Analysis on the Development of China's Diaper Industry in 2017-2021
First, favorable factors
(1) Consumption Ability and Ideas
In recent years, the baby diaper market in China has shown a rapid growth trend, which is mainly due to the sustained and rapid growth of the domestic economy. The material quality of life of the people has been further improved, the price of baby diapers has been properly reduced, and people generally recognize the role of baby diapers in protecting the baby. At the same time, as the number of elderly people gradually increases, the problem of increased urinary incontinence in the elderly and people’s correct understanding of urinary incontinence is gradually increasing. As a result, the demand for adult incontinence products is also gradually increasing. As China’s per capita purchasing power increases and the concept of consumption changes, the diaper market will usher in a rapid growth.
(b) Two-child policy
On January 1, 2016, the two-child policy was fully liberalized. Real estate, infant milk powder, diapers, and other industries released positive information, and baby diapers with the highest degree of correlation with the second child would usher in substantial growth. In November 2013, the release of the separate second-child policy directly promoted the blowout of the baby diaper market. The move to fully release the second child will undoubtedly have a huge boost to the production and market of baby diapers.
(III) Layout of Third and Fourth-tier Cities
Comparing with the Red Sea competition in the first and second tier cities, the third and fourth tier cities have more potential for development. At present, the third- and fourth-tier cities have become a new driving force for China's online consumption. From the perspective of channels, consumers in the first-tier and second-tier cities prefer to use foreign brands such as Posey, Kao, Curiosity, etc., in the channel areas dominated by hypermarkets, and in third-tier and fourth-tier cities, especially in the maternity and baby shop channels. Local brands such as Ques, Baby Shubao have more advantages. In recent years, the sales of diapers in the third and fourth tier cities have continued to grow at a rate higher than the national average, becoming the main battlefield for domestic branded products.
Second, unfavorable factors
(I) Foreign brands
Compared with other industries, the diapers and diapers market has a smaller total capacity at the current stage and the industry is highly competitive. At present, the brand pattern of the domestic baby diaper market has basically taken shape, and several leading companies with capital development advantages have dominated most of the market share, while the competition among small and medium-sized manufacturers in the low-end market has become increasingly fierce, and the survival status is not optimistic.
In the first half of 2015 published by the China Statistical Information Service Center (CSISC), “China Diabetes Brand Word-of-mouth Research Report”, Kao, Pampers and Curiosity ranked among the top three foreign brands. (The "Report" studies 20 diaper brands that are active in online sales)
(B) Price War
Diapers are the first choice for e-commerce maternity products promotion. On the one hand, diapers are one of the largest consumable items in the maternal and child product category. Consumers frequently purchase it. On the other hand, overseas direct mail and domestic bonded cross-border e-commerce forms have become a powerful supply chain system. The long-term price war will reduce the profitability of diaper companies.
The development of e-commerce has changed many people's traditional consumption habits while also revealing many problems. The first ones are counterfeiting. In July 2015, the Consumers Association (CCC, Consumer Protection Committee) and 19 Chinese consumers in Beijing, Shanghai, and Guangzhou jointly issued the “Infant Diaper Consumption Behavior Survey Report.” The report shows that online shopping has become an important channel for sales of baby diapers, but more than 50% of consumers have bought fake and shoddy products. In addition, the after-sales service problem is also very tricky, with 31.22% of the respondents said that they have encountered poor after-sales service, and 29.8% of the respondents have encountered the problem of parcel loss.
Forecast of China's Diaper Market Size for 2017-2021
In 2014, the size of the Chinese diaper market reached 29 billion yuan, an increase of 16% from the 25 billion yuan in the same period in 2013. We estimate that in 2017, China's diaper market will reach 44.35 billion yuan, and the average annual compound growth rate will be about 14.43% in the next five years (2017-2021). In 2021, the market size of China's diapers will reach 76.04 billion yuan.
Forecast of China's Diaper Production in 2017-2021
In 2013, the output of diapers in China was 20.41 billion tablets, an increase of 11.53% year-on-year; in 2014, the output reached 23.51 billion tablets, a year-on-year increase of 15.2%. We expect that China's diaper production in 2017 will reach 34.89 billion tablets, and the CAGR will be approximately 12.78% in the next five years (2017-2021). In 2021, China's diaper production will reach 56.44 billion tablets.
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