Residential water treatment is a relatively new concept in China, with the first residential water treatment products appearing less than 10 years ago. Like most higher-end consumer products, these systems first appeared in 1st tier cities in the country’s coastal provinces. Conventionally this equated to Beijing and Shanghai.
These cities, more developed, open, wealthier and Westernized than the rest of the country, proved a good starting point for many foreign companies to sell their products.
Even today, the first step of most foreign residential water treatment companies in their journey into China is to find distributors to sell on their behalf in these cities. This allows these companies to test the suitability of their product offerings before making a decision on their future in the country.
Although metropolises like these still remain major drivers of growth in residential water treatment, the adoption of these technologies is no longer limited to this handful of cities. Conversely, residential water treatment has ridden a wave of development in recent years to begin to become a feature in homes throughout China’s vast territory.
Do not just focus on China’s largest cities
In recent years, China’s inland provinces have made up for slowing GDP growth in coastal regions. Average incomes remain vastly unequal between inland and coastal areas. Nonetheless, both groups are experiencing rapidly increasing spending power as a middle-class emerges across the whole country.
Despite the continued importance of 1st tier cities, they should not be considered the be all and end all of China. The residential water treatment market has followed in the wake of rapid development, and together have began to touch much of the country.
Huidian Research, a leading Chinese research firm, discovered in 2012 that wealthier coastal regions in China now accounted for just 63% of the water treatment market. Although these provinces still account for a majority of the market it indicates that inland provinces now, unlike before, account for a considerable percentage of sales.
In particular, rapid urbanization and subsequent economic growth in cities across China have enabled sales of residential water treatment systems to escape their traditional coastal confines.
Tier-2 and tier-3 cities across China are playing an increasingly important role, and are an ever more attractive marketplace for foreign companies in this sector.
Many foreign companies now sell their residential water treatment products in all or most of China’s regions. Usually, the exceptions are Tibet and Xinjiang, due to their undeveloped nature and geographical remoteness. However, some foreign companies are now even starting to make inroads into these provinces.
Typically, foreign residential water treatment companies, if successful in tier-1 cities, then choose to expand their distribution reach to similar consumer groups residing in other urban areas throughout China.
The hidden potential of China’s rural regions
Although the wages of some groups of inland residents are gradually converging with their coastal counterparts disparities between urban and rural income remain far greater than those between inland and coastal regions.
Urban disposable incomes remain around 3 times as high as those in rural areas. Even withstanding this disparity, sales of residential water treatment are also forecast to rise in rural areas. However, given the differences in spending power a more economical product offering will likely be more suitable for this market at it’s current stage.
As China develops, so too does the market for residential water treatment devices. Initially, the market’s roots took hold in Beijing and Shanghai and even today this remains a common starting point for foreign companies entering the market.
However other urban centres, rapidly growing and increasingly richer, have since emerged throughout large parts of China’s vast territory and now provide attractive markets for residential water treatment technology.
Symbolic of the rapidly changing nature of China, this development is even beginning to touch rural areas where, despite being a world away from new metropolitan China, growth in the residential water treatment market is also forecast.
As development continues markets for residential water treatment, albeit of a different nature, will open up even more across a variety of different geographical segments.
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