CHINESE

  Despite the broad sluggishness of water heater market amid the outbreak in H1 2020, rapid heating electric water heater sector stood out with a rise in sales, making it a dark horse of the industry.

  An estimated market size of 5 billion Yuan for 2020

  Storage water heater and tankless water heater have been the mainstream of the market. In recent years, rapid heating electric water heater sector comes in the sight of consumers with a strong growing momentum though it is still a niche market.

  Currently, there’s no definition of the niche category yet. Consulting companies haven’t listed it as a separate category statistically as well. But I learn from my interviewees that, mainstream enterprises have achieved exciting sales of it in the first half of 2020. Midea and Micoe posted good sales; Vanward saw the category take the lead of its sales growth. Yang Hong, Product Director of Electric Water Heater Division of Vanward, is not satisfied with the performance. He says, “It has not reached our expectation yet. We have high hopes for this product.”

  It is believed that the rise of rapid heating water heaters is reasonable. With the pace of life getting faster, consumers want a faster showering experience than ever. Plus, with the stay-at-home order on during the pandemic, traditional storage water heater could hardly meet the showering demand of a whole family with limited hot water supply, which makes rapid heating a core appeal of consumers.

  Speaking of the market size, Yang Hong estimates that, it could reach 5 billion RMB this year considering the fast growth of the category during the pandemic.

  The market size of rapid heating category and that of tankless category are about the same. But mainstream enterprises are more bullish on rapid heating type. I learn that, a number of mainstream brands have started their deployment and R&D of the category though currently rapid heating water heater brands on the market are few.

  A sector with edges as well as drawbacks

  Hot water solution is an important demand of a household, which makes water heater industry a battlefield of industry players. With storage water heater criticized for its large size and slow heating speed and tankless water heater for its high power consumption, rapid heating water heater, a new category between the two existing types, was developed to address the pain points.

  Smaller in size and faster in heating speed compared with storage type, rapid heating water heater runs on lower power (5kw-5.5kw) than tankless type. Han Baodong, Director of Water Heater Division of Micoe, says, Chinese families normally prefer 60L electric storage water heater to meet their showering demand. The same amount of hot water can be supplied by a 20L rapid heating water heating with a shorter pre-heating time of around 10 minutes.

  But the category has its drawbacks too. Yang Hong points out that, the major drawbacks are high cost and high power demand.

  At the early stage of development, the cost of manufacturing a rapid heating water heater is high. Qi Jingwei, Product Manager of Rapid Heating Line of Midea’s Water Heater Division, reveals that, rapid heating models are at an average price of 3000RMB while the mainstream storage types at 1500RMB-2000RMB.

  Though the power consumption of rapid heating model is not as high as tankless type, it’s till much higher than storage type. The power consumption of it is between 5kW-7kW. Qi Jingwei says, the circuit designs of new houses can support the operation of the product but old houses cannot unless the circuit lines get updated.

  Industry insiders believe that, the fast development of the industry and city facilities will fix the high cost and high power requirement issues and allow the category to grow at a faster pace.

  A lack of standards

  The lack of definition hinders the development of the industry.

  It’s interesting that when I ask my interviewees about the category, they all reconfirm with me to see if I muddle up tankless type with rapid heating type, making sure we’re on the same page. When I contacted consulting companies regarding statistics of the category, I was told that the category has not been singled out in their monitoring of statistics yet.

  An industry insider explains that, there is no clear definition that frames the category yet, which leads to confusion in marketing and publicity.

  Rapid heating water heater is in its early stage and has not grown into a separate category yet. It is not singled out in distribution and there has been no industry standard regarding it yet. The R&D of this product mostly refer to standards for electric water heaters and tankless heaters.

  “For this reason, some enterprises call their products rapid heating type in publicity only by adding a rapid heating module to traditional storage type while others call their tankless type rapid heating type. This is not good for industry development. ” An industry insider stresses that the establishment of standards for rapid heating water heaters is necessary for industry development.

  Yang Hong points out that, higher power consumption and the addition of heating tubes do not make a product a rapid heating type. Innovations in structure design and processes are important. He says, currently, there are no standards in product structure, packaging, and publicity of rapid heating water heaters, which lead to false advertising and over hype. This will influence consumers’ recognition of the product and hurt industry development.

  Speaking of the prospect of the category, industry insiders are confident. Han Baodong believes that, the category has more potential than tankless models and has a bigger change to go mainstream. Qi Jingwei believes that, the upcoming 1-2 years will be a market cultivation period with limited growth but after that, the growth will pick up. She estimates that, the category will take 10%-20% of electric water heater market down the road.

   

  Click the following link to visit the website of China Household Electrical Appliances Association for more information:

  http://en.cheaa.org/


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