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China’s Home Air Purifiers Market Research

April 2014

© 2014 PIM Ltd. All rights reserved. No part of it may be circulated, quoted, or reproduced without prior written approval from PIM Ltd.

SummaryAir Quality• Currently ,China faces serious air quality challenges in both outdoor and indoor environments

– Of the 74 monitored cities in China, around half of them are suffering from some degree of air pollution and PM2.5 and PM10 are the main pollutants in 70 out of 74 monitored cities in China

– Of the 590 families sampled in seven cities, the concentration values of formaldehyde, methylbenzene and dimethyl benzene exceeded the standard values by noticeable rates

Market Context• Meanwhile, China is the biggest air purifier producer for the global market. Exports were 9.32 million air purifiers with a value

f 482 illi USD i 2012 i l t J K d N th A iof 482 million USD in 2012 , mainly to Japan, Korea and North America • Compared with 2011, China’s household air purifiers market size in 2012 grew at 50% by sales volume at a value of 0.43

billion USD• By the end of 2012, there were a total of 223 air purifier producers or brand owners in the China market, of which, 86%

being distributed in Southeast Chinabeing distributed in Southeast China Technologies• HEPA, Active Carbon, Photo Catalyst, Plasma, Static Electricity, Anion, ULPA have been reviewed in the study; there is no

single one can solve all of the air pollution problems• Filtration and absorption technologies would still dominate the market as they are safe and have relatively high efficiency for• Filtration and absorption technologies would still dominate the market as they are safe and have relatively high efficiency for

removing the key pollutants- PM and formaldehydeMarket Needs• Potential customers expect air purifiers with pricing ranging from 163.9 to 327.8 USD/unit, filters life cycle of 1 to 2 years

with replacement cost lower than 32.8 USD/yearp y• Technologies that meet the following requirements are eagerly needed:

– Longer life span, ideally 1 to 2 years– Integrated all-in-one technology. One layer filter with multiple functions of removing PM, formaldehyde, TVOC, foul odors,

etc

© 2014 PIM Ltd. All rights reserved. No part of it may be circulated, quoted, or reproduced without prior written approval from PIM Ltd. 2

– Higher efficiency for removing formaldehyde, ideally >=99.9%– Recyclable

Table of ContentsTable of Contents

• China’s Outdoor and Indoor Air Quality OverviewChina s Outdoor and Indoor Air Quality Overview

• China’s Air Purifiers Market Assessment

• Technology and Products Evaluation

• Customers Survey

• Appendix- Standards


Currently ,China faces serious air quality challenges in both outdoor and indoor environments

China’s Outdoor and Indoor Air Quality Overview_ Air Pollution Sources

and indoor environments

CO, etc.

PM2.5 PM10

SOSO2 , NO2


Formaldehyde, benzene, TVOC and PM2.5 could be harmful to human health when the concentrations exceed a certain level

China’s Outdoor and Indoor Air Quality Overview_ Harms

health when the concentrations exceed a certain level

Pollutant Property Harms Sourcep y

Formaldehyde

Colorless irritant gas, can be absorbed by respiratory tract

• It may cause tears, throat discomfort, nausea with low concentration and death with high concentration;

• Cancers the of nasal cavity oral cavity

• Formaldehyde-containing decoration materials

• Combustion productsFormaldehyde Cancers the of nasal cavity, oral cavity,

throat, skin and alimentary canal could be caused by long-term exposure to formaldehyde

Colorless • Inhibition of human hematopoietic Paint, liquid detergent, wood

Benzenetransparent oily liquid, volatile,combustible

pfunction;

• May cause anemia, infection, bleeding under the skin; dysfunction of brain, liver, kidney

, q g ,stain, plastic pipes

TVOC

Compounds with boiling range between 50~260℃

• It could causes irritation and discomfortby 3.0~25 mg/m3

• When the concentration is over 25 mg/m3, it may cause neurotoxic effect

Quick-drying paint, coating, adhesive, maquillage, detergent, decoration materials, etc.

P i l i i i h I k i l l d i i P l ll

PM2.5

Particles in air with diameters less or equal to 2.5 μm

• It may provoke arterial plaque deposition, cause vascular inflammation and atherosclerosis

• It is harmful to the respiratory system and the cardiovascular system

Power plants, metallurgy, petroleum, textile, chemical industry, automobile exhaust


Source: PIM research and analysis, October 2013

y

Of the 74 monitored cities in China, around half of them are suffering from some degree of air pollution

China’s Outdoor and Indoor Air Quality Overview_ Outdoor Air Quality

from some degree of air pollution

Air Quality Level in the Monitored 74 Cities* in China in the First Half Year of 2013S i ll ti

7.5%

9 5%

8.8%

Serious pollution

2.8%

Heavy pollution

Moderate pollution

ExcellentTop 10 most polluted Chinese Cities in 2012: - Lanzhou- Beijing9.5% Beijing- Urumqi- Chengdu- Xi’an- Tianjin

Xi i

Mild pollution25.4%

Good46.0%

- Xining- Nanjing- Harbin- Zhengzhou

Description AQI** value Description AQI value

Excellent 0~50 Moderate pollution 151~250

N t *74 iti i l d 23 it l iti ll th i i liti d iti f th d l d Y t Ri D lt P l Ri D lt

Good 51~100 Heavy pollution 250~300

Mild pollution 101~150 Serious pollution 301~500


Notes:*74 cities includes 23 capital cities, all the municipalities, and some cities from the developed area - Yangtze River Delta, Pearl River Delta.**AQI: Air Quality Index

Source: The Environmental Quality of the first half year of 2013, issued by Ministry of Environmental Protection of China

PM2.5 and PM10 are the main pollutants in 70 out of 74 monitored China’s Outdoor and Indoor Air Quality Overview_ Outdoor Air Quality

cities in ChinaSample: 74 monitored cities

33194.6%

82 4%90%

100%

300

350 Over-limit rateConcentration

(μg/m3) 4 Kinds of Pollutions

172

82.4%

58.1%50%

60%

70%

80%

200

250Min

Max

A172

138

7276

123

7060 20.3% 20%

30%

40%

50%

100

150Average

Standard value

Over-limit rate by

2443

6 1743 4435

60

40

0%

10%

0

50

PM2.5 PM10 SO2 NO2

O e t ate bynumber of samples


Notes: * 74 cities includes 23 capital cities, 4 municipalities, and some cities in Hebei province, Yangtze River Delta, Pearl River Delta, etc. China had about 500 air quality observation points in 74 cities in 2012

Source: The Environmental Quality of the first half year of 2013, issued by Ministry of Environmental Protection of China

7

Due to the combination of industrial and automobile gas discharges, the air of the cities in northern China and along the eastern coastal

China’s Outdoor and Indoor Air Quality Overview_ Outdoor Air Quality

the air of the cities in northern China, and along the eastern coastal areas, is heavily polluted

PM2 5 C t ti Di t ib ti i ChiPM2.5 Concentration Distribution in China

Beijing

Hebei

ShanghaiJiangsu

0 5 10 15 20 50 60

PM2.5 concentration (μg/m3)

Guangzhou


Notes: WHO standards: Density of PM2.5<=10 μg/m3


Indoor air pollutants come from various sources and are potentially harmful to human health

China’s Outdoor and Indoor Air Quality Overview_ Indoor Air Pollutants Source

harmful to human health

Inhalable particles

Deposition in Pulmonary bronchi and gas exchange interface

Deposition in trachea and pulmonary bronchi

Deposition in the upper respiratory tract (nose and larynx)

Pets allergensBacteriaVirus

Indoor dust mite allergensPollen

p y g g

Pollen

Fungal sporeLampblackCarbon black Flying dustSmoke

Cement powder Large dust

Environmental Tobacco Smoke

Gaseous Cement powder Large dust particlesSedimentary dust

PM10PM2.5Ultra-fine dust particles

Gaseous pollutants

0.0001 0.001 0.01 0.1 1 5 10 30 100 1000Microbial pollutants Particulate pollutants Gaseous pollutants YardstickUnit: μm


• Averagely, adults stay indoor for about 15~20 hours per day, and inhale around 32 kg air

Of the 590 families sampled in seven cities, the concentration values of formaldehyde methylbenzene and dimethylbenzene exceeded the

China’s Outdoor and Indoor Air Quality Overview_ Indoor Air Quality

of formaldehyde, methylbenzene and dimethylbenzene exceeded the standard values by noticeable rates

Sample: 590 families*p


Notes: Shanghai 105 families, Suzhou 99 families, Nanjing 99 families, Wuhan 97 families, Chongqing 78 families, Chengdu 88 families, Hangzhou 24 familiesSource: Formaldehyde and Benzene concentration Inspection Report-2011, written by Indoor Environment and the Health Branch of China Environmental Science Institute

The average concentration of formaldehyde in Hangzhou and Nanjing is slightly over the standard value however the maximum values in


is slightly over the standard value, however, the maximum values in all the cities have far more exceeded the national standardSamples: 590 families

40% 40%

45%0.7Over-limit rate

Concentration(mg/m3) Formaldehyde Pollution

0.5838%

26%

40%

30%

35%

40%

0.5

0.6

min

0.26

0.33 0.34

0.29

0 250.25

25%

19%

15%

20%

25%

0.3

0.4max

average

0.25

0.070.11

0.080.11

0.07 0.07 0.07

15% 15%

5%

10%

15%

0.1

0.2 standard

rate

0.005 0.02 0.005 0.005 0.005 0.005 0.0050%0Shanghai Hangzhou Suzhou Nanjing Wuhan Chongqing Chengdu


Source: Formaldehyde and Benzene concentration Inspection Report-2011, written by Indoor Environment and the Health Branch of China Environmental Science Institute


Families in Shanghai, Nanjing, Wuhan and Chengdu are seriously suffering from methylbenzene pollutants and more importantly thesuffering from methylbenzene pollutants, and more importantly, the maximum values highly exceed the indoor air quality standard

Samples: 590 families

60%2.5Over-limit rate

Concentration(mg/m3) Methylbenzene Pollution

1.97

1.74 1.79

40%

52%

41%

49%

40%

50%2

Min

1.41

1 07

38% 38%40%

28%30%

40%

1

1.5Max

Average

0.37

1.070.77

0 26 0 31 0 31 0.2210%

20%

0.5

g

Standard value

Over-limit rate by

0.005 0.02 0.005 0.005 0.005 0.005 0.005

0.260.15 0.17

0.31 0.310.18

0.220.2

0%0Shanghai Hangzhou Suzhou Nanjing Wuhan Chongqing Chengdu

Over limit rate by number of samples



Families in Hangzhou, Nanjing and Chongqing are heavily suffering from dimethyl benzene pollutants and more importantly the


from dimethyl benzene pollutants, and more importantly, the maximum values highly exceed the indoor air quality standard

Samples: 590 families

80%1.6

Over-limit rateConcentration

(mg/m3)

Dimethylbenzene Pollution

1.45

1.12 1.06

67% 67%63%

60%

70%

1.2

1.4

Min

0.63 0 59 0.6334%

47%

40%

30%

40%

50%

0 6

0.8

1Max

Average0.63

0.33

0.59 0.63

0.160.24 0.2

0.25

0 12

0.24 0.16

20%

10%

20%

30%

0.2

0.4

0.6Standard value

Over-limit rate by number of samples

0.008 0.04 0.008 0.008 0.008 0.008 0.008

0.16 0.12

0%0Shanghai Hangzhou Suzhou Nanjing Wuhan Chongqing Chengdu



In-car pollutants mainly come from interior parts, outdoor pollutants and smoking

China’s Outdoor and Indoor Air Quality Overview_ Pollutants in Cars

and smoking

Main In-car PollutantsS D i i P bl H f l l lSource Description Problems Harmful level

Interior parts −Parts like carpet, PU seat cushion, leather, textile fabric, plastic and coating, etc.−Are the results from the production processes of using adhesives

Release chemical pollutants and harmful gases into the air, like VOCs, formaldehyde, benzene and etc

High

of using adhesives and etc.

Running of theengine

−After long time running, the generated heat increases the release of pollutants −Produce harmful pollutants like amine and nicotine

Medium

Outdoor pollutants −Usually be inhaled by the air conditioning PM2.5 and smoke, etc. Mediumand smoking in cars system

−Smoking in car

Decorations −Like the inferior plush toys Release TVOCs into the air Low

• The air pollution in-car is different from in-door because of the following in-car features:− High airtightness, doors and windows are closed in most cases, which is not conducive to the spread

of harmful gases− High temperature environment, due to the sun exposure though the glass windows and long time

running of the engine, TVOCs are easily released out into the air− High population density, limited interior space


Source: 1. PIM interview sand analysis, October 2013

14

Of the106 sampled automobiles, the concentration levels of TVOC, methylbenzene and xylene in over half of them exceeded the standard

China’s Outdoor and Indoor Air Quality Overview_ Air Quality in Cars

methylbenzene and xylene in over half of them exceeded the standard value. Air pollution in newer cars is more serious than older cars

Pollutantρ (mg/m3) ρ (range) (mg/m3) ρ (average) (mg/m3) Over-limit rate (%)

Standard value

New cars Old cars Newcars

Old cars Newcars

Old cars

Formaldehyde <=0.10 0.01-0.15 0.01-0.09 0.065 0.039 11.5 0

Benzene <=0.11 0.003-1.125 0.002-0.403 0.101 0.078 17.3 13

Methylbenzene <=1.10 0.008-26.74 0.005-1.192 1.059 0.248 67.3 46.3

Xylene <=1.50 0.01-4.991 0.006-1.713 0.588 0.335 73.1 59.3

TVOC <=0 60 0 268-8 428 0 029-3 935 4 4 1 28 90 4 64 8TVOC <=0.60 0.268-8.428 0.029-3.935 4.4 1.28 90.4 64.8

ρ: concentrationSample: 106 passenger carsSample: 106 passenger cars


Source: Air Pollutions in Automobiles, Qian Hua, Shanghai Environmental Science Research Institute

The public anxiety concerns over the emergence of SARS and measuring PM stimulated the development of the air purifier industry

China’s Air Purifiers Market Assessment_ Development History

measuring PM stimulated the development of the air purifier industry. The media coverage of these issues have been the main source of awareness

The SARS event in China generated concerns on air quality. S f i t th t

The air purifier products for removing formaldehyde launched by Yadu in this year, combined

ith di ’ b d t f th

Several cities in China suffered from pollutant generated haze. Under stress from the public, the government

d th it i f PM2 5Some foreigners at that time turned to air purifiers as indoor air clean solutions

with media’s broadcast of the relationship of formaldehyde and leukemia, One of Yadu’s products won a sale of 50,000 units

announced the monitoring of PM2.5 levels to be publically available. Together, with media’s broadcasting, the air purifier industry has boomed

Events

2003 2005 2011 20122010

− Around 200 producers/brands owners− Foreign players dominated the industry−Top 4 players: Philips, Panasonic,

− Main players: Yadu− Yadu’s air purifier products accounted for around 80% of the market share

Industry Structure

Sharp, Yadu− Market share of the top 4 players accounts for around 77%

market shareStructure



By the end of 2012, there were a total of 223 air purifier producers or brand owners in the China market of which 86% being distributed in

China’s Air Purifiers Market Assessment_ Producers Distribution

brand owners in the China market, of which, 86% being distributed in Southeast China

Ai P ifi P d B d O Di t ib ti b R iAir Purifiers Producers or Brand Owners Distribution by Regions

North China

Southwest Northeast3%South Central China

North China5% 3%

3% Cities Main producers or brands owners

Shanghai Philips, Sharp, Blueair, Daikin, 3M, Honeywell, etc.3M, Honeywell, etc.

Beijing Panasonic, Yadu, IQAir, Austin, LG, Samsung, Moral,etc.

Hefei Royalstar Solveair etc

86%

Southeast China

Hefei Royalstar, Solveair,etc.

Foshan Midea, Apajia, TOSHIBA, etc.

Southeast China



As an emerging field, the development of the air purifiers industry is mainly driven by concerns of heavily polluted air conditions and

China’s Air Purifiers Market Assessment_ Driving Factors and Obstacles

mainly driven by concerns of heavily polluted air conditions, and faces challenges of insufficient regulations and supervision

Driving Factors Obstacles• Concerns on outdoor and indoor air qualities

−Air quality in outdoors and indoors has continued to deteriorate in recent years: The average concentration of PM2.5 in China’s monitored cities was 0 085mg/m3 in 2011 and increased towas 0.085mg/m3 in 2011,and increased to 0.172mg/m3 in the first half of 2013

• The widespread media coverage of the negative effects of poor air quality to people’s health:

• The industry standards of air filter products’ quality and detection systems are not unified. Different companies may use dissimilar detection standards− The statistics from NEPA* showed that 8,572

deaths in Shanghai, Guangzhou Xian and Beijing in 2012 were caused by PM2.5 pollution

− It was also reported that in 2011, Harbin Hematological Malignance Research

use dissimilar detection standards, which may result in consumer confusion and unhealthy development

• Deceptive and exaggerated advertising f i filt d t ’ f ie ato og ca a g a ce esea c

Institute received and treated over 1800 cancerpatients,46.7% of who suffered from indoor environmental pollution

• The income level of Chinese in cities is increased with

of air filter products’ performance is misleading customers and once exposed, a crisis of mistrust may spread among customers

• The income level of Chinese in cities is increased with more people able to afford health related investment

−NBSC** reported in 2009, the average disposable income of urban residents was 17,726 Yuan and increased to 26,959 Yuan in 2012


Notes: *NEPA: National Environmental Protection Administration ** NBSC: National Bureau of Statistic of ChinaSource: PIM research and analysis, October 2013

Compared with 2011, China’s household air purifiers market size in 2012 grew at 50% by sales volume at a value of 0 43 billion USD

China’s Air Purifiers Market Assessment_ Market Size

2012 grew at 50% by sales volume at a value of 0.43 billion USD

Sales Volume and Growth RateUnit: 10k units

Sales Value and Growth RateUnit: Billion USD

175

117+15%+50%

Unit: Billion USD0.43

0 29

+23%

117

928476

+15% 0.29

0.230.210.19

2008 2009 2010 2011 2012

• The market grew smoothly before 2010, and it was boomed by the emerging concept of PM which caused concerns on China’s air quality among customers Th lli i i b t 245 9 USD/ it (1 500 RMB/ it)

2008 2009 2010 2011 2012 201020092008 20122011

• The average selling price is about 245.9 USD/unit (1,500 RMB/unit) • By 2012, the total installation base is estimated at around 6 million units, and the household penetration

rate is around 6 million/ 200 million urban households=3%. The penetration rate in Beijing reached 16.2% by 2011



Meanwhile, China is the biggest air purifier producer for the global market Exports were 9 32 million air purifiers with a value of 482

China’s Air Purifiers Market Assessment_ Export Market

market. Exports were 9.32 million air purifiers with a value of 482 million USD in 2012 , mainly to Japan, Korea and North America

Export Market Size by Units Export Market Size by Value(Million Units)

p y(Million USD)

8.97

9.32

9

9.5

472 482500

600

7.98

8.5 361

200

300

400

7

7.5

2010 2011 20120

100

200

2010 2011 2012

• China is the world’s largest air filter producer, accounting for around 60~70% of the global consumption• The main consuming markets are America, Japan and Korea

2010 2011 2012 2010 2011 2012


Source: China Customs

g , p

In 2012, about 80 thousand after-market vehicle air purifiers had been sold with a market value of 6 56 million USD1

China’s Air Purifiers Market Assessment_ Market Size and Projection for Vehicle-mounted Air Purifiers

sold, with a market value of 6.56 million USD1

Market SizeF t i t ll d f t th i ifi d

Factory-installed VS. After-market

474560

662

600

700Thousands units

• Factory-installed refers to the air purifier and systems which are integrated into a car before the car leaves the factory

Vehicle-mounted Air Purifier Sales

Air Purifier Description

306351

408474

80200

300

400

500Factory-installed

After market

AQS/IAQSsystem

Adjust the air circulation by avoiding the polluted outside air to be inhaled

Anion generator

Integratedinto the instrument

34 40 47 56 66 80

0

100

2007 2008 2009 2010 2011 2012

Research mainly focused on the after-loading market,

st u e tboard

Photo catalyst

In the trunk

• With the average price of 82 USD per unit, the market size of after-market air purifier sales in 2012 reached 6.56 million USD*1

• The after market sales only took about 10% of the total vehicle

Research mainly focused on the after loading market, due to the demands for filtration materials

Others Integratedinto the instrument • The after-market sales only took about 10% of the total vehicle-

mounted air purifiers’ sales, but it showed a higher CAGR at 15.3% from 2007 to 2012

• The market growth rate is projected to be about 20% in the next 3~5 years annually1

• After-market refers to the air purifier which is installed as an optional equipment after the car leaves the factory

board


Note: *Market size=sales volume*average price=80,000 units*82 USD/units=6.56 million USDSource: 1. PIM research and analysis, October 2013

y

Projected by three scenarios, China’s domestic household air purifiers market could be attractive to players

Executive Summary China Domestic Market Size Projection

purifiers market could be attractive to playersAnnual Growth Rate Projection of China Domestic

Air Purifier MarketAir Purifiers Market Size of China Domestic

Market (million units)• Wide concerns continuously exists among customers

80% 80%70%

100%

Optimistic

Medium

Conservative61.7

129.6

51 7

Optimistic

Medium

Conservative

g• Buying intentions are mainly

guided by producers’ advertising.

70%60%

50%40%

60%50%

40% 30%30%25%

15% 1.8 7.0 12.6

11.2

30.6 51.7

8.8 17.1 24.6

2008 2010 2012 2014 2016 2018 2020

• The ongoing degradation of air quality in China would still result in widespread panic among customers• The market would not be limited by the production capacity as the industry would attract more players

2012 2014 2016 2018 2020

Optimistic

• It is estimated that the development roadmap would be similar to water filter. The growth rate of water filter in 2012 and 2013 is about 40 to 60%, and it is projected to grow at a CAGR of 30% in the next five years.

• The market would not be limited by the production capacity as the industry would attract more players Medium

• The industry regulations are projected to be unified after 2014, and the industry would experience a restructuring

Conservative

y g p j , y p g• With a 2-year learning curve, customers will be more informed and rational in making purchasing decisions• The development roadmap would be better than other white domestic appliances, whose CAGR is 10~15% • The market would be limited by the production capacity which is estimated to be around 20 million units

Optimistic scenario: 187% Medium scenario: 95% Conservative scenario: 56%Penetration


Notes: * Penetration rate= total market capacity/ 200 million urban households Source: PIM research and analysis

Optimistic scenario: 187% Medium scenario: 95% Conservative scenario: 56%Penetration rate* by 2020

Among the current technologies, there is no single one can solve all of the air pollution problems

Technology and Products Evaluation_ Technologies Comparison

of the air pollution problemsTechnologies Pros Cons

HEPA−High filtration efficiency on PM, could reach

99 97％ (for particles with diameter >=0 3μm)−Short lifetime (around 3 ~12 months)−High flow resistance: 20~80 PaHEPA 99.97％ (for particles with diameter > 0.3μm) High flow resistance: 20 80 Pa−Ineffective for removing viruses , VOC’s and foul odors

Active carbon−Effectively adsorb viruses , VOC’s foul odors

and formaldehyde−Short lifetime (around 3~6 months)−Easy to reach saturation levels−Slow purification speed−Slow purification speed

Photo catalyst

−Removes formaldehyde, VOC’s and viruses efficiently − Fast purification speed

−Ultraviolet radiation is a must, secondary pollution;

Plasma−Remove PM, VOC’s and viruses efficiently−Low power consumption−Fast purification speed

−Easy to generate ozone, cause secondary pollution−Extra power consumption

Static electricit

−Remove PM, viruses , foul smellLong lifetime no need to replace

−Easy to generate ozone and causesecondar poll tionelectricity −Long lifetime, no need to replace secondary pollution−Ineffective for removing formaldehyde−Extra power consumption

Anion− Remove dust, VOC’s and kill viruses − Benefit people’s health

−Low purification efficiency and −Slow purification speedAnion Benefit people s health Slow purification speed−Extra power consumption

ULPA* −High filtration efficiency on PM, could reach 99.999% (for particles with diameter >=0.1μm)

−Short lifetime (around 3 ~ 6 months)−High wind resistance: 200~300 Pa


Notes: * Because of its high wind resistance, ULPAs are currently used for industrial applications, such as semi-conductor industry, cleaning room in hospitals, etc Source: PIM research and analysis, October 2013

0.1μm)

HEPA is the most effective technology to remove PM, while AC has the most comprehensive functions for removing pollutants

Technology and Products Evaluation_ Technologies Comparison

the most comprehensive functions for removing pollutants

Source: PIM research and analysis, October 2013PM Formaldehyde TVOC Bacteria Foul Smell

HEPA

AC

Plasma

Photo Catalytic

AnionTechnologies

Static Electricity


• Harvey ball refers to removing efficiency High efficiency Low efficiency

Of the 500 sample household air purifiers in the market, although almost all of them have applied combined technologies HEPA AC

Technology and Products Evaluation_ Currently Used Technologies

almost all of them have applied combined technologies, HEPA, AC and Anion are the most widely used ones

Sample: 500 types of air purifiers in the marketSample: 500 types of air purifiers in the market

76%Active carbon

46%

71%

Anion

HEPA

8%

14%

23%

Plasma

Static electrivity

Catalytic

14%

8%

Others

Plasma



Filtration and absorption technologies would still dominate the market as they are safe and have relatively high efficiency for

Technology and Products Evaluation_ Technologies Development Trends

market as they are safe and have relatively high efficiency for removing the key pollutants- PM and formaldehyde• Technologies development trends: Filtration and adsorption technologies, would still dominate

the market− These two technologies are very safe as they will not create harmful byproducts. For example, anion,

plasma, ozone, static electricity and photo catalytic may release ozone to some degree, which may be harmful to human health

− These two technologies have relative high efficiency for removing the major pollutants – PM and formaldehyde

• Problems for the mainstream technologies Th lif i li it d d f t l t i d d F HEPA it i d 3 t 12− The life span is very limited and frequent replacement is needed. For HEPA, it is around 3 to 12 months, and for AC, it is about 3 to 6 months.

− The replacement periods are different. For multiple layers of filters, replacement is not convenient − Some interviewees commented that, the current technology for removing formaldehyde is not very gy g y y

satisfactory. For example, the AC technology could only remove about 80%, or even less, formaldehyde within 2 hours

• Technologies that meet the following requirements are eagerly needed:− Longer life span ideally 1 to 2 yearsLonger life span, ideally 1 to 2 years− Integrated all-in-one technology. One layer filter with multiple functions of removing PM, formaldehyde,

TVOC, foul odors, etc − Higher efficiency for removing formaldehyde, ideally >=99.9%



− Recyclable

Potential customers expect air purifiers with pricing ranging from 163 9 to 327 8 USD/unit filters life cycle of 1 to 2 years with

Customers Survey_ Targeted Customers and Their Expectations

163.9 to 327.8 USD/unit, filters life cycle of 1 to 2 years with replacement cost lower than 32.8 USD/year

Customer FeaturesFeaturesFeaturesTarget customers Have children or senior family members or pregnant woman

Live in newly decorated house

Allergies

Relative high education level with income >= 1,639 USD/month

CustomerE t ti

High purifying efficiency of removing poisonous gases , PM 2.5 and other pollutantsExpectation Acceptable price range: 163.9~327.8 USD/unit

Ideal filter replacement frequency :1~2 years

Acceptable filter replacement cost:<32.8 USD/year

Customer Distribution• Mainly in the regions with serious air pollution problems, like northern areas, Beijing, Hebei, Jilin,

Liaoning, Shanxi and Henan, etc.M i l th b id t h B iji Sh h i G h Ch h Sh d• Mainly are the urban residents, such as Beijing, Shanghai, Guangzhou, Changchun, Shenyang and Taiyuan, etc. Current market mainly focuses on:

− Tier-1 cities: 75%− Tier-2 cities:20%


Source: 1. PIM research and analysis, October 2013, October 2013

− Others:5%

Of the 68 interviewees, 91% have not used air purifiers at home. The main reasons given were that they think the indoor air quality is

Customer Survey_ Reasons of Applying Home Air Purifier

main reasons given were that they think the indoor air quality is acceptable and it is difficult to evaluate the effects of using purifiers

What are the main reasons you do not want to What are the main pollutants do you think an airybuy a household air purifier?

What are the main pollutants do you think an air purifier should remove?

4.043 623 60

Score*Score*

3.583.533.24

2.87

2 30

3.623.603.38

2.30

Unsatisfied Doubts Difficult to Too Acceptable Bacteria Foul odor PM2.5 Poisonous, with the filter replacement frequency

about the product

performance

evaluate the effects of using air purifiers

expensive indoor air quality

such as formaldehyde, benzenes and

VOCs


Note: *. Score means importance rate, 5- Very Important, 4- Somewhat Important, 3- Neutral, 2- Somewhat Unimportant, 1- UnimportantSource: 1. PIM interview and analysis, October 2013

Although having some doubts as to the value of air purifiers, 89% of interviewees showed interest in buying air purifiers in the future with

Customer Survey_ Potential Market

interviewees showed interest in buying air purifiers in the future, with the main driving factors of concerns on serious outdoor air pollutions and ensuring family health

Would you like to install an air purifier at home in the near future(within one year)?

What are the reasons you bought or plan to buy a home air purifier

Yes Score*

8%11%

3.223.303.30

3.94May consider it later

No, will not be considered

11%

81%Follow the

trend of improving

indoor AQ/for

better life

Influenced by the

serious outdoor air pollution

Ensure family health

(especially for children and senior)

For a newly decorated

house


better lifeand senior)

Note: *. Score means importance rate, 5- Very Important, 4- Somewhat Important, 3- Neutral, 2- Somewhat Unimportant, 1- Very UnimportantSource: 1. PIM interview and analysis, October 2013

Quality is the most important buying factor; Removing PM2.5, poisonous gases and foul odors effectively are the three major

Customer Survey_ Key Buying Factors

poisonous gases and foul odors effectively are the three major purifying effects in potential end users’ expectations

What are your major influence factors for What are the effects you requiring for a home airWhat are your major influence factors for buying or planning to buy an air purifier?

What are the effects you requiring for a home air purifier? Please priorities the following purifying effects in terms of importanceScore*

Score*

3.643.833.894.19

4.45

3.764.00

4.284.32

Quality (with a testing

report or not)

Function Price Technology Brand Effectively remove

poisonous, such as

formaldehy

Effectively remove PM2.5

Effectively eliminate foul odor

Effectively sterilization


de,TVOCsNote: *. Score means importance rate, 5- Very Important, 4- Somewhat Important, 3- Neutral, 2- Somewhat Unimportant, 1- Very UnimportantSource: 1. PIM interview and analysis, October 2013

Of those surveyed, the possible future end users expressed their primary concerns on the purification efficiency and safety features of

Customer Survey_ Parameters

primary concerns on the purification efficiency and safety features of air purifiers What are the important parameters for a home air purifier, in your opinion? Please priorities the following parameters in terms of importancefollowing parameters in terms of importance

Score*

3.423.573.873.984.064.174.224.264.31

4.614.65

Noise CADR Service Lifespan Power consumption

Filter replace-ment

frequency

Dust holding

Air volume AppearancePurification efficiency

Safety


Note: *. Score means importance rate, 5- Very Important, 4- Somewhat Important, 3- Neutral, 2- Somewhat Unimportant, 1- Very UnimportantSource: 1. PIM interview and analysis, October 2013

Activated carbon is the most widely-known technology; with most people having a low awareness of the features of current

Customer Survey_ Ender User Awareness

people having a low awareness of the features of current technologies

What are the technologies you currently using or Surveyed persons’ comments on theWhat are the technologies you currently using or familiar with, for air purifying?

25

Surveyed persons comments on the advantages and disadvantages of the listed technologies?

– About more than half of the respondents do

Number of answers

2223

pnot familiar with details about technologies

– Some gave comments:“Don’t know.”

1112

13

“Have no idea, only heard the name of activated carbon technology.”

“The physical adsorption technologies are safe.

6

Doubts about how effective the chemicals could be.”

“Limited purifying effects with a low speed.”

Plasma Electro-static

Photo catalyst

Activated carbon

Do not care

HEPA Ozone

“In general, they all can improve air quality, however, the prices are too high and it is very inconvenient to replace the filters frequently.”


Source: 1. PIM interview and analysis, October 2013

The ideal home air purifier would be priced between 1,001 to 2,000 RMB/unit with the filter replacement frequency at 1~2 years and a

Customer Survey_ Expectations

RMB/unit, with the filter replacement frequency at 1~2 years and a filter replacement cost at less than 200 RMB per year

What is the reasonable price range for a home The filter replacement frequency should be?What is the reasonable price range for a home air purifier?

The filter replacement frequency should be?

38%34%Percentage of answers

Percentage of answers

44%

32%Never

7%

3 months

10%

>2 years

10%

1~2 years 6 months

21%

Never 3 months>2 years1~2 years 6 months

The acceptable cost range for filter replacement and maintenance should be?

3%

70%

Percentage of answers

164.1 ~ 327.8 USD

<163.9 USD 328 ~ 491.8 USD

>492 USD

32 8

22%

33~82USD/

7%

82 1~163 9

1%

>164


Source: 1. PIM interview and analysis, October 2013

32.8 USD/year

33~82USD/year

82.1~163.9 USD/year

>164 USD/year

Description of RespondentsCustomer Survey_Respondents

Items Number of Interviewees PercentageGender 68 100%Male 34 50%

Female 34 50%

Age 68 100%≤20 1 1.47%

21~30 57 83 82%21 30 57 83.82%

31~40 6 8.82%

>41 4 5.88%

Household Income (USD/Month) 68 100%<1,587.30 42 61.76%

1,587.31~4,761.90 23 33.82%

4,761.91~7,936.51 2 2.94%

7 936 67 1 1 47%>7,936.67 1 1.47%

Average Consumption of Air Per Person: 32 kg/dayLocation coverage: Shanghai, Hubei, Hunan, Shandong, Guangzhou, Jiangsu, Zhejiang, Henan, Inner Mongolia, and Jilin

The analysis is based on the validated answers from 68 respondents of 79 interviewees. It should be noted that to have a comprehensive understanding of the consumers’ behaviors in China, a longer research time will be required for a broader and larger nationwide survey


Source: 1. PIM interview and analysis, August 2013

Ambient Air Quality National StandardsAppendix- Regulations

Pollutants TimeConcentration value (mg/m3)

GB3095-1996 GB3095-1996 modification GB3095-2012*Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2

SO2Annual average 0.02 0.06 0.10 0.02 0.06Daily average 0.05 0.15 0.25 0.05 0.15One hour average 0.15 0.50 0.70 0.15 0.50

TSPAnnual average 0.08 0.20 0.30 0.08 0.20Daily average 0.12 0.30 0.50 0.12 0.30Annual average 0 04 0 10 0 15 0 04 0 07

PM10Annual average 0.04 0.10 0.15 0.04 0.07Daily average、、 0.05 0.15 0.25 0.05 0.15

PM2.5Annual average - - - 0.015 0.035Daily average - - - 0.035 0.075

NOxAnnual average 0.05 0.05 0.10 - - - 0.05 0.05Daily average 0.10 0.10 0.15 - - - 0.10 0.10One hour average 0.15 0.15 0.30 - - - 0.25 0.25

NO2Annual average 0.04 0.04 0.08 0.08 0.04 0.04Daily average 0.08 0.08 0.12 0.12 0.08 0.08One hour average 0.12 0.12 0.24 0.24 0.20 0.20

CODaily average 4.00 4.00 6.00 4.00 4.00One hour average 10 00 10 00 20 00 10 00 10 00One hour average 10.00 10.00 20.00 10.00 10.00

O38 hours average - - - 0.10 0.16One hour average 0.12 0.16 0.20 0.16 0.20 0.16 0.20

PbQuarterly Average 0.0015 0.0010Annual average 0.0010 0.0005

B[ ]PAnnual average - 0.000001

B[a]Pg

Daily average 0.00001 0.0000025

F

Daily average 0.007 -One hour average 0.020 -Monthly Average 0.0018 0.0030 - -Plant Growth Period Average 0.0012 0.0020 - -


Notes: * GB3095-2012 was issued at the beginning of 2012 and will be executed from Jan. 1st, 2016. GB3095-1996 and its modification version are the currently used standards. However, for the monitored 74 cities in China, it applied the new standards.

39

Indoor Air Quality Standards - GB/T 18883 - 2002Appendix- Regulations

Category Item Unit Limit value Note22～28 Summer air conditioning

Physical

Temperature ℃22～28 Summer air-conditioning16～24 Winter heating

Relative humidity %40～80 Summer air-conditioning30～60 Winter heating

Air rate m/s0.3 Summer air-conditioning

Air rate m/s0.2 Winter heating

Air change flow m3/h·p 30SO2 mg/m3 0.50 One hour averageNO2 mg/m3 0.24 One hour averageCO mg/m3 10 One hour average

Chemical

CO mg/m 10 One hour averageCO2 % 0.10 Daily averageNH3 mg/m3 0.20 One hour averageO3 mg/m3 0.16 One hour average

Formaldehyde mg/m3 0.10 One hour averageBenzene mg/m3 0.11 One hour average

Methylbenzene mg/m3 0.20 One hour averageDimethylbenzene mg/m3 0.20 One hour average

B(a)P mg/m3 1.0 Daily averagePMl0 mg/m3 0.15 Daily averagePMl0 mg/m 0.15 Daily average

TVOC mg/m3 0.60 8 hours averageBiological Bacterial count cfu/m3 2500

Radioactive 222Rn Bq/m3 400 Annual average


Guidelines of Air Quality Assessment for Passenger Cars - GB/T 27630 - 2011

Appendix- Regulations

27630 2011

Item Limit value (mg/m3)Benzene 0.11

Methylbenzene 1.10Dimethylbenzene 1 50Dimethylbenzene 1.50

Ethylbenzene 1.50Styrene 0.26

Formaldehyde 0.10Acetaldehyde 0.05Acrylaldehyde 0.05


Comparison of the two existing standards for air purifiers’ purifying performance


performance Item Requirements

GB/T 18801-2008: Air purifiers standard

CADR (Clean Air Delivery Rate) (= 6*V*(Ke - Kn))– The measured value should not be less than 90% of the nominal value

F h i ll t t it h ld b t d CADR d d(V: Testing room volume; Ke: Total attenuation constant; Kn: Natural attenuation constant)

– For each air pollutant, it should be noted a CADR corresponded

Cleaning life span

– The cleaning life span for removing air pollutant refers to the accumulated running time by the air cleaner from the beginning to the CADR of corresponding pollutant decline to 50% of the initial value

– The measured value of cleaning life span of the air cleaner (or the replaceable parts) should not be less than 90% of the nominal valuenominal value

Noise level

CADR ≤ 150 (m3/h): ≤ 55 dB(A)

150 < CADR ≤ 400 (m3/h): ≤ 60 dB(A)

400 < CADR (m3/h): ≤ 65 dB(A)

EIC for solid pollutants: EIC for gaseous pollutants: EIC for total pollutants

Efficiency level of clean (EIC)(η = CADR/P) (η: Efficiency of clean, m3/(h·W)

P: Power of air cleaner)

A 2.00 ≤ η 0.80 ≤ η 1.60 ≤ η

B 1.50 ≤ η < 2.00 0.60 ≤ η < 0.80 1.20 ≤ η < 1.60

C 1.00 ≤ η < 1.50 0.40 ≤ η < 0.60 0.80 ≤ η < 1.20

D 0.50 ≤ η < 1.00 0.20 ≤ η < 0.40 0.40 ≤ η < 0.80

T ti l ( th fi th i ht) 3 5 * 3 4 * 2 5 30 3Testing room volume (see the figure on the right) 3.5 m * 3.4 m * 2.5 m = 30 m3

APIAC/LM 01-2013: Indoor air purifier’s purification performance evaluation requirements

Effective area (= 0.1*CADR) – The measured value should not be less than 90% of the nominal value

PM2.5 CADR – The measured value should not be less than 90% of the nominal value

– Standby power: ≤ 2 0 WEER (Energy efficiency Ratio) (= CADR/P)

Standby power: ≤ 2.0 W– The measured value of EER should not be less than 2.50 m3/(h·W)– The measured value of EER should not be less than 90% of the nominal value

EER level(Standby power ≤ 2 0 W

1 6.00 ≤ E

2 5.10 ≤ E < 6.00

3 4 30 ≤ E < 5 10


(Standby power ≤ 2.0 W,E: EER, m3/(h·W))

3 4.30 ≤ E < 5.10

4 3.40 ≤ E < 4.30

5 2.50 ≤ E < 3.40

Environmental Protection Certification Rules and Antibacterial performance requirement


performance requirement

CQC51 448155 2011 Environmentally Friendly Certification Rules for Air Cleaner

• CQC空气净化器环保认证规则 http://wenku.baidu.com/view/2406425b804d2b160b4ec036.html• GB21551.3-2010《家用和类似用途电器的抗菌、除菌、净化功能空气净化器的特殊要求》检测。

CQC51 448155 2011 Environmentally Friendly Certification Rules for Air Cleaner

Judgment method of function

The cleaning performance of product should meet the following parameters:

Solid pollutant η ≥ 40% (η: Cleaning efficiency)

Gaseous pollutant η ≥ 25%function Gaseous pollutant η ≥ 25%

Bacteria η ≥ 50%

GB 21551.3-2010 Antibacterial and cleaning function for household and similar electrical appliances – Particular requirements of air cleanerq

Noxious substances produced by the air

Ozone concentration (5 cm from the air outlet) ≤ 0.10 mg/m3

UV intensity (30 cm from the appliance) ≤ 5 μW/m2

TVOC concentration (20 cm from the air ≤ 0 15 mg/m3produced by the air cleaner

TVOC concentration (20 cm from the air outlet)

≤ 0.15 mg/m

PM10 concentration (20 cm from the air outlet)

≤ 0.07 mg/m3

Antibacterial requirement: after 1 h running in the testing room at least 50% of the bacteria

Functionality

Antibacterial requirement: after 1 h running in the testing room, at least 50% of the bacteria have been eliminated

The purification materials should be replaceable or renewable; the purification device is washable and can be disinfected


Thank YouThank YouFor further information about the report, p ,

Please contact [email protected]

Address: Building 1 Suite 1361, Jin Jiang Complex,59 Mao Ming Nan Lu, Shanghai 200020 China

OffOffice Phone: 86 21 5466 7100Fax line: 86 21 5466 7110

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