By Lansun Chang

It was during the 1990 Asian Games, hosted in Beijing, that a paradigm shift toward the water treatment market in the region occurred.

One of the event’s official sponsors was a distributor of locally bottled water, Space Water. Although these distributors probably never realized it at the time, their presence initiated a major change in the perception of water in the Asian marketplace. As the audience consciously absorbed the competition and resulting scores, subconsciously they were awakened to a new lifestyle. It was the refreshing idea that consuming purified, bottled drinking water was far more appealing than the present common means of boiling tap water for consumption. This simple idea also signified a turn toward the modern world.

Since these games, the drinking water treatment market has grown tremendously in all Asian countries. Today, in the major cities of Hong Kong, Tokyo and Beijing—as well as Shanghai, China; Bangkok, Thailand; and Taipei, Taiwan—it’s commonplace for five-gallon water coolers to be delivered to office buildings and homes everywhere. This was something rarely seen, even as recently as five years ago. A variety of bottled water, including flavored assortments, continues to occupy increasingly more shelf space in stores. In addition, sales of water treatment equipment to consumers have quintupled since the 1990 Games.

Rapid growth markets
Asian entrepreneurs have prospered as a result of this growing demand for higher quality water. During the mid 1990s, the Angel water coolers were sold in China at all of the major department stores and distribution outlets. Mr. Jiang, founder of Angel water coolers, started his business without a factory and with only a minimal capital investment. Today, this same company has major distribution networks throughout the People’s Republic of China and focuses on inexpensive equipment sold through extensive distribution channels. The company has many factories and targets its sales through lower market entry points popular among consumers.

In the Philippines, the water market is also growing rapidly, but in a somewhat different direction. Franchised water stores have appeared all over Manila, and business people in the Philippines are selling not only the business concept but the associated equipment as well. These franchising operations thrive primarily by generating profits through selling water equipment, with the franchising fee providing minimal revenue. Under the same concept, Taiwanese water businesses survive primarily on revenue from equipment used to produce the inexpensive water coolers that populate the landscape throughout the island.

Water as treasured commodity
In the late 1990s, the Asian consumer became more sophisticated, demanding greater numbers and varieties of quality water treatment equipment. The water market has continued its momentous wave as a veritable social phenomenon, and is rapidly shifting from bottled water or point-of-use (POU) water coolers to the concept of installing upscale water treatment equipment and pre-packed water systems.

Presently in Korea, an upscale, hi-tech countertop reverse osmosis unit, with an upscale selling price of over $2,000 is gaining broad market share. The Korean residential market is growing so rapidly that one particular company has hired 10,000 direct sales personnel to meet the demand.

In Beijing, water softeners are being sold as a package with drinking water systems to become total home water solutions. According to an EcoWater Systems dealer, Beijing Friend Economic Developing Co. Ltd., Chinese consumers are purchasing water softeners as part of their lifestyle improvement plan.

Installation in homes
In one example cited by the Beijing dealer, a family purchased a water softener to better appreciate the taste of their coffee. This statement is similar to sentiments expressed by many other Asian customers who believe that treated water not only makes their tea more clear, but enhances the taste as well. The dealer continued to explain that many of his customers purchased their water treatment equipment to remove chlorine (which is thought by the Asian society to be a cause of carcinogens) and excess calcium, which is thought to cause kidney stones (in addition to scale).

In Taipei, many high-end residential buildings commanding premium rental prices are adding total water treatment systems. This complements the concept of exclusive housing and a first-class lifestyle. Residential developers are focusing their designs to include state-of-the-art appliances, including water softeners, among their products. Prominent political figures and high-level executives in Taiwan’s high-tech companies also own complete whole-house residential water treatment systems for their homes.

Policies mean business
On the environmental side, Asian consumers are becoming more aware and concerned over the effects of industrialization to their environment. A growing number of reports on escalating problems of contaminated water supplies and the presence of pesticides, animal diseases and other harmful impurities are amplifying concerns. According to a 1996 report by the Chinese EPA-equivalent, 42 percent of the drinking water supply in 32 of China’s major cities is contaminated.

In its 1999 Annual Report, the Asian Development Bank (ADB), an agency dedicated to reducing poverty in Asia and the Pacific, referred to the water quality and sanitation situation in Asia as “a major tragedy.” The report suggested that the majority of Asian cities weren’t prepared for higher population growth with respect to safe water and sanitation. The organization called on Asian citizens to take a committed stance to help governmental agencies develop stronger and more effective policies and strategies. Presently, the water industry is benefiting from these types of requests.

Heightened awareness
Having begun to educate themselves about these water quality issues, Asian consumers are becoming increasingly concerned that water used in their daily lives must be purified by methods which they themselves can control. Despite a year of declining growth trends, China’s economy grew an estimated 8.1 percent in the first quarter of 2000. In the same period, Hong Kong experienced a 13-year high growth rate. Japan is undergoing similar patterns. As these economies accelerate, unemployment plummets and person income rises, it’s a certainty that Asia’s middle class will grow. Along with this growth will come a demand for ways to provide for higher quality water in the home.

This growing awareness—combined with accelerated economy and growth amongst the region’s (particularly China’s) middle class—makes Asia a strong target for the water market. With the Asian upper class adding total home systems to their residential homes and businesses, the middle class will be quick to follow. Aspiring to a better way of life, Asian consumers on every level will be purchasing water treatment equipment and the trend in the “desire” for better water will quickly become a necessity and a way of life.

Conclusion
In conclusion, water treatment equipment is very marketable in rapidly developing Asian countries. As the standard of living rises, the newly wealthy are becoming increasingly particular about the quality standards of their local water supplies. Whether the trend follows the growth of a social phenomenon, economic trends or an increasing knowledge and awareness of environmental issues—the need for high quality water and resulting abundant business opportunities is crystal clear. Let’s look forward to how this is reflected at the next Asian Games in 2002 in Pusan, Korea.

References

  1. “Economics & Statistics,” Asian Development Bank online: http://www.adb.org
  2. “Economic Releases—International: China, Japan, Hong Kong” The Dismal Scientist online: http://www.dismal.com/economy/releases/economy.asp?View=International

About the author
Lansun Chang is vice president of international sales at EcoWater Systems Inc. in St. Paul, Minn. She has considerable experience in the water treatment industry and specializes in international markets. Chang can be reached at (651) 731-7458 or email: http://changl@ecowater.com

Share.

Comments are closed.