In recent years, affected by the COVID-19 pandemic, the global demand for masks in China has surged, leading to an increase in domestic consumption; since March 2022, due to the continuous spread of the Omicron variant in Shanghai and across the country, demand for masks has risen again in various parts of China. In the future, with the increasing demand for masks from manufacturing and service industries, as well as the enhanced protective awareness of Chinese residents, mask demand will continue to remain high, and China's mask output value will also remain at a high level for a long time.
China mask product market
The production and output value of mask products in China have increased from 3.7 billion and 4.2 billion yuan in 2016 to 65 billion and 100 billion yuan in 2021, with annual compound growth rates of about 75% and 90% respectively. The sudden surge in output value was mainly due to the unexpected surge in demand for mask products during the COVID-19 pandemic from 2020 to 2021. In addition, as a major producer of mask products, China not only needs to meet domestic demand but also export a large number of mask products to other countries. Therefore, the growth of mask products, especially medical masks, showed an astonishing increase in 2020.
Due to government intervention measures, including fiscal support for the purchase of raw materials and employment, tax exemptions for manufacturers, and the issuance of new manufacturing licenses, the price of mask products dropped significantly in 2021 after soaring in 2020 due to the gradual catch-up in supply with demand for mask products.
Looking ahead, as China transforms from a manufacturing powerhouse to a service-oriented economy, mask manufacturers are increasingly struggling to obtain sufficient cost-effective factory workers to maximize production capacity. Due to insufficient capacity utilization, it is expected that China's mask product output and value will decline to approximately 53 billion and 68 billion RMB respectively in 2026, with annual compound growth rates of approximately -4% and -7% from 2021 to 2026.
Source: Analysis by Frost & Sullivan
Mask market in major countries in Asia-Pacific region
During the COVID-19 pandemic in China in 2020, enterprises across the country that had the conditions expanded or converted their production lines to produce masks in response to the national call for epidemic prevention and control, filling some of the short-term supply gaps for masks. However, as Chinese consumers' awareness of protection has increased, their demand for masks has risen. The temporary production lines for mid- to low-end masks added during the pandemic face the risk of being idle or disposed of. In addition, in 2020, Japan ranked second in market share among major Asian countries, accounting for 19.3%, second only to China. Japan is a traditional mask consumer country, and the COVID-19 pandemic has catalyzed a significant increase in mask demand there. Excluding the impact of the pandemic, it is expected that the demand for masks will continue to remain high in the future.
Source: Analysis by Frost & Sullivan
Regional Distribution of Mask Manufacturers in China in 2020
Masks are a rigid consumer good with stable market demand. The regional distribution of mask manufacturers shows a concentrated trend, with the most mask manufacturers located in developed provinces represented by Jiangsu, Henan, and Anhui.
Source: Analysis by Frost & Sullivan
Performance characteristics and application scope of masks
Masks generally consist of a main filter material such as polypropylene melt-blown fabric, as well as other materials such as metal (for nose clips), dyes, and elastic materials (for mask straps). Masks can be classified into medical protective masks, medical surgical masks, and ordinary masks based on their performance characteristics and application ranges. Masks can be divided into flat, duckbill, arched, or foldable shapes according to their face mask shape. Masks can be categorized into ear-loop, strap, or headband types based on the way they are worn.
Source: Analysis by Frost & Sullivan
Analysis of the Mask Industry Chain
From the perspective of the industrial chain, the upstream of the mask product industry includes raw materials and production equipment. The raw materials generally provided by upstream enterprises include non-woven fabric, melt-blown fabric, polypropylene, nose bridge strips, etc. Equipment suppliers offer a range of production equipment such as mask machines, mask welding machines, mask packaging machines, mask sterilizers, etc., and all machines may vary slightly according to product specifications. The midstream of the mask product industry includes original equipment manufacturers (OEMs), original design manufacturers (ODMs), and original brand manufacturers (OBMs). OEMs provide labor, expertise, and cost-effective solutions for brand owners and allow brand owners to have creative control over the design and patents of their products. On the other hand, ODMs usually own their own designers and manufacturers and operate according to the principles of white-labeling or private label manufacturing, thereby saving R&D costs for brand owners and producing reliable products with good performance. The downstream of the industry includes distributors and customers, including retailers, hospitals, pharmacies, e-commerce platforms, governments, etc. In the mask product industry, it is common for some brand owners to expand sales through distributors.
Source: Analysis by Frost & Sullivan
Most OEMs and ODMs ultimately strive to become OBMs, possessing design and manufacturing processes, and producing high-end or niche products that require a high level of expertise. For example, some mask manufacturers operating as OBMs have developed strong R&D capabilities through years of experience accumulation. This allows them to go from an idea to prototype design, product refinement, final design confirmation, obtaining patents, and then conducting large-scale production entirely internally, thereby creating mask products for export. In addition, some OBM masks have the capability to further upgrade their manufacturing equipment to advance the entire mask manufacturing process.
The impact of the epidemic on the mask industry
The unexpected demand for mask products in 2020 led to soaring raw material costs for masks, keeping the unit cost of all mask products high, thus resulting in an exceptionally large market size for mask products in 2020. However, despite the decrease in unit cost of all mask products due to increased supply, the demand for mask products is expected to be much larger than before the pandemic. Although the demand for mask products due to hospitals, clinics, and vaccination campaigns is expected to decrease after 2022, the daily protective needs of non-medical industry workers and the public for mask products will continue to grow, driven by natural baseline growth and potential changes in mask usage habits. For example, workers in service industries and manufacturing will have increased demand for mask products because these jobs require high social interaction and mandatory hygiene requirements. In addition, due to use in outdoor life and school settings, including workplace protection needs for the 20 to 65 age group and demand for mask products among the 15 to 19 age group, the adoption and usage rates of masks will be higher than before the pandemic.
Additionally, from the perspective of exports, the main export destinations for Chinese mask products include the United States, Japan, Canada, as well as European countries such as Italy, Germany, and Spain. In 2020, these countries were heavily dependent on imported masks from China because China is one of the few countries in the world that still have mask production capacity and can supply other regions of the world. Although domestic mask production has rebounded after these countries resumed work in 2020, due to the ability of existing Chinese mask manufacturers to produce high-quality masks at relatively low costs, the demand for imported masks remains strong. Moreover, both domestically and internationally, the mask product market has significantly reduced its attractiveness to new industry participants.
From the perspective of international demand, many mask manufacturing companies in the United States, Europe, Japan, and South Korea are considering significant restructuring of their global supply chains to move them away from China in order to reduce supply-side risks. For example, India, Bangladesh, Sri Lanka, and Vietnam are known for their reliable outsourcing partners, which offer lower geopolitical risks compared to China. These four countries are competitive in terms of cost, especially in labor costs, where corporate tax rates are one of the lowest in the world. Therefore, the trend towards regional diversification poses challenges to existing Chinese mask manufacturing companies. However, due to the uncertainty of quality issues, finding suitable overseas manufacturers is a challenging task that is influenced by the risks of each country. Thus, the challenges faced by domestic manufacturers are not imminent, as supply chain restructuring is a very time-consuming process. Nevertheless, for existing Chinese mask manufacturing companies, it is crucial to develop long-term strategic partnerships with overseas companies and provide high-quality products to enhance their competitive advantage.
Future trends of China's mask industry
The functionality, design, and quality of mask products are becoming increasingly important:The mask product manufacturing business used to mainly focus on B2B, but due to the emergence of the COVID-19 pandemic, B2C business has been booming since 2020. Therefore, mask manufacturers need to cater to the tastes and preferences of different consumer segments. Mask functions will become more diverse, including antibacterial, portable, comfortable, and other features. In addition, there will be more innovative designs, including barrier-free designs for people with hearing impairments. Moreover, as consumers are attracted by product differentiation, designing fashionable masks will become an important focus for mask manufacturers. In the future, consumers will place more emphasis on product functionality, design, and quality when choosing masks rather than price. New entrants and inferior producers in the market will gradually be eliminated, leaving only high-end mask companies competing based on their functionality, design, and quality.
Vertical and Horizontal Integration of Mask Product EnterprisesGiven the abundance of mask product suppliers in 2020, mask brands with deep brand concepts, high visibility, and good reputations are more favored by consumers. The market competition for mask products is fierce, and mask companies actively seek comprehensive vertical and horizontal integration of the industrial value chain. Controlling the entire industrial value chain from key raw material supply, production to final packaging and sales is the core strategy of mask companies, thereby effectively regulating cash flow and increasing profit margins. Compared with small production and processing enterprises, large mask companies have capital advantages, brand advantages, scale advantages, and cost advantages. Therefore, in the future, as market competition for mask products intensifies, small mask companies will gradually be eliminated by market competition. The integration of the industrial value chain vertically and horizontally through mergers and acquisitions is expected to become a common practice within the industry, leading to an increase in market share and higher market concentration among leading mask companies.
