Volume 9, Issue 5                     September/October  2005

GOING GLOBAL
What the International Film Market Can Teach Us
And Why It Matters

by Brigid O'Leary and Les Shaver

When you were a kid, did you think that monsters lived under the bed? Did you think the people who live in Australia walked upside down? Did you ever try to dig a hole to China? While we tend to outgrow certain perceptions of the world as we age, there are still certain stereotypes that we inevitably carry with us into adulthood. For example, how much do you know about the international film market? What assumptions do you have about what tinters around the world face? 

In every issue we here at Window Film magazine try to bring you stories about the use of window film around the world (see The Back Page/In the News, page 48), so you may already be aware that tinters in many countries are dealing with the legal ramifications of window film and laws that govern its use. 

Legislation
If nothing else, the one issue over which every tinter, shop owner, distributor and manufacturer around the world can empathize is the imposition of window film legislation. It is, of course, most worrisome to those who tint vehicles.

“The very real risk of having automotive window tinting wiped out with the stroke of a legislative pen falls on deaf ears and jeopardizes the livelihood of all tint businesses who do auto and who do it legally. The investment of thousands of dollars cold be at risk at any one time,” says Rob Tait, owner of Car Tint Pty. Ltd in Melbourne, Australia.

In some countries, such as Israel, Egypt and Saudi Arabia, automotive window film is already banned; and just how much tinting a vehicle can have varies by region and sometimes by country or state/province, as can be seen in the U.S. market (see Legislative Battles, Window Film May/June 2005, pages 22-25). 

“There are tinting regulations for the automotive market in Asia. Some countries also restrict front windshield tinting. There are reported cases of accident vehicles that are denied payment from insurers for non-compliance with the local tinting regulations,” says Poon Kiang Hau, general manager of Haeuei Enterprise, a distributor based in Singapore that serves the Asia-Pacific region. 

Though the legislation aspect of the industry affects distributors and manufacturers just a little differently than it does shop owners and tinters, everyone has much to lose when film is regulated. Poon also points out an aspect of car ownership that could have as much of a potentially adverse impact on the industry as the law alone: the reaction of insurance companies to window film. He’s not the only one to call attention to just how much power the insurance companies may wield, and as one tinter points out, the mere fact that some shops participate in illegal tinting could jeopardize the whole industry on the insurance end as well as the strictly legal end.

“In the auto market I feel with all this illegal tinting going on, it is really hurting the industry. I think that the insurance companies are going to start getting involved in banning window film on vehicles. Once that happens, it will be a losing game,” says Jeff Thompson, owner of a tinting company in Cedar Park, Texas.

Aftermarket Awareness
The first step in winning a legislative battle is to make sure that people know about window film and what it can do. One of the challenges facing the industry, no matter the country or region of the world, is awareness. To sell film, of course, consumers must be cognizant of the fact that the products exist and offer certain benefits (offer solar control capabilities, protection, decoration) and then they must be persuaded to buy it.

The responsibility for consumer awareness is a touchy subject, not to mention one that is dictated by factors that include government restrictions, market competition and environmental or social needs.

For some members of the window film community, the bans on automotive window film changes the landscape of consumers and potential business. Yochi Solna, product manager at Hanita Coatings, a manufacturer headquartered in Israel, notes that he does not feel his countrymen know as much about window film and its benefits as do American citizens, in part because the use of tint on vehicles is illegal.

“One prime market—automotive film—isn’t available to us. All automotive films are banned in Israel, though we are working with the authorities to change the situation. It’s a security issue, since the army and police are extremely nervous about unseen passengers,” says Solna.

Yet at the same time, he also feels that the Israeli people are more acutely aware of safety and security film and what it offers to building occupants, and for good reason, too.

“There is an awareness of the importance of security films, primarily because of their proven effectiveness in real-life situations,” he said in an interview with Window Film magazine. “Theoretically, Israel should be a fantastic market for window film, being an affluent country with year-round sunshine, intense heat and an abundance of security problems.

We’re certainly market leaders in our home territory.”

Real life practicality goes a long way in influencing the public. In Australia, solar protection is a must.
“We are well educated in respect to the [ultraviolet] protection but most customers in our market get auto tinting for the looks [first], UV and heat rejection. I would guess that about 20 percent of the cars on the roads are tinted,” says Ric Mitchell, owner and manager of the Tint Professor in Melbourne, Australia. 

“We spend about $120,000 per month on marketing, including TV, radio and shopping center promotions; the market down here is well aware of tinting,” he added.

Be it for protection from bomb blasts or UV rays, and regardless of use (in vehicles or on architectural glass), education of the masses is a key to consumer awareness for selling window film.

“Educational information about window film is widely available in the market. Many leading automotive and architectural magazines are available for less than $4 (US). The Asian market has enjoyed tremendous growth due to greater awareness of the benefits of window film. Retail customers are also beginning to examine product specifications before making decisions. The demand for architectural film is huge in most Asian countries. However, the more sophisticated products are more readily accepted in the automotive sector. Most cars in China, Taiwan, Malaysia, Thailand and South Korea are already tinted,” says Poon. “The automotive and architectural window film sectors have equally fair shares of the window film market in Asia-Pacific. The mainstream demand is driven by the need for solar protection. Lately, there has also been greater awareness for safety/security film. We do project high growth in the automotive sector in the future.”

Maybe the rest of the world is truly more knowledgeable about the benefits of window film, maybe it just seems that way, but at least one American member of the industry feels that the U.S. population is significantly lacking in consumer awareness about the product.

“Consumers know absolutely nothing about window film. My company and team work hard to educate them, but we can’t do it alone. Consumers need to be educated. It adds value to the industry as well as credibility to the companies that deserve it. Manufacturers will have to become more involved in this education process and in extending credibility to the deserving installation companies. Too often, they are only interested in moving the product … they don’t care how or to whom, just move it. If the industry is going to survive, the manufacturers will need to become selective in who they sell product to; require that they become knowledgeable, educated, trained and obtain proper credentials or possibly licensed,” says Thompson, who is actively involved with the international film industry by way of an informal networking group established five years ago by Tait, that includes members of the industry from Europe and South Africa as well.
Thompson touches on one aspect of the industry—and the issue of consumer awareness—that is hotly debated: who’s responsibility it is to educate consumers and how much of a role manufacturers should play in the process? 

Competition
However, consumer awareness is only part of the equation. Even—or especially—in regions and countries where window film is widely known and very popular, competition among tint shops plays a large roll in shaping the industry.

“All the major manufacturers are active in every geographical and product area that we sell in, so it’s a very competitive industry. We’re increasing our market share worldwide, primarily owing to the extremely high quality of our products, but also due to great work by our distributors, specifically thanks to HanitaTek, our marketing channel in the United States,” says Solna.

From a manufacturing and distributing standpoint, Solna is not alone in recognizing the industry as one that is highly competitive.

“We feel that the business climate is highly competitive. Contracts were offered in some countries for tinting new cars as low as $12 (US). In extreme cases, we do face competitors around the region who sell window films below the price they paid to the factory. We believe the profit margins to the United States and Europe are healthier than Asia-Pacific,” says Poon. “Private branding is very popular in Asia and some global brand names experience greater difficulties in Asia as compared to the United States and Europe. The situation is very unique to Asia. While dealers demand substantial marketing and technical support from Asian distributors, most are not prepared to conform to franchising or dealership agreements.”

Solna and Poon export 98 percent and 90 percent of their goods, respectively, with Solna’s sales going to Europe, North America and the Far East and Poon’s market being Asia-Pacific.

On the dealer level, though, competition is a much different ball game. Tait takes a very critical look at the industry and voices an opinion that has been expressed by tinters 10,161 miles (16,352 km) away.

“The trouble with this industry is that it is too easy to get into this business and any hacker with a few hundred bucks buys the same roll as I, where I can spend thousands of dollars a year. He starts up, cuts the throat out of the business, then is gone the next summer, leaving the legacy of a devastated business to resurrect and more than likely bad film debts,” he says. “Distributors would be far better advised really supporting those tinters who have proven to be well established, good paying, right for the industry people rather than those who promise all and deliver nothing. I’m utterly convinced that a lot of people who are in window tinting are not sales people, have very few people skills and wouldn’t know how to run a chicken raffle. They are order takers. Where are the incentives and goals targets to strive for that reward the business owner/tinter each year?”

Some would argue that merely making money should be incentive enough of a goal for a tint shop owner, and whether or not the manufacturers and distributors have a responsibility to the tint shop owners by way of support and incentives, one overarching issue that will have a long-term and far reaching effect on the industry is legislation of automotive window film.

Quality Work and Warranty Woes
If consumer awareness and legislation are two of the most unifying aspects of the industry, then competition is one of the most dividing issues. As part of that, there are different aspects with which window film companies—particularly installers—concern themselves. The first is a quality film application. 

“I think the Do-It-Yourself (DIY) auto film is going to create a huge liability. I walk into an auto parts store and everything from legal to illegal is available. Why offer illegal DIY film to the public? DIY is never a ‘professional looking’ install. Other consumers see it on the road and assume all window film does that, looks like that, etc.,” says Thompson.
Even without DIY factor, tint shops and installers still have to deal with fly-by-nights and other companies that are in the industry to make a quick buck.

To the chagrin of many, low cost films are becoming more prevalent, not less, according to Kent LeMonte, vice president of Enrpo Distributing in Houston.

“Mostly this has been in an area of automotive films and the effort has been primarily price-based rather than quality-based. I say this with obvious exceptions,” he says.

The market for cheap film exists all over the world and one that is not likely to go away.

“There is also a substantial demand for low-priced window films in some parts of the world,” says Poon. “These consumers are more interested in aesthetics and privacy. Very often, buyers from this category pay little attention to quality and performance.”

Just because a shop uses a low-price and low-quality film doesn’t mean it will do so forever, either.

“There will always be a market for low-price films, but we stay clear of that end of the business. I know of a few dealers who decided to switch, but they came back pretty quickly,” says Paul Panarisi, Madico’s window film product manager.

For those who value a quality film, rather than one that may have shrink, color or texture deficiencies, they can only watch the competition using the cheap films and clean up the mess when an unhappy customer needs the job fixed, sometimes to correct the application of film tinted beyond the legal limit.

“We’re seeing mobile detailers putting on film and they’re using the worst films available. They don’t have overhead. They’re working out of other people’s shops or they are working mobile or [at a] coin-operated car wash. People are coming in needing us to take the tint off because it won’t pass state inspection. [The tinters who did the work] their phone numbers change, they work by the seat of their pants and there’s no warranty,” says Mike Burke, owner of Lightning Mike’s in Charlotte, N.C.

Burke brings up another issue that has lots of teeth: warranty.

“The biggest issue to face our industry in recent times has been the sanctioning of manufacturers and distributors to endorse film with lifetime warranties. This is a massive problem world over and is more relevant to countries [such as] ours that have such severe climates with tons of heat and UV exposure pouring onto films. I feel it’s neither right nor ethical and the Pandora’s box has been opened, which is now difficult to close. The buying public thinks they are purchasing a film product that will last because of two little words—‘lifetime warranty.’ The reality is that all films, regardless of manufacturer, will collapse. Some sooner than later, some better than others, but it’s only a matter of time. The distributors know it; the shop owners know it; the tinters know it; everyone except those buying it,” says Tait, who bristles at the thought of using the ploy as a means of making a sale.

“It really goes against my ethics of what is merchantable quality and decency but that’s what happens when marketing men in white coats try to create a one-upmanship on their competition,” he continued. “The situation has gotten totally out of control nowadays and these words are uttered as flippant as water off a duck’s back. Discussions I have had with some [Australian] distributors of major brands want to be rid of it, but a Catch-22 situation occurs where there is not one company with the temerity to make the first move so we just keep digging a bigger hole for us all.”
Tait is of the opinion that automotive film should have a three-year warranty and architectural film no more than a five-year warranty.

“That covers film and labor at no cost to the client. If these [warranty limits] were in place, we wouldn’t see the ridiculous debacle of warranty lodgment we have today where distributors are none too happy about coughing up for tinters when things go wrong, especially in open ended, non-defined terms such as ‘life,’” he says.
He’s not the only person who feels that warranties may be out of control, at least in some parts of the world.

“We believe that warranties in the U.S. market have gone too far, and we will be seeing adjustments in the future. Interior installations to double- and triple-glazing with sophisticated coatings are increasing the risk of glass breakage and seal failure. This is where scratch-resistant exterior films come into their own, so we can give them up to a five-year warranty,” said Solna.

“All and all, even the so-called ‘best’ films made right here in the United States still fail in an unreasonable amount of time,” says Matt Greene, owner of Tint Connection Inc. in Fort Myers, Fla. “I’ve seen one-ply polyester films outlast high-performance metal-based films by ten years, so who is to say [which film is better]? I have a hard time believing that we put men on the moon 40 years ago but cannot manufacture a window tint that will last indefinitely.” 

International Networking
With warranty issues, competition, consumer awareness and legislation unifying members of the window film industry worldwide, it stands to reason that networking both on the national and international level is not only important, it’s good business. The industry has several outlets for such business opportunities, including the Association of Industrial Metallizers, Coaters and Laminators (AIMCAL) for manufacturers and the International Window Film Association (IWFA), as well as more localized associations such as the Australian Window Film Association (AWFA) for all members of the industry from manufacturers down the chain to the individual installers. The IWFA has many international members, including Haeuei and Hanita Coatings, which is also a member of AIMCAL. 

“I have known Rob [Tait] for about five years. He and I correspond with each other at least twice a week. Right now, I’m working on getting over there to spend some time with him. He and I have discussed each of us running the opposing company for a week to learn how we run our businesses. This would give us an opportunity to experience a new, fresh vision. As far as the rest of the international guys, we contact each other a couple times a month. Some of the group is U.S.-based and I am in contact with one on a weekly basis. It is very interesting how everyone does about the same thing, but we do things a little differently at the same time,” says Thompson. “The best part is finding out what the other markets are doing, what is popular, what are different ways to create new business, new techniques. Most importantly, hearing about new products that are out there [but] that are not available here. I do find it interesting that our group is able to keep each other informed of new products, their performance and the longevity of that product before it hits the U.S. market,” says Thompson. “On the dealer end, I don’t think the industry has a clue what is happening outside their back door. We spend all of our time generating business and little to no attention on the business industry. Technolo-gies are changing by the day. I think the U.S.-based companies have an attitude that they are better than the international market.” 

Know the Past, Know the Future
While it can be hard for some companies to see the forest for the trees, sometimes the international networking is most beneficial for the opportunity it allows members of the trade to compare views of the industry, both from the standpoint of how far it has come and where it is going in the future.

“There’s a big demand for solar control films that really tackle the problems of heat build-up and glare and, given the political reality here in Israel, safety and security films are also an important part of our domestic portfolio. Not surprisingly, combined solar/safety films are also popular. There has been a growing sophistication of products and market expectations. People demand the solar energy rejection of silver films, but want a low-reflectance level and high VLT, a more natural appearance. Luckily, we’ve been making the correct strategic decisions throughout the last decade, with new technologies and capabilities that provide answers. For example, who had heard of nanotechnology a decade ago?” said Solna. “We feel that we’ll be seeing a big growth in more sophisticated security solutions.”
For Poon, the future is sure to bring changes that are dependent not only on the environment (by way of existing petroleum supplies for the manufacturing of film as well as transportation costs) but also the all-important factor of consumer awareness.

“In the beginning, there was an influx of color-adhesive and PVC films into the market. There was a limited emphasis on product quality and many consumers experienced color fading or shrinkage of the window films installed. High-performance products, such as sputtered films, were once highly priced. Today, with the surge of emerging manufacturers, there is a greater selection and high performance films are more affordable,” says Poon. “For the premium products, we do notice some worrying signs. The polyester and adhesives used in window films are derivatives of petroleum. We expect rising oil prices to hurt the margins of manufacturers who might have to pass on the rising costs to distributors. However, distributors are struggling to slash prices to maintain market shares, resulting in a price drop for such product range.

“We forecast a long-term decline in prices of lower-end window films. Over the next five years, the new ethylene crackers in China are expected to grow about 20 percent annually, and it will create more polyester producers in the region. We are concerned that, when polyester film production exceeds demand, the price of this segment might hit new lows. We also foresee strong growth in the next three years from Singapore, the Philippines, Indonesia and India. There used to be a huge influx of darkly tinted conventional dye films in these markets, which were once perceived to give better protection from the sun. As the market matures, customers begin to demand aesthetic appearance and solar control solutions that are unmatched from sputtered film. Taiwan and Malaysia are very developed markets. Consumers are able to appreciate the exceptional performance offered by U.S. sputtered films. We are also experiencing an increasing demand for such high performance products in China, Thailand, South Korea and Singapore,” says Poon.
Of course—and as should be expected—there is a difference in how distributors and manufacturers perceive the same changes in the industry that dealers and installers do.

“The biggest changes I have witnessed as a tinting business owner with a commitment to film 100 percent of the time is the demise of the domestic tinting market since 1975 and yet, at the same time, the meteoric rise of the automotive sector. Commercial and security/safety [film] has remained fairly constant with decorative translucent really going ahead in leaps and bounds. The events of 9/11 have done little to rally the urgency for fitting security/safety because of this ridiculous attitude that ‘it won’t happen here and we don’t have the money anyway,’” said Tait.
And so rises the question: what, exactly, is the window film industry selling?

“One thing I have noticed, it seems that the industry is lowering their prices. It seems that people are selling our industry as a commodity instead of a service. How can you ‘Wal-Mart’ a service? Service pricing and value in all other service industry areas: automotive repair, landscaping, painting, maintenance, AC repair, siding, etc., is continually going up. There is a value to the service performed and pride in the work done. However, our industry is continually low-balling everything, undercutting one another and lacking in self-respect and professionalism. If our industry doesn’t show self-respect and explain the value in what we do and the knowledge that we have gathered over the years, how is the consumer to respect us and perceive value in what we do?” asks Thompson. WF

Brigid O’Leary is the editor of Window Film magazine. Les Shaver is a contributing editor to Window Film magazine.
All photos courtesy of Haeuei except those on page 33.

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