Three Major Changes in China's Sanitary Ware Industry After the 2020 Pandemic

1. The industry has entered a reshuffling stage.

This pandemic is a major health check for our industry. Some small-scale enterprises, family workshop-style businesses, or those unwilling to build a brand will be eliminated. The same reshuffling process applies to distributors. Distributors that do not operate on a large scale, do not have corporate operations, lack brand awareness, and do not have team operations will definitely be at a disadvantage. The difficulties brought by the pandemic are faced by everyone and are temporary, but our lives continue, and people's pursuit of a better life remains unchanged. With the overall strength of China growing and the increasing confidence in cultural consumption, patriotism and the use of domestic products have become increasingly favored expressions among consumers today. Therefore, this is also an era of the rise of domestic products.

2. The competitive landscape of the industry's stock market will greatly intensify, and the market will enter a period of old renovation and incremental growth.

Let's look at some data. Last year, the scale of China's home building materials market was expected to reach 2.23 billion yuan. Since 2018, the real estate market has actually entered the era of stock housing, with the new housing market significantly shrinking, which will have a considerable impact on the industry. However, we also see that the proportion of old house renovations and second-hand houses is increasing year by year, with last year's renovation volume accounting for over 40%. This year's market share will be relatively stable, with the full renovation market accounting for 29%. These two areas will become important battlegrounds for our competition. Additionally, this year, plans to renovate 39,000 old urban communities across the country will involve nearly 7 million households, doubling from last year. The old renovation market will become a significant source of growth. This presents a very big opportunity for us this year.

3. Consumers' consumption concepts and habits have changed, further promoting the upgrade of home decoration consumption, which is directly related to our company's product research and promotion direction.

In 2018, the National Development and Reform Commission proposed the conclusion that consumption upgrade is accelerating, marking the beginning of the consumption upgrade 1.0 era. This year, the National Development and Reform Commission issued another document proposing to further align with the trend of consumption upgrade and put forward a series of implementation opinions, thus opening the consumption upgrade 2.0 era.

Keywords such as more rational, more sustainable, and healthier will lead to a reshuffling of the existing consumer market. In the bathroom and home decoration market, health, customization, and smart products have become the focus of consumer attention. First, health has become the primary core demand for home decoration. In a media interview, 85% of consumers stated that they will pay more attention to health and environmental protection when purchasing home products in the future. The demands for protection, sterilization, and health in home products are prominent, which requires companies to conduct in-depth product research and technological innovation to provide consumers with systematic, professional, and scientific overall solutions for healthy home living.