Political: Government’s 430 billion Yuan investment: 12th Five-Year Plan

According to the 12th Five-Year Plan1 for sewage treatment, China aims to improve its rate of treating wastewater to 85% in urban areas, 70% in county-level cities and counties, and 30% in towns by 2015.

Government intends to spend about 10% more on water conservation projects this year (RMB200b), to avert a worsening water crisis. It also hopes to double the current average annual investment in water conservation construction over the next 10 years.

Economic: China is undergoing unparalleled urbanization—the new middle class consumes more water than previous generations.

According to McKinsey2, by 2020, China’s private domestic consumption is expected to climb from 5th to 3rd globally.

Government intends to spend about 10% more on water.

Social: Many Chinese people are attracted to luxury goods. According to Forbes, the growing Chinese economy and urban expansion have produced

a class of wealthy consumers with great purchasing power and desire for consumption.

Technological: Bottled water declared not safe and not good for the environment

According to World Wide Fund for Nature3, 1.5 million tons of plastic are expended in the bottling of 89 billion liters of water each year.

1 Carey Wong, Water Sector: China Reveals More Conservative Methods

http://www.ocbcresearch.com/Article.aspx?type=strategy&id=20110408092818_12439 2 Global Insight August 2009, McKinsey Global Institute China Model

3 AllAboutWater.org, The Effects of Bottled Water: http://www.allaboutwater.org/environment.html

Strengths Weaknesses

Leading manufacturer of solid carbon block filters

Easy installation & maintenance Cost-effective (does not waste

water or electricity) Broad IP database .

Relatively unknown name in China and Asia Not the most aesthetically appealing of water

filters in the industry Chinese version of company website is still

under construction, improvement needed

Opportunities Threats

Water industry is still immature, highly fragmented market

Health is “in” now in China and Asia Environmental conservation is “in”

now in China and Asia Increase in consumer interest in

clean drinking water

Highly competitive business industry with small enterprises flooding in frequently

People tend to trust the “big names,” companies that are already well-established in China

o Examples: 3M, Canature (local Shanghainese brand), Pentair, Paragon, etc.

18 and Under Locals 5

19-35 Years Old Locals 20

36-55 Years Old Locals 15

56 and up Locals 20

18-36 Year Old Expats 15

TOTAL 75

6%

27%

20%

27%

20%

Survey Population

18 and Under Locals

19-35 Years Old Locals

36-55 Years Old Locals

56 and up Locals

18-36 Year Old Expats

1) Your Main Source of Drinking Water

18 and Under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Boiled Water 0 5 7 13 0

Bottled Water 5 7 4 2 5

Water Filter 0 5 3 2 8

Tap Water 0 0 1 3 0

RO Water 0 3 0 0 2

0 2 4 6 8 10 12 14

18 and Under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Main Source of Drinking Water by Age Group

RO Water

Tap Water

Water Filter

Bottled Water

Boiled Water

2) Your Idea of the Safest Drinking Water

18 and Under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Boiled Water 1 3 5 11 1

Bottled Water 3 3 5 2 2

Water Filter 1 6 3 4 10

Tap Water 0 0 0 2 0

RO Water 0 8 2 1 2

0 2 4 6 8 10 12

18 and Under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Idea of Safest Drinking Water Source

RO Water

Tap Water

Water Filter

Bottled Water

Boiled Water

3) Your Attitude Towards Shanghai Water

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Very reassured (100% OK) 0 0 0 0 0

Reassured ( <75% OK) 3 9 8 15 1

Unassured ( <50% OK) 2 8 5 5 6

Very unassured ( <25% OK) 0 3 2 0 8

4 Circle of Blue, Toxic Water: http://www.circleofblue.org/waternews/2013/world/toxic-water-across-much-of-

china-huge-harvests-irrigated-with-industrial-and-agricultural-runoff/

0 2 4 6 8 10 12 14 16

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Attitude Towards Shanghai Water

Very unassured ( <25% OK)

Unassured ( <50% OK)

Reassured ( <75% OK)

Very reassured (100% OK)

4) Huang Pu Jiang Dead Pigs Incident Has an Effect on Your Drinking Water Habits…

18 and up

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Yes 2 9 6 5 13

No 3 11 9 15 2

5 James Fallows, 2800 Dead Pigs in a Shanghai River: http://www.theatlantic.com/china/archive/2013/03/2-800-

dead-pigs-in-a-shanghai-river-how-did-this-happen/273892/

0 2 4 6 8 10 12 14 16

18 and up

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Huang Pu Jiang Dead Pigs Incident Has An Effect

No

Yes

5) Your Primary Consideration When Choosing a Water Filter

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Brand 1 4 1 1 4

Function 4 13 12 16 8

Price 0 3 2 3 3

Size 0 0 0 0 0

0 2 4 6 8 10 12 14 16 18

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Primary Consideration for Water Filter

Size

Price

Function

Brand

6) You Are Likely To Purchase a Water Filter in…

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

1 year (*=already have a filter) 0 8 (4*) 5 (3*) 3 (2*) 10 (5*)

2 years 0 4 1 2 4

3 years 0 2 2 5 0

More than 3 years (*=never) 5 6 3 10 (6*) 1

0 2 4 6 8 10 12

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Likeliness to Purchase a Water Filter

More than 3 years

3 years

2 years

1 year

7) Knowledge of Brands

18 and under

19-35 yrs old

36-55 yr sold

56 and up

18-36 Expats

Multipure 0 5 1 2 2

Pentair 0 4 1 1 0

3M 3 11 9 6 13

Ecosystem 0 1 4 0 0

None of the above 2 4 2 14 2

0 2 4 6 8 10 12 14 16

18 and under

19-35 yrs old

36-55 yr sold

56 and up

18-36 Expats

Knowledge of Brands

None of the above

Ecosystem

3M

Pentair

Multipure

8) Your Workplace Provides a Water Filter…

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Yes 2 12 6 6 12

No 3 8 9 14 3

0 2 4 6 8 10 12 14 16

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Presence of Water Filter at Work

No

Yes

9) A Water Filter in the Workplace Is…

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 yr old Expats

Very necessary 1 12 6 0 13

Necessary 4 8 5 7 2

Unnecessary 0 0 2 9 0

Very unnecessary 0 0 2 4 0

0 2 4 6 8 10 12 14

18 and under

19-35 yrs old

36-55 yrs old

56 and up

18-36 Expats

Necessity for a Water Filter at Work

Very unnecessary

Unnecessary

Necessary

Very necessary

Short Answer Results (Consolidated):

1) On average how much water do you consume per week?

-Range: 5L-20L (most common: 10L)

-Seems like older people drink less water (>36 years old usually drank

under 10L)

2) What kind of water do you currently drink? How much do you

spend? a. Bottled water (31%)

-Cost range: 10-50 rmb/week

-Many people would consider cheaper, healthier alternative

b. Filtered water (30%)

-Cost range: 200-1500rmb

-Brands: 3M, Pentair, Meidi, Nongfushanquan

-Many are company-paid filters

c. Boiled water (24%)

-Cost range: 0 rmb

3) Why do you drink this kind of water?

a. Bottled water: Convenient, clean, safe, healthy

b. Filtered water: Same as above, plus keeps good minerals, also

tastes better

c. Boiled water: Know it’s safe because boiled water gets rid of

harmful bacteria and pollutants, also TRADITION for many people

(especially the elderly generation)

4) What do you know about China’s current water situation?

-Many people said that they know the water situation is poor; there is a

shortage of high quality water; tap water is dangerous and unhealthy;

serious pollution exists

-Some people knew that bottled water in China is unsafe

-Some people admitted that their knowledge of China’s water is limited

5) Which is healthier? RO water without any minerals or filtered

water with minerals?

-Almost everyone answered filtered water with minerals, which is

strange because on the multiple choice section, it was pretty divided

6) What kinds of factors do you consider when choosing a drinking

water source for your family?

-Almost everyone answered cleanliness, healthiness, safety

-Quite a few mentioned price and convenience

-A small number specified the need for healthy minerals in their water

7) Where do you see the future of drinking water? Getting better or

worse?

-Most people were optimistic and positive, believed the situation will get

better as the government tries to find more ways to provide healthy

water

-Some think it can’t get any worse

8) How can you play your part in environment conservation?

(purpose of this question is to gauge how much people know about

environmental issues, and how much they care)

-Many people were very general and vague: conserve water, protect

environment, save natural resources

-A few people specified that they could cut down on electricity, increase recycling, reduce usage of plastic bags, replace plastic with glass or other reusable materials, use biodegradable plates and cups to serve food, take public transportation/bike/walk

Based on the results of this section, it is clear that many people are misinformed about China’s current water situation. Almost 1/3 of the people I interviewed were under the impression that water bottles are safe. Also, those who preferred boiled water were usually >56 years old and not open to changing their water source. This kind of attitude among the elderly narrows the target market to an age range of 25-55 years old, people who are financially independent (of their parents) or ready to start/sustain a family.

6 Jeremy Webb, China’s Social Media

Equivalents: Infographic Mk4 http://www.asiadigitalmap.com/2012/10/china%E2%80%99s-social-media-infographic-mk-4/