5.

China Water Purifier Production

The production levels of water purifiers have been 1.5- 3% above the sales. The water purifier production has grown with the CAGR of around 33.77 % from 14.39 Million units in 2008 to 46.08 Million units in 2012. In 2012, nearly 71.85 % of the manufactured water purifier was sold domestically. Figure 17: China
Water Purifier Production By Volume, 2008-2012 (Million Units) `

The domestic consumption is anticipated to increase because of several factors such increasing consumer awareness, reducing water purifier prices, availability of variety of products, governments inability to provide fresh water, etc. However, the exports are anticipated to decrease because of the developing inhouse manufacturing capacities in countries like India and Bangladesh. It is anticipated as consequences of decreasing exports, the manufacturing of Chinese water purifiers would decrease in coming years. The water purifier production is expected to grow at a CAGR of around 25.82 % to reach up to 180.4 Million units by 2018. From the total production nearly 87.78 % would be sold domestically and the rest is anticipated to account for exports
Source: TechSci Research

4.2.2 By Segment The water purifiers are currently brought by the middle class and rich population segment of the society in China. They are generally considered quality conscious than price conscious due to which RO purifiers have been their choice. The UV water purifiers were dominating the market before 2006; however, things have changed drastically over the past few years. The RObased water purifier accounted for 45% market share in 2012, compared to the 36% of UV based water purifiers. Figure 14: China Water Purifier Market
Share By Value By Segment, 2012
Source: TechSci Research

Over 2013-18, the RO purifier market is expected to witness tremendous growth with its share increasing to 49% in 2018. On the other hand, the market share of UV based purifiers is expected to decline continuously, reaching 28% in 2018. The offline purifiers doesn`t need electricity which makes them maintenance free due to which the share of offline based water purifier will be affected much, and an growth is highly anticipated and is forecasted to hold a market share of around 23% by 2018.

4.2.3 By Sales Channel

The primary channel for water purifier sales in Chinese market is through retail shops. When asked from where the respondents buy their water purifiers, nearly 58% of the respondents voted for reseller in the market. This is largely due to the significant share of small size playersOn the other hand, various sales strategies from large players such as 3M, A.O. Smith, Mitsubishi and Media were reflected in 28% votes, who buy their purifier by directly approaching the company. Direct sales include door to door sales, company stores, company websites etc. The online buying is still an emerging trend in China, only 8% sales were recorded through online purchase. Others include multiband retail & direct sales by distributors which has contributed 6% by 2012. In China the consumers are very much governed by the word of mouth therefore, for selling any product in the Chinese market a consultancy based approach is what is best suited. Hence, where more than 58% of the water purifiers are sold through resellers, it is highly imperative that a company keeps its channel partners happy and loaded with offers and promotions. In the past, it has been observed that some of the companies tried to sell their water purifiers without resellers in the Chinese market but were eventually thrown out of the market as they couldnot sell their products and were forced to turn towards the resellers. It is strongly recommended to build a strong and healthy network of channel partners for succeeding in the Chinese market

4.1.3 By Segment The water purifier sales in China have been generated majorly from metro cities because of the educated & health conscious consumer compared to rural areas. The consumers from metro cities have the capacity to afford RO based water purifiers which have more purifying capabilitiesIncreasing urbanization had increased the sales of RO based water purifier from USD 0.75 Billion in 2008 to USD 2.42 Billion in 2012. The UV is a legacy technology due to which the sales of UV based purifier have not increased with the constant pace as of RO based water purifiers. However, UV based purifier have demonstrated as preferred choice of middle class consumers due to less price and medium purifying capabilities which has permitted sales to reach USD 1.96 Billion in

2012. The Offline purifies were at their initial stages of life cycle but low pricing has made them preferred choice of rural consumers which has allowed the sales to reach USD 1.01 Billion in 2012. Increasing GDP is also changing the market dynamics, as GDP increases the spending power of consumers would increase, which will boost the sales of RO based water purifier. The consumers who prefer UV based purifier today would switch to RO based purifier where as consumers who prefer Offline would switch to UV based purifier. The rural consumers are expected to start using offline purifiers. In 2018, sales of RO based water purifiers are expected to witness highest growth with CAGR of nearly 23.87% to reach around USD 9.1 Billion mainly on the account of their purifying capabilities and popularity among consumers. The UV and Offline water purifiers are expected to encounter less growth compared with RO but they will grow at a CAGR of around 17.20% and 26.67% and to reach up to USD 5.24 Billion and USD 4.24 Billion respectively by 2018