Clean Air for Sale in China

Residents of Chinese cities choked with air pollution look to air purifiers to breathe easier.

By Joseph Luk

As China’s cities experience record numbers of hazardous smog days, sales of residential air purifiers have been booming. Overall sales of air purifier products on average increased 11 percent annually between 2010 and 2012, according to China’s Ministry of Commerce.

The air purifier market still has plenty of room to grow, according to market consultancy TechSci Research, which projects that China’s air purifier market will grow 34 percent annually over the next five years. The Broad Group, a Chinese manufacturer, estimates that China’s air purifier market size could exceed $33 billion in the next five years.

Opportunities for businesses

The rising demand for air purifiers has presented opportunities to American multinationals and entrepreneurs.

American consumer and commercial products company Honeywell International Inc. reports that sales of the company’s air purifiers have increased by 50 percent annually for the past three years, says Ling Zhen, Honeywell’s Asia Pacific director of homes and indoor environment control. Those sales aren’t limited to residential purchases. The company also markets to Chinese government hospitals, airport terminals, metro stations, libraries, museums, and hotels. Last April, Honeywell was also awarded a contract to equip SOHO China, a high-end commercial complex in Beijing, with its air purifiers.

China’s demand for clean air has attracted American entrepreneurs as well. Oransi, a startup air purifier manufacturer based in Austin, Texas, exports high-end air purifiers to China. One of Oransi’s high-efficiency particulate absorption (HEPA) purifiers sells for $1,500. According to a Sina report, the most popular models in China sell for somewhere between $495 and $660 (¥3,000-4,000).

Oransi CEO Peter Mann said that he thinks there is space in the China market for his company to compete at the high-end. “People have been reaching out to us mostly through our website’s contact us form,” Mann said. “I haven’t purchased any professional market research in the last three years. We’re just trying to keep up with the demand that we have.”

Oransi recently shipped the first 500 units to Chinese distributors to get the units in stores before the Chinese New Year. The company has also sold nearly 1,000 additional units to Chinese distributors to be shipped at a later date.

Despite China’s market size and logistical advantages, Mann said his company decided to base manufacturing operations in the United States instead of China. “We looked at making [the purifiers] in China because it would be much simpler, but we found that we can make the best quality products in the United States,” he said.

DIY workshops

On the other end of the price range, Smart Air Filters, Inc. offers customers air filters from a variety of suppliers through its website. Smart Air hosts do-it-yourself workshops in China to teach people how to assemble their own air purifiers. The components kit costs 200 RMB ($36) and the workshops cost the same amount separately.

Thomas Talhelm founded Smart Air when he was studying in China as a Fulbright scholar. While he was in Beijing, he was uncomfortable paying $1,000 for a recommended air purifier.  Instead, he studied the mechanics of an air purifier, and built his own by strapping a HEPA filter to a fan.

He published the results on his blog and says that the DIY filter compared favorably to more expensive brands. His workshops are now regularly booked out in Beijing, and Smart Air plans to expand workshops to Shanghai and Chengdu.

Talhelm says Smart Air had a “huge spike when Shanghai had its own “airpocalypse,” and sales doubled every day for three days.” Smart Air’s customers initially were mostly expats, but now sales on Taobao, an e-commerce site that primarily targets Chinese customers, have exceeded sales through PayPal, which is primarily used by expats. Despite the success, Talhelm says Smart Air’s founders are not in it for the money.

“We make money on each sale, but the money is going back into the business for increasing sales, salaries, new samples, and equipment. My main goal is to help people get clean air without getting ripped off, not make tons of money,” Talhelm says. “Recently someone called us a ‘social enterprise,’ and I think that’s about right.”

Talhelm says he believes people are willing to spend a lot on air filters because they have no way of knowing whether they work. “So people assume that the more expensive it is, the better it works,” Talhelm says. This is why he started a blog to educate readers on purifier tests.

“My argument is not that the expensive purifiers are ineffective,” he says. “I’ve tested a half dozen expensive purifiers, and I found great results with all of them. My complaint is that there’s no reason they need to be that expensive. I’ve seen models for RMB 16,000 ($2,645), and that blows my mind.”

Growing market

Karan Chechi, research director at TechSci Research, says that a lack of awareness among Chinese consumers has limited sales of residential air purifiers so far. But that is about to change.

“With the increasing purchasing power of residential consumers coupled with rising air pollution concerns, a shift from entry-level air purifiers to mid-segment air purifiers, i.e. $501-$1,000, is expected in China during the next five years,” Chechi says.

Mann says that consumers will have to take purchasing decisions “on a case by case basis and see what works best for them.” Depending on a consumer’s needs, which could vary based on respiratory conditions or habits such as smoking, Mann says a customer should consider the size of the room the filter will be used in, how well the filter can catch the finest particles, and whether the filter’s noise-level is acceptable.

“There is an education gap, and it’s hard to show the benefits or performance of a better product versus a lower-end, cheaper product,” Mann says. Mann says customers should pay attention to how well an air purifier filters out PM 2.5 (particulate matter less than 2.5 microns in diameter). The US Environmental Protection Agency uses PM 2.5 measures to assess health risks in outdoor air. It’s also the measure the US embassy in China reports daily on its Twitter feed. For indoor air, Mann says the standard is to use the same scale with a laser particle counter to ensure the customer is getting the desired results.

In a statement to the Chinese media, Honeywell’s Ling said that the air purification industry needs standard metrics to assess the effectiveness of air purifiers. “How is a product’s filtration level determined? What organizations can establish the product standards and how do we make those organizations authoritative? How do we ensure consistency between testing conditions and practical use? These are all questions that need to be addressed.”

[author] Joseph Luk ([email protected]) is assistant editor of the China Business Review. [/author]

(Photo by Lei Han via Flickr)