China’s Water Purifier Market Estimated to Exceed $4 billion in 2017
Penetration of Water Purifier: The Gap between China and Developed Markets
Water purification equipment has been in existing in China for many years, but the lack of industry standards and consumer awareness of drinking water safety makes its penetration rate much lower compared to Western countries. The total market size is also smaller than other kitchen appliances.
Sales Volume Increases Steadily – Mostly Online
In recent years, with the trend of consumer upgrades, the sales volume of water purifier has increased year by year. According to CMM (China Market Monitor), by 2015, China’s water purification market has expanded by more than 64%. In 2016, the total market size was $3.05 billion, an increase of 40.6%. And it’s estimated that in 2017 the sales would be up to $4.06 billion, an increase of 33.2% yoy.
At present, online has become a major purchasing channel for water purifiers. It is reported that in 2012 online only accounted for about 3.9% of the total sales, yet in 2016 the share has increased to 35% of the total market.
In the online channel, water purification system accounted for about 50.3% of total sales, followed by the filtering system at 43.2%, and then the pipeline machine at 1.4% as well as the direct drinking machine at 5.1%.
As to the offline channel, water purification accounted for 73.1%, the filtering system was about 13.7%, the pipeline machine 1.4% and the direct drinking machine is about 11.8%. In the recent two years, water purifiers with large water output, intelligence, & easy installation have become the mainstream.
Current Issues: Low Entry Barrier Drives Booming Number of Manufacturers
Number of water purifier manufacturers grow rapidly since 2000. In particular, 2013-2014 sees an explosive growth momentum. At present, China’s water purifier industry has grown to more than 3,000 manufacturers with hundreds of brands and models in the market and the annual growth rate still remains at 30%-40%.
According to industry sources, the entry barrier and capital investment requirement is relatively low, which attracts many start-ups. There is no sophisticated technology involved in manufacturing either, hence there exist many “mon-and pop” type of small manufacturers.
Inevitable Trend: Transformation and Upgrading
Lack of industry standards has become the main barrier to the further development of the market. While new national standards regarding air purification products have been published, there is still no unified test standards in the water purification industry to solve issues like false advertising and poor product quality.
Another main challenge is after-sales customer service. Many companies focus much on the products, yet less on customer service and drinking water safety, which hurts the credibility of the industry.
Since the beginning of 2017, factors like intensified market competition, rising raw material price, and strict supervision from the government have all been pushing hard on the transformation. The pursuit of the AI enabled, smart home also becomes the new trend in the water purification industry.
Opportunities: Ample Emerging Market Potential
Despite many challenges, the entire ecosystem of the water purification industry has become more mature since the beginning of this century. In recent years, the popularity of smart home also contributes to the growth of the industry.
It’s estimated by CMM that, by 2020, the water purifier market would be about $1.91 billion at 45% ASGR. Other sources like ABI seem relatively conservative, proposing a 20-30% ASGR in the future two to three years.
Generally speaking, the emerging market potential is still huge. On the one hand, the capacity of the market is far from saturation given the booming service market of over billions fueled by the needs for after-sales services and filter replacement. On the other hand, the consumption power of Chinese consumers keeps increasing. With consumption upgrade and rising public awareness of health and environment, the water purifier market will maintain substantial growth along with the market change.