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Frost & Sullivan releases '2023Research Report on the Commercial Water Purifier Industry in China
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Commercial water purifiers are a type of water treatment equipment specifically designed for commercial, industrial, medical, and other fields. They primarily remove impurities, pollutants, and microorganisms from water to meet the water quality requirements for different uses. The development of commercial water purifiers stems from the need for water safety and health, and is also closely related to environmental protection and sustainable development.
Frost & Sullivanfrost &Frost & Sullivan, hereinafter referred to as 'Frost & Sullivan', hereby issues 2023 Commercial Water Purifiers in China Industry research report
01
Commercial drinking water consumption structure
Drinking water is the foundation for human survival and development.It plays an important role in ensuring human health, meeting daily living needs, and improving the quality of life. With the development of social economy and the improvement of residents' living standards, people's requirements for drinking water quality and safety are also constantly increasing. Currently, the main consumption structure of drinking water in China includes bottled water, tap water, plain boiled water, and water treated by water purifiers. From 2018 to 2022, the total consumption of drinking water in China increased from 109.659 billion liters to 119.039 billion liters, with an annual compound growth rate of 2.1%. Among them, the annual compound growth rate of water consumed after being treated by water purifiers was as high as 12.7%, reflecting the continuous growth in the current demand for drinking water safety among Chinese residents.
In the commercial sector, current bottled water and plain boiled water dominate the drinking water market. However, as the advantages of water treated by water purifiers in terms of convenience, economy, and safety are recognized, their market share is continuously increasing, gradually replacing bottled water and plain boiled water. The proportion of consumption of drinking water treated by water purifiers is fromThe consumption increased from 43.67 billion in 2018 to 57.24 billion in 2022, a growth of 15.9% from 2018's 12.5%. In 2022, the consumption of bottled water and plain boiled water ranked first and second, accounting for 45.7% and 35.9%, respectively, while the consumption of bottled water accounted for the lowest proportion at 2.5%.
Commercial water purifiers have significant advantages over barreled water dispensers, such as being more convenient, offering better cost-effectiveness, environmental friendliness, and safety. In recent years, commercial water purifiers have become very popular in office buildings, schools, hospitals, enterprises, government agencies, and other settings. Especially during the pandemic lockdowns, when transportation of bottled water was restricted and it was difficult to supply in a timely manner, water purifiers were an ideal solution. The water treated by water purifiers is gradually becoming the mainstream of commercial drinking water, with an estimatedIn 2027, its proportion will increase to 25.8%.
Source: Analysis by Frost & Sullivan
In terms of the number of enterprises, the proportion of those currently using barreled water is the highest, reaching56.0%, followed by water heaters, accounting for 32.4%. However, among these drinking methods, the penetration rate of water purifiers has increased the fastest, rising from 7.6% in 2018 to 10.8% in 2022. Due to the clear advantages of water purifiers over bottled water in terms of usage cost and convenience, it is expected that in the next few years, water purifiers will gradually replace bottled drinking machine products in enterprises. The market share is projected to grow from 10.8% in 2022 to 20.1% in 2027, while the proportion of bottled water is expected to decline to 50.5%.
Source: Analysis by Frost & Sullivan
02
Permeability of water purifiers in different countries
Residents in developed countries have a higher standard of living and consumption, which gives them a high level of awareness and recognition of water purifiers. Currently, the water purifier market is more mature and widespread.In 2022, the penetration rate of water purifiers in South Korea has reached as high as 95%, almost achieving universal access; the penetration rate of water purifiers in developed economies such as the EU, the US, and Japan has also reached or exceeded 80%.
In contrast, despite the booming development of the Chinese economy and the continuous improvement in residents' living standards, the market for water purifiers is still in a stage of gradual cultivation due to the relatively low awareness among residents about these products.In 2022, the penetration rate of water purifiers in China was only 23%, far lower than that of major developed economies. However, on the other hand, the low penetration rate indicates that there is still enormous development potential and room for growth in China's water purifier market.
For companies in the water purifier industry, an important task at present is to enhance end-users' awareness and trust of water purifiers, in order to promote the increase in the penetration rate of water purifiers in China. In the future, the Chinese water purifier market has great potential and is expected to become a major growth point for the global water purifier market.
Source: Analysis by Frost & Sullivan
03
Analysis of Key Downstream Customers and Use Cases
Commercial water purifiers have a wide range of applications, including schools, hospitals, office buildings, government agencies, airports, and other public institutions or commercial buildings. The downstream demand is enormous.
In school settings, water purifiers are mainly used in school cafeterias, administrative buildings, teaching buildings, and other places. The dietary safety of teachers and students on campus is of utmost importance and receives high attention from society and regulatory authorities. Therefore, the demand for commercial water purifiers in schools is also increasing rapidly. Compared to the current mainstream bottled water, commercial water purifiers can largely avoid the pollution risks associated with the production and transportation of bottled water. On the other hand, commercial water purifiers do not require frequent purchase and replacement, are simple to maintain and service, and only need to be operated according to the manufacturer's instructions and maintenance requirements, which also reduces the school's usage costs and environmental burden.
Hospitals have extremely high requirements for water quality and commercial water purifiers are a special application area. Commercial water purifiers can effectively remove harmful substances such as heavy metals and bacteria from water, ensuring the hygiene and safety of hospital water use. Water purifiers used in hospital applications are mainly used in outpatient halls, operating rooms, wards, and other places.
In commercial buildings and offices, commercial water purifiers offer a lower-impact, safer, and more convenient drinking option compared to bottled water. They reduce the cost of drinking water for businesses and also provide better health and safety for employees.
In addition to the three core scenarios mentioned above, in the future, as terminal users in various fields demand better drinking water health, economy, convenience, and other aspects, commercial water purifiers will further be promoted to various public places including restaurants, supermarkets, communities, factories, etc., to meet the needs of different types of users.
04
market scale
A water purifier is a device that can clean water quality, mainly divided into front-end and back-end water purification equipment. These devices can remove impurities and harmful substances from water, improving the quality of water to meet people's needs for healthy and safe water. Among them, the pre-filter can remove most suspended particles, sediment, and organic matter, the softener can remove hardness ions from water, while water purifiers and water dispensers can remove harmful substances such as bacteria, heavy metals, and chlorine from water.
The multifaceted advantages of water purifiers fully align with the consumer trend in China, which is increasingly pursuing a high-quality life amidst the continuous improvement of residents' income levels. In recent years, the number of households, schools, hospitals, and enterprises and institutions choosing to use water purifiers has been increasing year by year.Since 2018, the market scale of water purifiers in China has exceeded one trillion yuan for several consecutive years. Although there was a slight decline in 2020 due to the impact of the pandemic, the overall market scale has still remained at the hundred-billion level and reached 118.07 billion yuan in 2022. Among them, new machine sales reached 111.66 billion yuan, and after-sales service reached 6.99 billion yuan.
In the future, as the Chinese market rapidly recovers from the impact of the pandemic and consumption is expected to continue upgrading, the China water purifier market will also maintain rapid growth.In 2027, it reached 198.57 billion yuan, with new machine sales amounting to 186.57 billion yuan and after-sales service reaching 12 billion yuan.
Source: Analysis by Frost & Sullivan
In the water purifier market, commercial water purifiers are one of the fastest-growing categories. Driven by the continuous growth in demand for healthy drinking water in public places such as schools, hospitals, and enterprises, the commercial water purifier market has developed rapidly. It is estimated that the scale of the commercial water purifier market in China has grown fromThe rapid growth from 5.99 billion yuan in 2018 to 10.46 billion yuan in 2022 reached a compound annual growth rate of 15.0%. Among them, the market for new commercial water purifiers sold from 2018 to 2022 increased from 5.69 billion yuan to 9.83 billion yuan, while the market for after-sales service grew from 300 million yuan to 630 million yuan.
As users in downstream sectors continue to raise their demands for drinking water safety standards, as awareness and acceptance of water purifiers continue to improve, and as the ecological services of commercial water purifiers gradually become more complete, the market for new commercial water purifier sales and after-sales service will grow rapidly.
expected toIn 2027, the market scale of commercial water purifiers in China will further grow to 214 billion yuan, with a compound annual growth rate of 15.7% compared to 2023. The sales volume of new products will reach 19.79 billion yuan, and the after-sales service market will reach 1.61 billion yuan. Currently, commercial water purifiers have become a highly potential sub-sector within the water purification industry.
Source: Analysis by Frost & Sullivan
05
Common Business Model Advantages, Disadvantages and Cost Analysis
Water purifiers originated in the last centuryIn the early 1980s, the United States was not yet entering the Chinese market. From the 1990s to 2000, the home improvement water purifier market was in an exploratory and developmental phase. With the development of industry, water pollution became increasingly serious, and the standardization and routine use of urban tap water could not meet the personalized drinking needs of households. Therefore, bottled water became the mainstream of domestic drinking water. Since 2000, water purifier manufacturers have rapidly developed and grown, and the water purifier industry has quickly recovered and expanded.
The rapid popularization of water purifiers in the Chinese market began withIn 2013, water pollution incidents occurred frequently, and smoggy weather continued, raising concerns about health. This provided an opportunity for the water purification industry to promote its products and popularize knowledge. Coupled with the prevalence of trade shows, it further accelerated the popularization of the water purification industry. In 2013, the water purifier market experienced explosive growth, with retail sales increasing by 75.7% year-on-year, 64.7% in 2014, and 46.1% in 2015. After three years of rapid development, it accelerated the popularization of water purification products and enhanced people's awareness of them.
However, due to some mixed players pursuing short-term profits at all costs, a series of industry chaos has been triggered, causing great harm to the industry. Therefore, it is imperative for the industry to transform and upgrade.The years 2016-2017 were a period of transformation and rational development for the water purification industry. A.O. Smith rose rapidly, the Angel brand's positioning became evident, Midea's high-end transformation began, and water purification companies started to re-examine their future development direction.
With the increasing attention to drinking water health and continuous improvement in water purification technology, not only do households need safe and healthy drinking water, but people also gradually expect safe and healthy drinking water for office and public places. Therefore, commercial water purifiers have developed rapidly, becoming a blue ocean market that many brand owners are vying to enter.
At present, the development of the commercial water purifier market has gone through an initial and rapid growth phase, entering a period of steady growth. At this stage, competition in the commercial water purifier market is becoming increasingly fierce, and the competitive landscape among companies within the industry is gradually taking shape.
Compared to household usage scenarios, the demand in the commercial water purifier market is more stringent. Commercial venues require larger-scale drinking water supply and higher performance standards, especially in terms of water output and safety factors. Therefore, there are significant differences in market demand between commercial and household water purifiers, with higher requirements for manufacturers' professionalism. In addition, there are also substantial essential distinctions between traditional retail and commercial marketing models. Enterprises need a deeper understanding of industry characteristics and the real needs of commercial users to stand out in the fierce market competition.
Currently, commercial water purifier manufacturers on the market mostly focus on household water purifiers and have limited experience in the commercial water purifier market. Their overall solution capabilities are weak, and most manufacturers are still at the stage of selling products.
At the same time, there are also a small number of enterprises in the industry that have rich experience in providing overall solutions for commercial water use scenarios, such asA.O. Smith. In 1982, the first Sino-foreign joint venture hotel in China—Guojing Hotel—pioneered the introduction of A.O. Smith's commercial direct supply hot water system solutions; in 2010, the world-renowned Shanghai World Expo also included A.O. Smith as a licensed product provider, supplying professional direct drinking water/thermal water system solutions for its 23 Expo venues.
Commercial direct drinking water for enterprises of this typeWith rich experience in the hot water field, I have conducted in-depth research on the usage characteristics and needs of customers across various commercial channels. I possess the ability to provide relatively comprehensive overall solutions. These enterprises can offer customized solutions that better meet the actual needs of customers, thereby gaining more competitive advantages in the commercial water purifier industry.
With the fierce competition in the commercial water purifier industry, the competitive landscape among companies within the sector is gradually taking shape. Therefore, prioritizing the construction of a mature and complete business model targeting distributors is of great significance to market competitors, as it can help enterprises quickly establish an advantage. The essence of the commercial water purification industry is the struggle for an ecological chain among major manufacturers.
Source: Analysis by Frost & Sullivan
The main business models of commercial water purifiers are as follows:
1) Overall machine sales
In the business model of whole machine sales, water purifier manufacturers mainly sell products through two channels: self-operation and agency distribution to meet the needs of different customer groups. Direct-operated stores can be divided into online and offline models. The offline direct-operated store model can provide more comprehensive and professional product displays and after-sales services, while online e-commerce malls can improve product sales efficiency and convenience while reducing sales costs.
However, the current online sales model is more suitable for household water purifiers. Commercial water purifiers have a higher value and do not match the characteristics of online mall models. Distributors can help water purifier manufacturers expand their market and reduce sales costs.
2) Commercial Lease
The commercial rental model is a product sales model that involves leasing. Enterprises or institutions pay rent to water purifier manufacturers and can choose to return the equipment or continue renting it after using it for a certain period of time. The advantage of this business model lies in its ability to effectively reduce the financial pressure on enterprises and institutions, make equipment usage more flexible, and allow water purifier manufacturers to obtain sustainable income through long-term rental services.
Currently, there are mainly two commercial leasing models in the industry. The first is where dealers need to purchase machines outright from manufacturers and then lease them to end-users. The second is where manufacturers provide leasing services to dealers. The second leasing model can reduce the financial pressure on dealers and help them share the risk of lease defaults. However, it has high requirements for the brand's business positioning and comprehensive operational mechanisms. Therefore, only a very small number of manufacturers in the industry can implement this model.
In recent years, the penetration rate of commercial leasing models has grown rapidly. In the commercial sector, the penetration rate of leasing models has risen fromThe growth rate increased from 29.3% in 2018 to 33.9% in 2022, and it is expected to reach 39% by 2027.
3) BOT
Public buildings are one of the main application areas for commercial water purifiers. For public buildings such as schools, hospitals, and government agencies, some manufacturers have adoptedBOT (Build-Operate-Transfer) model.
This model is reasonably selected based on the actual number of people. The investment and maintenance of the entire set of equipment, including direct drinking water machines and terminal intelligenceThe manufacturer is responsible for the supply of IC card water dispensers and pipelines, equipment installation and construction, regular water quality testing, maintenance, filter material replacement, and the electricity and water costs required for equipment operation. Users do not need to invest any funds. The manufacturer only charges the corresponding water dispensing fees through unified billing or card consumption, with the specific prices being jointly negotiated and determined by the manufacturer and Party A. After the contract expires, the ownership of the entire set of equipment belongs to Party A. Adopting the BOT model can further disperse risks, alleviate Party A's financial pressure, and improve project efficiency.
Source: Analysis by Frost & Sullivan
Currently, the main business models for commercial water purifiers are overall machine sales and commercial rental. Under these two models, companies often sell or lease their products to distributors, who then go out to market on their behalf. The two ends reach a cooperation through mutual competition.
In order to gain more advantages in the game, distributors usually choose to increase capital investment. By purchasing a large amount of goods, they enrich the variety and quantity of inventory to occupy a larger say in the market. A large inventory not only increases procurement costs but also leads to an increase in inventory costs. This not only increases the sales pressure on distributors but also results in fierce competition among them, with phenomena such as low prices and cross-selling emerging frequently, deteriorating the competitive environment of the industry. A harsh competitive environment is not conducive to market development.
In addition, with the continuous changes in social needs, the single business model of the primary stage has gradually become unable to meet market demands. In the already mature water purifier market, even with good products, it is difficult to stand out under traditional sales models.
Currently, some water purifier manufacturers offer rental services alongside their sales. However, the simple model of renting and selling is still limited to product sales thinking. To achieve sustainable development, companies must rely on system-driven approaches to establish efficient ecological chains and more complete operational systems.
At the same time, the fierce market competition environment will place higher demands on distributors. In the future, terminal sales models will gradually shift from single-product sales to service-oriented sales models. Distributors need to become local operators or service providers, acquiring customers through strong resource integration capabilities and system services. The fierce market competition has put forward higher requirements for distributors' operational back-office systems.
After entering the stage of stable development, some manufacturers have taken the lead in proposing an ecological business model guided by the concept of win-win cooperation. Under this innovative ecological business model, water purifier manufacturers and distributors are no longer in a competitive relationship but form an integrated interest structure. By cooperating, they create a favorable market environment for both parties to jointly build a stable and suitable ecosystem for development.
such asA.O. Smith adopts a 'platform + ecosystem' business model, focusing on user insights, channel research, product development, high-end manufacturing, brand building, talent cultivation, and exploration of business cooperation models. This is to assist partners in quickly responding to market demands, reducing operating costs, and enabling distributors to focus on market development and expansion. At the same time, this business model also avoids the pressure that distributors may bear due to excessive inventory. Through digital technologies and tools such as intelligent platforms, distributors can promptly query factory inventory and production capacity information, achieving light assets and zero inventory.
Compared to traditional heavy-asset business models, ecological business models are more friendly to manufacturers and distributors. They can also establish a good market environment and effectively help distributors build a more stable and powerful operational backend system. This is one of the sustainable development directions for commercial water purifiers.
06
Market-driven factors
Based on the comparison of the water quality, convenience, cost, and maintenance of the four common types of drinking water available on the market at present, the following conclusions can be drawn:
l Water quality: Drinking water and bottled water treated by water purifiers exhibit the best quality, while there is a risk of secondary contamination in barreled water, which results in slightly inferior water quality.
l Convenience: In terms of convenience of use, bottled water and water treated by a water purifier can be consumed directly, making them convenient to use. However, bottled water not only has limited supply but also involves very cumbersome operations such as ordering, delivering, and changing water, resulting in poorer convenience of use.
l Cost: In terms of cost, bottled water is the most expensive, while barrelled water requires long-term investment, with the cost per barrel second only to bottled water. Although the initial cost of drinking water treated by a water purifier is higher, the subsequent maintenance costs are lower. Over time, the cost of drinking water treated by a water purifier is about half or less than that of barrelled water. Moreover, there are currently models such as commercial leasing in the market, which greatly avoid the issue of high initial investment costs.
l Environmental protection: Bottled water and bottled mineral water have certain disadvantages in terms of environmental protection due to the need for plastic packaging. However, drinking water and plain boiled water treated by a water purifier do not have such issues, making them highly environmentally friendly.
l Maintenance: In terms of maintenance, drinking water and bottled water treated by water purifiers require long-term care. However, water purifiers usually come with professional maintenance teams, while bottled water does not have a mature maintenance team. A lack of long-term maintenance will greatly affect the quality of bottled water.
Overall, the drinking water treated by the water purifier has a clear advantage over the other three types in terms of water quality and convenience. Additionally, its cost is moderate, indicating excellent development potential for the future.
Comparison of Four Kinds of Drinking Water
Note:☆ The higher the number, the better the performance of the drinking water in that field
Source: Analysis by Frost & Sullivan
The main driving factors for the current commercial water purifier market are as follows:
1) Improvement in the quality of residents' lives. With the rapid development of China's economy and the improvement of residents' living standards, people have put forward higher requirements for the quality of life, and their demands for the safety and healthiness of drinking water are also increasing. Therefore, commercial water purifiers, as devices that can provide safer, more convenient, and higher-quality drinking water, are increasingly favored by schools, hospitals, public institutions, and enterprises.
2) Product upgrades and iterations. The continuous development of the commercial water purifier market is also due to the continuous upgrading of product quality. In recent years, with the continuous development and application of technology, the technology of commercial water purifiers has been continuously innovated and improved, and the product quality and usage effects have been continuously optimized. This has further enhanced the market competitiveness of commercial water purifiers.
3) The Chinese market has great development potential. Currently, the penetration rate of water purifiers in the Chinese market is relatively low. Compared to developed countries and regions, there is still significant room for improvement in China's water purifier penetration rate. Although people's awareness of water quality has increased in recent years, the current penetration rate of commercial water purifiers in the market remains low. Especially in cities and areas where water sources are polluted or affected by other reasons, people have more stringent requirements for drinking water quality, and the potential for the commercial water purifier market in these regions is also great. In the future, the commercial water purifier market in China will continue to grow.
4) Policy-driven. Compared to drinking water treated by a water purifier, bottled and barreled water require additional plastic packaging.Since 2008, the Chinese government has gradually tightened restrictions on plastic products and introduced the 'Notice on Solidly Promoting the Governance of Plastic Pollution' in 2020. It proposes that from January 1, 2021, non-degradable disposable plastic products will be banned. With the gradual tightening of the plastic ban, the development of bottled and barreled water will be subject to certain restrictions, while drinking water methods that do not require the use of plastics such as water purifiers are expected to be further promoted by policies.
07
Market development trend
1. Service Upgrade and Technical Iteration
The future growth of the commercial water purifier market will mainly depend on service upgrades and technological innovation. In a highly competitive market environment, water purifier manufacturers will continuously improve service quality by providing comprehensive after-sales services and solutions to meet customer needs, thereby enhancing brand competitiveness and market share.
Service upgrade will become an important development direction in the market. Against the backdrop of terminal users' increasing demands for product quality, manufacturers need to continuously improve service levels to meet the ever-changing needs of customers. Service upgrade includes after-sales service, product usage guidance, sales team training, after-sales team training, and other aspects, which can effectively enhance customer satisfaction and promote the establishment of brand loyalty.
The technological innovation of commercial water purifiers will also be an important driving force for future market development. With end-user With increasing attention to water quality and health, water purifier manufacturers will continue to introduce products with higher performance and more advanced technology to meet market demands. At the same time, with the application of new materials and technologies, the manufacturing cost of commercial water purifiers will also continue to decrease, further promoting market development.
2. Intelligent development
The intelligent development of commercial water purifiers is a trend for the future, which will greatly improve the performance, reliability, and user experience of commercial water purifiers. With the continuous development and application of technologies such as artificial intelligence and the Internet of Things, commercial water purifiers will develop towards intelligence and automation. The application of intelligent technology will become a new trend in market development, enabling remote system monitoring, product fault self-diagnosis, automatic cleaning, and other functions to provide customers with a more convenient and efficient usage experience.
IoT technology not only provides manufacturers and distributors with tools to monitor the usage of monitoring equipment in the commercial water purifier market, but also offers users more convenient and intelligent services. With IoT-assisted IoT technology, users can remotely monitor the usage status and water quality of machines through electronic devices such as mobile phones in real time. They can also receive advanced functions such as filter replacement reminders and TDS value abnormalities, thus avoiding the harm of water pollution to human health. Through intelligent technical means, the maintenance and upkeep costs of commercial water purifiers are significantly reduced, and faults can be proactively discovered and handled through data collection and analysis, improving user experience.
At the same time, intelligent development is also an inevitable trend for distributors. Through technologies such as platformization and digitization, data silos between manufacturers, distributors, and users can be broken down. Distributors can view user usage in real-time, quickly, and clearly, as well as the inventory and production status of manufacturers, allowing them to arrange market development more rationally. Manufacturers can directly obtain user usage data and better assist in product upgrades and iterations. Meanwhile, through distributor sales data, manufacturers can understand market demand more comprehensively and timely, and arrange factory production more reasonably.The A.O. Smith-operated distribution platform, in addition to the features mentioned above, can also display business processes and customer reviews in real-time on mobile devices, thereby improving dealer operational efficiency.
The development of intelligence will also cultivate the user experience of end-users, shifting their traditional functional needs towardsThe 'functionality + service' requirement has promoted the rapid development of the industry. In the intelligent development of commercial water purifiers, the intelligence and digitization of the intelligent system have achieved information interoperability among products, service providers, and users. This has provided commercial water purifiers with better performance and reliability, as well as a more convenient user experience.
3. Standardized development
Current commercial water purifier distributors face various problems, such as heavy assets, high inventory, and significant sales pressure. These factors lead to fierce market competition and low industry standardization, which affects the long-term and sustainable development of the industry. However, to build a stable market environment, it is necessary to establish good market order. In this regard, ecological business models are gradually replacing traditional game relationship models. Manufacturers and distributors develop together to form a favorable environment where interests coexist. This cooperation model is an effective way to promote the standardized development of the industry and can also effectively prevent bad behaviors such as counterfeiting and low-price competition.
However, to establish a good standardized industry system, reliable partners are indispensable. Therefore, Finding partners that operate with integrity, have fair and just market management policies, and are committed to safeguarding the interests of every customer is of great significance for the standardized development of the industry. These reliable partners will help manufacturers and distributors jointly create a better market environment, effectively reduce the financial pressure on dealers, optimize their living conditions, and thus promote the process of standardized industry development. Therefore, establishing such cooperative relationships is crucial for the sustainable development of the entire industry.
08
Commercial water purifier market participants
Participants in the Chinese commercial water purifier market include international brands and domestic manufacturers. In terms of international brands,A.O. Smith Companies such as Smith, 3M, and General Electric (GE) hold a certain market share and brand influence in the commercial water purifier market in China. These international brands have gained a certain level of market recognition after entering the Chinese market by leveraging their advantages in technology research and development, quality control, brand influence, etc.
In terms of domestic manufacturers, Angel (Angel), and local brands under Unilever such as Qinyuan and Midea also hold a significant share in the commercial water purifier market. These domestic enterprises have achieved certain success in research and development and production. By continuously innovating and improving product quality, they have gradually formed their own brand advantages and market positions.
Source: Analysis by Frost & Sullivan
A.O. Smith, 3M, and GE are major international manufacturers with a high brand recognition and industry reputation, and are highly recognized by end-users and distributors.
Among them,A.O. Smith commercial water purification systems have been installed in over 100,000 high-end enterprises, institutions, and public places across the country, including more than 40% of Fortune Global 500 companies in China, over 40 international airports, more than 50% of the top 50 universities, over 20 of the top 100 tertiary hospitals, and many government agencies. Over the more than 20 years of development in China, A.O. Smith has cooperated with over 50% of its customers for more than 15 years, earning the high trust of business partners. A.O. Smith has long ranked at the top of China's mid-to-high-end water purifier sales. According to statistics from AVCN, in 2022, A.O. Smith topped the list of China's mid-to-high-end water purifier sales.
In addition, domestic companies such as Angel and Midea have been operating in the water purifier market for many years and have also gained a good reputation. Angel has successfully entered venues such as the National Stadium (Bird's Nest), Beijing Daxing Airport, and Shenzhen Bao'an Airport, and has reached strategic cooperation agreements with several leading real estate developers.
In terms of distribution models, Currently, mainstream manufacturers have adopted both direct sales and commercial leasing models. For exampleManufacturers such as A.O. Smith, 3M, and Qinyuan mainly sell and lease through distributors, without establishing physical direct stores. GE, Angel, and Midea, on the other hand, adopt a combination of direct sales and distributor models, promoting products primarily through distributors with direct sales as a supplement. It is worth mentioning that in addition to directly providing leasing services to distributors, A.O. Smith has further upgraded its innovative product sales model, which can be rented or sold, into an 'platform + ecosystem' business model that integrates cross-border elements. The aim is to connect business partners and end-users through trust, and to derive long-term benefits from repeat purchases and word-of-mouth referrals.
In terms of customer service, A.O. Smith places emphasis on an efficient organization for customer service, with comprehensive service innovation and improvement ranging from product quality management to service strategy and talent training models. The company establishes a quality benchmarking partner ecosystem and a quality assurance ecological chain on the basis of ensuring the quality of its own products, to ensure that each delivery link meets quality standards. In addition, A.O. Smith provides digital platforms, professional training, talent recruitment, and IT transformation support to partners such as agents and suppliers, jointly offering a high-quality product experience. Qinyuan has set up self-operated after-sales service teams in multiple regions across the country, providing professional and high-quality services.
In terms of marketing and promotion, Manufacturers such as A.O. Smith, 3M, and Midea have diverse commercial products and collaborate with each other to promote their products, reducing the market promotion pressure on distributors. In particular, A.O. Smith has also utilized internet resources to establish communities through its vast product matrix, using word-of-mouth marketing and social fragmentation to help distributors promote their products, expand market influence, and assist business partners in obtaining more sales opportunities.
In terms of platformization and digitization, Midea has connected the data silos in the production process through its Midea Smart Cloud platform, helping enterprises better understand factory capacity and other information to better explore the market.A.O. Smith provides dealers with a digital management tool, 'E-Distribution', which allows dealers to monitor product inventory and sales data in real-time, helping to achieve zero inventory management, improve efficiency, and enhance customer reputation. A.O. Smith's commercial water purification products also integrate IoT technology, closely connecting the four main entities of 'customer - A.O. Smith - equipment - after-sales engineer', enabling multi-party information exchange and rapid transmission. Based on big data analysis, they can proactively and quickly provide maintenance services, ensuring more reliable equipment operation while optimizing drinking water management costs throughout the entire lifecycle.
Source: Analysis by Frost & Sullivan
Report Writing Team
Yang Lei
Consulting Manager, Greater China, Frost & Sullivan
Liu Xufeng
Frost & Sullivan Greater China Regional Consulting Advisor
Contact number:021-5407-5836
Contact email:PR@frostchina.com
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Frost & Sullivan's investment and financing business in Greater China has achieved full industry coverage of the Chinese national economy, including a high level of attention to all economic hotspots such as the new economy and new infrastructure. It covers sectors including biomedicine, consumer retail, internet and technology, entertainment media, financial services and fintech, carbon neutrality and environmental protection, machinery manufacturing, energy and power, real estate property, mineral resources, infrastructure, automotive travel, logistics transportation, rail transit, shipping, aerospace, agriculture, forestry, animal husbandry and fisheries, industrial materials, construction engineering, education and training.
Since the Frost & Sullivan team began providing investment and financing advisory services to corporate leaders and their management teams, it has helped nearly a thousand companies successfully list on the Hong Kong and overseas stock exchanges. It is a leading enterprise in the field of domestic investment strategy consulting.From 2014 to 2022, Frost & Sullivan has consecutively ranked first in the market share for leading Chinese enterprises seeking overseas listings as a professional industry advisor; moreover, in recent years, Frost & Sullivan reports have been widely cited in the prospectuses of leading A-share listed companies, primary and secondary market research reports, and other capital market disclosure documents within the industry.
For over 62 years, Frost & Sullivan has helped a large number of clients (including Fortune Global 1000 companies, top domestic and international financial institutions, and other leading enterprises) achieve strategic goals by completing tasks including but not limited to due diligence, valuation analysis, and third-party assessments through its nearly 50 offices around the world, utilizing a powerful database and expert library, and applying rich professional knowledge and consulting tools.
