Briefing on China's Air Purification Market
In December of 2016, intense smog caused twenty-three cities in China to raise red alert alarms. Although a significant health risk, the high levels of pollution bring peaks of air purifier sales in many places throughout the country.
After six years of rapid development, China’s air purifier industry is stabilizing. Buying patterns are predictable and showing signs of sustainable growth. PIM’s analysts have reported on this development over the past four years. Over this time, they have interviewed high-end air purifier producers, distributors, retailers, testing labs, and consumers. The following briefing reveals five points from their findings.
Point One - The Weather Factor
With the hourly public broadcasting of PM 2.5 levels, Chinese consumers are aware of their effects on public health. Air purifiers, that will absorb these minute particles, have become popular household items. Although retailers sell units throughout the year, sales increase dramatically during the late fall and early winter months. During this time, as northern temperatures drop with homes and offices heated from coal fired power plants, the windless days for weeks on end concentrate the pollution to reach dangerous levels. Although not experiencing extreme seasonal cold airs, the more southern regions also have high PM 2.5 concentrations. Public domain sales data of Honeywell and Blueair air purifier producers shows sales volumes during fourth quarter of 2015 as 1.5 ~2 times the total sales volumes of the previous three quarters.
This predictable demand surge allows for efficient supply chain management, production scheduling, and timely stocking of inventories.
Point Two – High Pricing for Low Technology
A mainstream air purifier is quite simple, consisting of an intake blower, filtration and airtight shell. The filters are usually in three layers, ranging from low efficiency materials to modified activated carbon and HEPA units. The blower brings in contaminated air to pass through the purifying filter. The shell houses the blower and filter preventing any leakage. These simple assemblies are on DIY sites on the Internet.
However, pricing of these low technology products is quite high, up to 10 to 20 thousand CNY. The hotter selling units are from 2,000 to 4,000CNY. According to PIM’s research, the cost of a blower is 100 to 600CNY, the cost of a low efficiency air filter is 10to 30CNY, the cost of a modified activated carbon
filter is about 50 to150CNY, the cost of the shell is 30 to 100CNY. The critical parts cost of an air purifier priced at 2,000 to 4,000CNY are no more than 400 to 800CNY. Air-conditioners in the same price range have component costs up to 1,000 to 2,000CNY. It easy to see pricing of China’s air purifiers has more to do with consumers’ psychological needs than traditional cost-profit pricing models. How long this pricing will continue is unknown.
Point Three – Technical Misrepresentations
The current technology uses active carbon (modified active carbon) combined with HEPA filters. Some often ignored deficiencies in the active carbon are low absorption efficiency and easy saturation. , Saturation can result in polluted substances not absorbed, causing secondary pollution and the active carbon not working in a moist environment. Consumers can change the filters regularly to avoid these problems, thus creating high profits in this industry.
Some other filtration methods, such as static, anion, photo catalytic technologies, exist in the market. These often promoted as saving costs with no needed filter replacements, but deliberately avoiding their drawbacks , such as the possible effects on the earth’s ozone levels.
Ordinary consumers, lacking professional knowledge of air purifier performance differences and testing processing, put too much trust in the producer’s advertising. They easily overspend on technology that does not yield their expected results. Brand owners have been successful in making high sort-term profits. However, research and development of more effective materials will benefit the public and provide longer term profitability.
Point Four – Lack of Industry Standards
As recently as 2015, the number of air purifier manufacturer was up to thousands. Some manufacturers, without developing any effective technologies, joined the market with high earnings. However, with the introduction of the industry standard, GB/T18801-2015 in 2015, and implemented on March 1st
, 2016, many of the low-end producers left the market. Currently, more than 300 air purifier manufacturers are still active.
Compared with the version released in 2008, detections of CADR values for PM particles are stricter in new standard. Currently, the calculation method for filter network/ filter life span as well as the testing method and standard for formaldehyde purification and cumulative removal volume index (CCM value) have been proposed.
The new standard put forward stricter requirements for air purifiers, particularly for removing formaldehyde. This has attracted air purifier manufacturers’ attention. However, the labeling index for CADR and CCM values for formaldehyde are not mandatory. Some manufactures only
publish one index as excellent, ignoring the other. For example, an air purifier of one well-recognized company claimed that formaldehyde CCM value was up to 5.8 grams, far above the top F4 level (1.5 grams) in the national standard, while CADR value was only 58m3
/h detected in an independent laboratory. By reading the product brochures further, PIM found this company only advertised CCM value, with no mention of the CADR value. According to PIM’s interviews with industry professionals, there is a correlation between the two indicators, so the combined indicators may show good performance of an air purifier. Separating the two indicators as a reference can mislead consumers.
PIM’s interviews with independent professional testing institutes revealed the new national standard for testing methods as not well-developed, especially the CCM detection of formaldehyde. Test for CCM values have some shortcomings such as long-term testing, high cost, low accuracy, and difficulties to reproduce the test. The National Quality Inspection Institute does not use CCM value as an indicator during spot checks because of these shortcomings. This situation has led to ineffective field and laboratory CCM level verifications.
Point Five – Bogus Detection Sensors
To appeal to more customers’ several companies are installing various sensors in their products. They claim the sensors to detect the quality of indoor air in real time. Some of these so called sensors interface with a mobile phone APP.
According to PIM’s interviews, a sensor which can detect air pollutant concentrations accurately is worth tens of thousands of CNY. It is simply impossible that sensors priced at only tens of CNY have the ability to report accurate readings, but unwary consumers were attracted to them.
From the early development cycle of China’s air purifier industry there has been high speed growth as poorly informed consumers seek ways to protect themselves from airborne pollutants. The market is now stabilizing though, through the implementation of performance standards, and better public education, eliminating many low end producers.
The industry is still challenged to develop lower cost to consumers for effective protection. How long does will it take to solve air pollution problems in China? How far can the air purifier industry go? Tom Ward, president of PIM consulting company, admitted that we have little real knowledge on this issue for meaningful discussion. Much will depend on China’s continued economic development and government driven initiatives. About this issue, we may refer to some foreign cases: the UK government spent nearly 80 years curbing air pollution and finally got rid of their “fog cities. Germany took nearly 50 years on air pollution to achieve initial success. The Chinese government has already taken positive actions, but actual solutions will take at least 10 to 20 years. During this time, there will be ample opportunities for innovation in the air pollution control market. As for air purifier industry, with continued improvement of the national standard, the entry barrier will only become higher. Only the producers willing to invest heavily in new materials and techniques will survive and thrive in the years to come. This will require some reshuffling, but the end results should be to the benefit to public health with proven effective air purification technology.
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