Adhesion Matters - Adhesive Market in China

Episode Date: August 3, 2025

In this episode, we will look at the adhesive market in China and the role of distribution.  China's industrial adhesive market is a rapidly expanding sector, projected to reach USD 16.90 billion by 2028 with a CAGR of 6.45%. This growth is driven by key end-use industries like packaging, automotive (especially EVs), and construction, coupled with strong government emphasis on sustainability and advanced manufacturing.  Foreign players face increasing competition from rapidly innovating local Chinese manufacturers who offer competitive price-value propositions and leverage localized supply chains.  Sustained success for Western adhesive manufacturers hinges on continuous innovation, particularly in "green performance" adhesives, deep localization, proactive intellectual property protection, and cultivating strategic partnerships.

Think about all the things holding our modern world together often, you know, quite literally. Your phone, that new EV, even the box, your latest online order came in. It all relies on things sticking together. And while this multi-billion dollar industrial adhesives industry, well, usually goes unseen, it's absolutely foundational. Today we're taking a deep dive into this really dynamic and, frankly, rapidly expanding market, specifically in China. We'll unpack a pretty significant recent acquisition and explore the sophisticated strategies foreign players are using to next. navigate this crucial sector. Our mission today is basically to cut through the noise, give you a shortcut to understanding this vital, kind of underlying part of the global economy. We're drawing

on two key sources, a recent news announcement about a major acquisition and a comprehensive market analysis report. That's right. And this isn't just about, you know, simple glues, not at all. We're talking about a high stakes, high-tech chemical sector where precision and performance are, well, paramount. We'll explore the sheer scale of the market. the dominant technologies driving it forward, the elaborate strategies global players are deploying, and the fascinating evolving role of specialized distributors. And we'll do it all within the unique industrial landscape of China. Right. And just to give you an immediate sense of that scale, the overall China adhesives market is already estimated at a truly massive 13.16 billion

U.S. dollars in 2024. Wow. That figure is impressive, but what's maybe even more compelling is how rapidly this market is growing. Yeah. This isn't just big. It's a rapidly expanding universe. The overall China adhesis market is expected to soar to $16.9 billion U.S. dollars by 2028, showing strong growth with a compound annual growth rate, or C-A-G-R, of 6.45% from 2024. It's clear China isn't just a player.

It's, well, it's firmly positioned as a global leader in both adhesive consumption and production. Absolutely. And this isn't just some abstract growth number. It's profoundly rooted in the specific end-use industry's driving demand. For you, the key takeaway is probably where this demand is really coming from. Packaging adheses, for instance, they're projected to hit over $7.2 billion U.S. dollars by 2030. 7.2 billion. Yeah, with an 8.6% CAGR.

China already holds a significant 20.3% share of the global packaging adhesus market, partly fueled, as you might guess, by the relentless expansion of e-commerce. Sure, it makes sense. Then you have the automotive sector. That's expected to reach 737.40 million U.S. dollars by 2030. China account for a substantial 25.8% of the global automotive adhesives market. And this isn't just growth. It's a fundamental shift, right? With adhesives literally holding the future of light, late materials,

and the rapid growth of electric vehicle or EV production together. So crucial for EVs. Crucial and construction. That sector is absolutely booming. Driven by new homes and infrastructure, plus a growing demand for eco-friendly green buildings and those faster pre-fabricated construction methods, which are expected to account for 30% of new buildings by 2025. And beyond these big ones,

we're also seeing significant activity in electronics, new energy sectors like photovoltaic and wind power, and, you know, the ever-expanding 5G consumer electronics market. That's incredible coverage across so many key areas. So given this incredible growth, what specific adhesive technologies or types of resins are truly leading the charge in China right now. What makes them so dominant?

Well, what's fascinating here is the clear trend towards green solutions. Waterborne adheses, for example, already hold a dominant 40% market share in 2024. 40%. Wow. Yeah. And this is largely because they're eco-friendly and have low VOC content that's volatile organic compounds. Right. The emissions. Exactly. The chemical emissions that are a major environmental concern in traditional adhesives.

And this trend is strongest supported by China's 14th five-year requirements. plan, which, as you know, prioritizes environmental sustainability. We're also seeing robust growth in hot melt adhesives, especially as the fastest growing segment within the automotive sector. They're favored for their fast curing and strong bonds. Okay, so speed and strength for auto. Right. Now, when we look at the raw materials, the resin types, polyurethane adhesives are dominant, about a 26% market share. They're highly favored in sectors like footwear and automotive for their, well, superior adhesion and durability. Okay. But keep an on acrylic adhesives. They're the fastest growing segment, estimated around a 7% CAGR, driven by

their increasing use in packaging for durable bonds and even faster curing times. Interesting. Faster and faster. Exactly. What this really tells you is how China's explicit government initiative, like that 14th five-year plan, are just influencing but actively shaping the entire demand landscape. They're prioritizing environmental sustainability and rapid industrialization, which directly drives the need for high-performance, green adhesives, and, you know, significantly boosts sectors like EVs. That's a great point about the strategic national direction. It's not just market forces. It's policy actively driving demand here, isn't it?

And speaking of strategies, let's turn our attention to the major non-Chinese manufacturers. These companies aren't just looking to sell products. They seem to be making deep strategic investments directly in China. It's a clear commitment, absolutely. And it speaks volumes about where they see the future. We're seeing a definite trend. Global players are pouring billions into advanced R&D in specialized production in China, often transforming their global footprint in the process.

Take Dow Inc, for example. They've invested over $3 billion. Three billion. Yeah, making its Zongji a gang site its most extensive production base in greater China and a globally significant silicon manufacturing hub. They just completed a major silicone expansion this past March, specifically targeting high-growth areas like electronics, transportation, especially EVs, renewable energy, packaging, and construction.

So really covering those key growth sectors we talked about? Precisely. Then you have DuPont. They invested $30 million in a new Zeng Jagang facility that opened last September, specifically to manufacture adheses for transportation customers with a strong emphasis on light weighting and EV applications. Again, EVs and light weighting. That's recurring theme.

Elkham ASA has continuously invested in its shank. Shanghai operations since way back in 1997, including a large R&D center and the acquisition of polysill in 2020. They're making a big bet on the EV sector, launching new capacity for advanced electronics adheses in Shanghai last October, and a special Delta 2 workshop for EV-specific silicones. Their aim. To be the largest silicones producer in China. It's a smart move, especially when you consider the EVs use four times more silicones than

traditional cars. Four times. Wow, okay. Then there's Henkel AG and Co, K-G-G-A. They're the global number one in adhesives, right? Right. They broke ground on a new 120 million euro Kunpeng smart factory in Yantai. It's designed for high-quality, sustainable adhesive products for electronics, automotive, medical, and aerospace.

And get this. They're aiming for climate-positive manufacturing by 2030. Climate-positive, so beyond neutral. Exactly. Striving to actually remove more greenhouse gases than they emit. Pretty ambitious. Huntsman Corporation, a market leader in polyurethains in China for over 25 years. operates one of its three major global polyurethane manufacturing facilities there,

and they have these systems houses nearby. What are those exactly? They're essentially specialized local facilities that allow them to custom blend and tailor adhesive solutions right there for customers. Huge flexibility, great for high-performance bonding in automotive, aerospace, and electronics. Lastly, Tremco CPG Inc., while not manufacturing directly in mainland China, serves the market through regional supply from their largest Asia-Pacific plant in Malaysia, which opened last July, specializing in sealants and adhesives for industrial construction,

particularly modular and OEM applications. That's a staggering amount of investment and focus across the board. It really highlights why these global players are making such strategic bets in China. For you, the listener, I think the key takeaway here is that these global giants are clearly converging on the high-value high-tech segments. This not only shows where the most profitable growth opportunities probably lie, but it also indicates a significant maturation of the Chinese. market, right? Towards demanding more sophisticated performance-driven solutions. Definitely a

maturing market. But of course, manufacturing is only half the battle, getting these advanced materials to customers efficiently. Well, that brings us to another critical player in this ecosystem. That's right. We really need to talk about the crucial role of specialized distributors. Let's take a closer look at Bodo-Muller-Chimi. Okay. Bodo-Muller-Chimi has a very focused presence in China. They've got branches in Shanghai established back in 2015, and ISO-9,001 certified, and Hong Kong, established in 2017. Importantly, both operate their own warehouses. That's a key advantage for logistics in such a vast market.

Having their own infrastructure there. Exactly. Their primary focus in China is adhesives, and they're viewed as much more than just a distributor. They're really seen as a solution provider and a competent center. And the big news here, this is fresh from the source, is that Bodo-Miller-Kimi entered exclusive talks for the acquisition of Rockton's distribution activities back in November 2024. And that acquisition was successfully completed on July 22, 2025, so very recently. Okay, so that deal is done. And for those unfamiliar, who was Rockton?

Right, Rockton. Founded way back in 1990, they were a longstanding Henkel distribution partner headquartered right there in China. But they also had locations across Asia, Hong Kong, Vietnam, Singapore, and even in Canada. This wasn't just a small outfit. They brought over 130 employees to the table, including 26 technical service engineers and 50 sales specialists. Significant expertise, then. Absolutely. And they had a firmly established infrastructure, offices, warehouses, and laboratories in 11 locations across China, distributing major Henkel product brands like Lacteat, Technomelty, Tereson,

and Bondurite, names many will recognize. Yeah, familiar brands. So what's the strategic significance of this deal for Vodomelichemy? Well, this acquisition is truly pivotal. It positions Bodo-Muller-Cemmy as Henkel's leading distributor in Asia, consolidating its market position, particularly in the electronics adhesive space. Frank Haug, the CEO of Boto-Muller-Cemey group, he called it a pivotal step. And Lion LeBruly, President APEC, highlighted the synergy, you know,

combining Boto-Muller-Chemey's global experience with Rockton's deep local market knowledge. Global reach meets local expertise. Exactly. And Kevin Pang, the managing director for Greater China, affirmed it, creates a high performance platform for Asian clients. And what are the financial implications? What kind of scale are we talking about for this combined entity? Well, the combined entity is projected to have revenues exceeding 100 million U.S. dollars. Over 100 million. Okay. And the Bodomiller Chemi Group's APAC regional loan is now expected to achieve a turnover of around 120 million euros

with over 200 employees there. So a significant boost to their Asian presence. Definitely. And for For customers, this means Rockton's former clients now gain access to a global network, and importantly, significantly enhanced technical support. This comes partly through Bodomelmer Kemi's newly inaugurated laboratory facilities in Shanghai, which offer state-of-the-art testing and formulation services. Access to better labs and testing, that's a clear benefit. It really sounds like a game changer for distribution in that region. So stepping back a bit, why are these specialized distributors like Bodo-Muller-Kami so

critical for foreign manufacturers operating in a market as vast and complex as China. You know, their role has become just indispensable. They offer invaluable market access and reach that manufacturers would frankly struggle to replicate on their own. They manage incredibly complex logistics and warehousing, often, as we said, with their own facilities, which reduces the burden on foreign firms. Bakes that headache away. Right. Crucially, they provide that on-the-ground technical support and customization for unique local needs. And they're vital for navigating China's complex and, let's face it, constantly evolving regulatory environment, especially around environmental standards. But their role is truly

evolving beyond just logistics. They're becoming your strategic partners. They now offer value-added services like mixing, blending, formulating, even recycling, and R&D support, transforming it to comprehensive solution providers that are almost an extension of the manufacturer's own R&D and sales efforts. So much more than just moving boxes. Okay, this market sounds like a gold rush in many ways, but, you know, every market has its pitfalls. For foreign companies, what are the biggest hurdles they face trying to crack China's industrial adhesive market? Especially when you consider things like intellectual property or local competition. That's an excellent question. You've definitely hit on some key points there. Foreign manufacturers face intense competition, really intense,

from rapidly emerging and innovating Chinese manufacturers who are increasingly moving up the value chain. A notable example is Huishin new material. They've reportedly developed high-performance raw materials at half the cost to foreign competitors. Half the cost. That's the claim. Now, this raises an important question, right? Does that necessarily mean their quality is on par with the global leaders? Or is there still maybe a gap in performance for those really high-end applications?

That's a dynamic we're watching. It's space to watch, yeah. Definitely. The industry also faces significant cost pressures from fluctuating raw material prices and, of course, the substantial R&D investments needed for these high-performance products. And yes, to your point, intellectual property, erosion, and theft remain a persistent concern for foreign players. Always a factor there. And what about the supply chain?

That can be a real headache in such a large and complex market, can it? Oh, absolutely. Supply chain vulnerabilities are definitely a challenge. You've got geopolitical tensions, trade restrictions, raw material price fluctuations, and a reliance on imports for certain specialized products. These all play a role. Chinese companies often benefit from significant cost advantages because of their deeply localized supply chains. Hard to compete with that on price alone. Very hard.

It means foreign companies really need a stronger value proposition than just cost. Performance, service, innovation. Those become key differentiators. Right. But despite these hurdles, I mean, China clearly remains a massive opportunity, wouldn't you say? Oh, absolutely. The opportunities are still immense. China is the world's fastest growing market for goods and services and the largest chemical market globally. That offers immense potential, especially for premium products.

There's a strong and growing demand for high performance and specialty adhesives driven by China's ongoing economic development, particularly in those advanced manufacturing sectors like EVs, electronics, and prefabrications. construction we discussed. The growth areas. Exactly. And China's strong emphasis on green development and increasing demand for low VOC products also create significant opportunities for foreign companies that already have strong sustainable adhesive technologies. Now, sustainability is an opening. A big one. Strategic partnerships, including joint ventures and acquisitions like the Bodo-Muller Kimmy-Rockton deal we just talked about, are crucial for gaining local expertise in accessing established networks. And finally, China really acts as a global test.

bed for innovation. Success here often strengthens companies for other global markets. Learnings from China can be applied elsewhere. A testing ground. Interesting. Okay, we've covered a tremendous amount in this deep dive. The explosive growth of China's industrial adhesive market, the strategic multi-billion dollar investments of global manufacturing giants, the indispensable and clearly evolving role of specialized distributors like Bodo Miller, Chemi, and this intricate web of challenges and opportunities for foreign players? Yeah, if we zoom out to the big picture, I think for non-Chinese companies,

sustained success in China isn't just about selling products anymore. It really isn't. It demands continuous innovation, especially in high performance and sustainable adhesives. Deep localization of R&D and supply chains is key. Smart market segmentation, strong distribution partnerships, and, you know, unwavering agility to adapt to this incredibly dynamic and competitive environment.

China isn't merely a market to conquer. It's become a critical arena, where global chemical companies are tested, shaped, and frankly, where future strategies are forged. So for you, our listener, here's something to think about, maybe a provocative thought to leave you with. Considering China's strategic push towards advanced, sustainable manufacturing and its role as a global innovation test bed, how might the rapid evolution of industrial adhesives in this market hint at the materials and processes that will define the next generation of products across all industries worldwide? We invite you to think about how these seemingly niche chemical advancements could ripple through our entire industrial future.