC emission standards more strictly, this significantly affects the demand there for waterborne coatings, inks, adhesives etc.
- The general trend is towards waterborne technology, however, the actual change may not be as substantial as some of the downstream players claim it will be. One of the barriers against converting to waterborne technology is the cost of changing the application system. Another common concern of downstream players is that waterborne technology does not perform as well as the traditional solvent borne technology.
- Take coating as an example, MNC players have the technical advantage of being able to provide efficient waterborne products. Promoted by the recent policies, SAI has observed an increasing number of local Chinese players providing waterborne coatings in their top-tier portfolios.
- Other policies, such as the new automotive insurance policy in China, coupled with VOC control standards, will also influence the decisions of downstream customers in terms of MNC vs. local products, and high-end vs. mid-range or low-end products.
SAI is well positioned to support our clients in navigating these complications owing to its comprehensive understanding of policies and local markets. SAI conducts authentic primary interviews with players along the value chain to provide fact-based insights that help clients formulate effective marketing, sales, and completion strategies.
SAI has developed a complimentary executive briefing on China VOC control policies. For a copy of this document or to discuss cooperation opportunities, please contact Greg Downes at gdownes@saiasia.com or call +65 6550 9827.