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China's Detergent Industry: Maturity And Innovation
Apr 08, 2017


Since 1995, China's detergent market has shown the following characteristics:

1 key technologies tend to mature

Decontamination synthesis technology has always been a key technology in the competition of detergent products. With the extensive and long-term development and application of the technology, has gradually transformed into the industry's basic technology, it is difficult to have a larger breakthrough space. The improvement of key technology maturity, directly led to the reduction of product differences, exacerbated by the price and cost of competition, so that the price competition has become the basic market competition order detergent. As long as there is a breakthrough in the new product does not appear, then the existing competitors will maintain a high investment, low growth stalemate.

2 relative surplus production capacity

Smaller product differences have not been able to stimulate the rapid growth of consumer demand, the overall size of the washing powder market is gradually stabilized. The first stage of excessive duplication into today's "go" situation, in this situation, the sales and reduction of incremental sales a manufacturer may be equal to its competitors, if the product differences continue to shrink, will inevitably lead to changes in the larger market structure.

3 profit margins fall

Reduce the level of profitability of the industry, can be said to be an inevitable result of limited ", the results also reflected in the manufacturer and distributor, between manufacturers and wholesalers, wholesalers and retailers to induce structural competition. As consumer demand will not be reduced, the market trading volume will not be reduced, then the seller in the lower profit margins and strive to enter the primary market in addition to price factors, in order to gain a lot of commercial credit for other investment, high profit product line management, and manufacturers directly into the two secondary market transactions the motivation is largely in order to save the investment. For those who can not adapt to the modern financing mode, and a single manufacturer of the industry, the price competition will make it at a cost disadvantage, in the course of its investment is accompanied by the reduction of absolute capital stock.

4 industry structure

Excess production capacity and declining profit margins, almost all of the potential entrants to shut down, but also to existing competitors, mainly manufacturers have brought more and more opportunities for success. Because of the relative position of the manufacturer in the industry structure is very low, it is difficult to change, and the levels of vendors and suppliers of raw materials of the bargaining power but because of their dependence on manufacturers to constantly improve and improve the relative. In terms of substitutes, cream, soap, like spray and liquid etc. several products form, at present only the laundry soap is developing fast, but it is not suitable for washing machine, so the potential is limited, and most alternative liquid products have not paid attention to.

5 existing sales scale becomes critical

In fact, after a period of growth from 1987 to 1995, China's detergent manufacturing industry has entered the first round of maturity since the reform and opening up. A leader is not necessary to expand the scale of investment to maintain growth, although the growth rate is slow, but it can provide sufficient funds for the horizontal industry, can begin to increase returns for its shareholders. And a large number of competitors in the downstream, is facing a continuous landslide and loss. But in spite of this, they still need to increase their investment in order to maintain the marginal size. In the absence of market division and product innovation competition environment, a smaller share, single industry and more types of products, it is difficult to curb the cost and size of the gap between it and the industry leader in widening trend. It is because of this gap, the price competition will make production and circulation began to focus, cost and investment capacity will be largely to the change of the market structure. In the macro sense, too many competitors crowded together in a relatively mature and small products in the market, if there is no reasonable division of labor, economic resources and competitive efficiency will be damaged, when the loss to a certain extent, the market will eliminate part of competitors. And bear the brunt, will be those who are now at the edge of life and death, but still dare not bold innovation of state-owned enterprises.