Nippon Paint : Q&A Summary

About this update from Nippon Paint Holdings Co., Ltd.

A1 At NIPSEA China, our recent strategic initiatives have focused on four key areas: textured paint, community stores, Application Service Providers (ASPs), and our Direct2Front distribution model. Starting with community stores, we currently operate approximately 300 locations, compared with around 270,000 conventional retail outlets. Unlike traditional stores, which primarily function as product sales channels, community stores are designed to provide a more immersive customer experience. Customers can see, touch, and experience the actual finishes and textures before making a purchase, which has helped improve purchase confidence and post-purchase satisfaction. It is the ASPs that provide these experiential services at community stores, and we expect that the real-world experience offered through community stores will become a source of competitive advantage going forward, particularly in regional cities. Another important initiative is Direct2Front, our digital ordering and fulfillment platform. This allows customers to place orders online, with products shipped directly from our logistics centers to retail stores or construction sites. The model shortens delivery times, improves order accuracy, and enhances overall supply chain efficiency. Following its successful implementation in Shanghai, we are expanding Direct2Front to additional regions and expect it to contribute meaningfully to operating efficiency over time. Textured paint carries a higher unit price than conventional paint, but it provides a more cost-effective alternative to natural stone for decorative finishes, making it an attractive choice for customers. Looking ahead, we see two key growth drivers: textured paint as a product category, and community stores, supported by ASPs, as an experiential sales channel.

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