In the future, the product penetration rate of low-tier cities will increase

1, China's home care market growth space is huge

China's daily chemical industry covers five important livelihood daily necessities segments such as home care, fabric care, tableware care, personal care and pet care. In the past decade, with the growth of per capita disposable income brought about by the improvement of China's economic level, people have increasingly high requirements for quality of life, which has promoted the upgrading of consumption and the differentiation of daily chemical products, and further stimulated the potential growth of China's daily chemical market.

According to retail sales, in 2019, China's personal care, fabric care, home care, tableware care and pet care accounted for 78.6%, 12.3%, 5.2%, 2.6% and 1.2% of China's daily chemical industry, respectively. The diversification, differentiation and high-end of China's daily chemical market categories are the main direction of future growth.

For example, in 2019, in the United States, home care and fabric care market volume is similar, while China's home care retail sales are only 42% of fabric care, and from the per capita spending point of view, in 2019, the consumption level of home care products in the United States is 13 times that of China, so China's home care market has huge room for growth.

China has the world's second largest home care market after the United States. Retail sales of China's home care industry increased from 21.6 billion yuan in 2015 to 30.5 billion yuan in 2019, corresponding to a compound annual growth rate of 9.0%, which is much higher than the global growth rate of 3.6%.

2. China's home care online channels are growing rapidly

China is the world's largest e-commerce market. In recent years, the popularity of China's mobile Internet and the upgrading of logistics technology and payment technology have promoted the continuous vigorous development of China's e-commerce. In 2019, the online sales channels of China's home care products accounted for 19.0%, which is still at a low level compared with consumer goods such as consumer electronics (45.8%), home appliances (44.5%), clothing and footwear (34.3%), and personal care (30.3%), and there is huge space for online sales development.

The proportion of online sales channels in China's home care industry increased from 12.6% in 2015 to 19.0% in 2019, and the compound annual growth rate of online retail sales was 20.8%.

In recent years, consumer spending on home care products in all tier cities has continued to increase. In China's lower-tier cities, home care products are still in the early stages, and the penetration rate is relatively low. In 2019, the penetration rates of household cleaning products, insecticidal and mosquito repellent products and air care products in low-tier cities were 34.6%, 60.2% and 15.8%, respectively, lower than 61.0%, 67.9% and 25.4% in first-tier cities and 44.2%, 63.4% and 20.6% in second-tier cities.

As people pay more attention to health and comfortable living environment, it is expected that the penetration rate of these three types of home care products in low-tier cities will further increase in the future.

3, environmental awareness to promote the growth of home cleaning market

With the growing consumption level, increasing awareness of home environment cleaning, increasing demand for convenience, and consumers' preference for natural and environmentally friendly products, China's home cleaning market has great growth potential: China has the world's second largest home cleaning market, with retail sales growing from 13.5 billion yuan in 2015 to 19.3 billion yuan in 2019, with a compound annual growth rate of 9.5%, much faster than the global market growth rate of 3.4%.

4. New portable mosquito repellent products are growing rapidly

China's insecticidal and repellent market has huge growth potential: China's insecticidal and repellent market is the world's largest insecticidal and repellent market, and its retail sales increased from 6.2 billion yuan in 2015 to 8.4 billion yuan in 2019, with an annual compound growth rate of 8.0%, which is much faster than the global market growth rate of 3.4%(according to the current year's yuan).

New portable mosquito repellent products focusing on outdoor travel scenarios, benefiting from their safety and convenience, have become the fastest growing sub-category in China in the past five years, with its retail sales growing at a compound annual growth rate of 32.6% from 166.4 million yuan in 2015 to 515.3 million yuan in 2019. From the traditional to the new form of product transformation, the new form of product upgrading to promote the growth of the industry.

The insect-repellent market is divided by form, from traditional products such as pan incense to electric mosquito repellent tablets/electric mosquito repellent liquid, to mosquito nets, mosquito repellent liquid, mosquito wipes, etc. In 2019, new forms of insect-repellent products (including electric mosquito-repellent tablets/electric mosquito-repellent liquid and outdoor portable products) accounted for about 44% of all retail sales of insect-repellent products in China, while in some developed markets, the proportion often exceeds 70%.