The scale of water purification market reaches tens of billions, and vicious competition accelerates the reshuffle

As more and more households use water purifiers, there is a fierce competition between established water purification companies and new entrants. When will the competition be decided? Liang Hui, vice chairman of Beijing OriginWater Purification Technology Co., Ltd., expressed his views on this.

With the increase of income level and the upgrading of consumption awareness, people's health needs are getting stronger and stronger. On the other hand, the water quality problem in my country is increasingly valued. Under this circumstance, the water purification industry has developed rapidly and has received everyone's attention. Whether from the perspective of industrial sewage treatment or household water purifiers and other sub-sectors, the market scale of the water purification industry has been formed.

"Five years ago, this market was probably worth 10 billion yuan. Last year, it was around 50 billion yuan. I think in the next three to five years, this market will reach 100 billion yuan." On September 26, at the naming and signing ceremony of the Beijing-Guangzhou and Beijing-Shanghai high-speed railways of OriginWater, Liang Hui, vice chairman of Beijing OriginWater Water Purification Technology Co., Ltd., told a reporter from the "Daily Economic News".

Fierce competition in the industry accelerates reshuffle

Liang Hui believes that there is no doubt that people inside and outside the industry are generally optimistic about the development of the water purification industry, because this industry is related to the health of residents' drinking water, and the health industry has always been a sunrise industry.

The CITIC Consulting Industry Research Center pointed out that the five-year compound growth rate of the industry's market size will not be lower than 30%; and according to the forecast of the China Business Industry Research Institute, by 2020, the penetration rate of China's water purifier market in urban households will reach 35%, corresponding to a stock of about 94 million units, and the household water purification market capacity will reach 128 billion yuan.

On the one hand, the industry is developing rapidly, but on the other hand, there are many problems in the water purification market. Liang Hui said that the industry still has the same problems as in the past decade: lack of unified standards, lack of unified understanding among consumers, products produced by companies competing with each other are often not necessarily what consumers need, and vicious market competition is fierce.

According to the survey data of China Business Information Network, as of 2015, there were more than 4,000 domestic water purifier brands, but only about 1,200 water purifier companies had relevant approval documents from the National Health and Family Planning Commission. Some small companies have incomplete qualifications, no guarantee of after-sales service, and serious technical plagiarism, resulting in uneven prices and quality of water purifiers on the market. In recent years, with the introduction and improvement of national policies, such as the "Water Efficiency Leader Action Implementation Plan" and "Reverse Osmosis Water Purifier Water Efficiency Limit Value and Water Efficiency Grade" and other documents have been issued one after another, which have played a certain role in rectifying the chaos in the water purification industry, and the industry has entered a reshuffle stage.

"I think we are in the process of a reshuffle now. The stage of total chaos has passed. Many big brands have gradually reshuffled the industry. OriginWater is also making some moves in the industry through various means such as mergers and acquisitions, but the result of the reshuffle will have to wait for the next two to three years to be known," Liang Hui told reporters.

Companies below the echelon seize the market

Combined with the layout and emphasis on the environmental protection industry in the "13th Five-Year Plan", the development of the water purification industry will usher in a golden period. In addition, with the penetration of consumption upgrades, the water purification market is also becoming the main battlefield for major companies to compete. Guotai Junan Securities believes that three major camps have been formed in the industry, namely, the first camp headed by AO Smith, Midea, Qinyuan, etc.; the second camp headed by Haoze, Bishuiyuan, Joyoung, etc.; and the third camp headed by Gree, TCL, etc.

Liang Hui also admitted that OriginWater is at the forefront of the second echelon. In a market of 100 billion, there will definitely be companies with a market share of more than 20% and a scale of 20 billion that stand out. Although OriginWater cannot enter the first echelon at present, it will work hard to strive for it.

The reporter of Daily Economic News noticed that in the development and reshuffle of the water purification industry, major enterprises have seized market share from multiple aspects such as products, brands, channels, and prices. As early as 2014, Kaineng Environmental Protection actively promoted its channel construction, expanded channels such as overseas market sales and network sales, and increased market promotion efforts. The naming of OriginWater for the high-speed rail is also an active way to expand channels and build brand advantages.

As a major brand of integrated home appliances, Midea has rich channel resources and has more advantages in the household water purifier market segment. Its long-term cooperation with supermarkets and hypermarkets gives it a great advantage in after-sales service. As a household water purifier is an electrical product that requires professional participation in installation, maintenance and replacement, its after-sales service channel is particularly important.

"But big brands may not be good at every aspect. For example, Midea is good at small household appliances. Sometimes there are more opportunities in professional consumer fields, and professional companies are more recognized," Liang Hui analyzed.

In addition, the industry's barriers and core are still in technology. Liang Hui took Gree air conditioners as an example. Air conditioning cooling and heating have little to do with the properties of home appliances, but are more related to core technologies. Patent applications can reflect the status of technological innovation. The "Comparative Analysis of the Patent Status of Water Dispensers and Water Purifiers in my country" released by Ping An Securities Research Institute shows that Midea, Gree, and Qinyuan's water purifier-related patent applications are all around 70.

Ping An Securities pointed out that both the old water purification companies that have been deeply involved in the industry for many years and the traditional home appliance companies that have just started to get involved in the water purification field in recent years are relying on their own backgrounds and advantages to operate independently. The competition is fierce and the industry has not yet formed a stable competitive landscape. The reshuffle of the water purification market is ongoing. As for the result of the reshuffle, perhaps as Liang Hui said, it will be clear in the next two to three years.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.