Region/Countries: Asia, China Industry: Water / Clean Technology Date: April 2021

Why this is important to Wisconsin businesses: Concern is growing among Chinese consumers about safe and healthy drinking water, but penetration of these devices and systems is still low.

Concern is growing among consumers in China about safe and healthy drinking water. As water purifiers become more popular, penetration of these devices and systems is still low, and the market holds huge potential for companies that produce them.

From 2013 to 2018, the water purifier market in China showed a trend of constant growth. In 2018, China's water purifier retail sales reached $4.9 billion USD, with a year-over-year increase of 17.4%.The market size declined slightly in 2019 to $4.8 billion USD, then was severely shocked with the pandemic in 2020, with revenues of only $3.7 billion USD, but the market had already begun to grow again in the second half of 2020.

Market penetration is still below 10%, indicating that the market still has enormous growth potential—water purifiers are seen as a household necessity in high-income countries, and penetration generally exceeds 80%. For example, the water purifier penetration rate has reached 90% in the U.S., 90% across Europe, 80% in Japan and 95% in South Korea. According to analysis by All View Cloud (AVC), a big data technology and application service provider in the field of smart homes, from 2021 to 2023 the retail volume for clean water devices and systems is expected to grow by 14%, 11.1% and 8.8% in each successive year.

With China’s rapid industrial and agricultural development, water pollution has become a serious problem. An estimated 68% of the groundwater in China needs professional processing before use, and tap water is not safe due to rusting and aging pipes as well as reservoir pollution. As the Chinese government has implemented policies promoting awareness of water pollution, the Chinese population has started paying more attention water quality. According to the White Paper on China's Healthy Household Appliances in 2020, 92% of consumers pay special attention to health concerns when purchasing household appliances, and the top five categories of healthy household appliances with consumer awareness are air conditioners, refrigerators, washers and dryers for clothing, water purifiers and fresh air systems.

According to analysis by AVC, the low penetration rate of domestic water purifiers is inextricably linked to income. Only when income increases to a certain level will people move beyond the essentials and purchase appliances that improve health and quality of life. In recent years, China’s per capita disposable income has steadily increased, surpassing $5,000 USD in 2021—more than double the figure from a decade ago. In some first-tier cities like Shanghai, Beijing and Guangzhou, per capita disposable income has already exceeded $10,000 USD. The resulting boost in consumption is bound to drive demand for water purifiers. As demand rises and the devices become more popular, that popularity drives further growth as consumers see their friends and neighbors buying water purifiers and are influenced to do the same. If penetration rises to 25% of Chinese households, this will mean a market size of $15.4 billion USD—indicating the opportunities are significant, since penetration is likely to rise much higher in the long run.