Water Purification – A Booming Market

By China Water Risk 13 December, 2011

China Water Risk reviews this with the Asia-Pac CEO of Culligan, a global leader of water purification systems.

More stringent standards on water treatment in China by July 2012
In the meantime, water purification market is booming - for both commercial and domestic consumption
Old habits mean that boom could thrive longer

As of July 2012, every drinking water treatment plant in China will have to meet a new and more stringent standard controlling 106 water quality parameters compared to 15 previously.

The new standard (GB 5749-2006) will, if implemented effectively, ensure world class level water quality for communities supplied by municipal water treatment plants, provided the delivery infrastructure i.e. pipe network is in good conditions. Currently some local governments are opting to improve supply networks with the installation of piping network dual systems. Such systems incorporate high quality pipes and regular monitoring of both pipes and water this ensuring that water quality is maintained. The first of these systems was installed in Pudong, a district of Shanghai in 1997.1

Up to now, due to the China’s water scarcity problems and fast urbanization, the government’s focus has been to ensure supply as opposed to quality. As a result and combined with poor quality control, China’s drinking water is in large part contaminated with dissolved chemicals.

The wealthier and better educated of Chinese society no longer trust the country’s tap water, nor the tradition of boiling it for purification. As a result, purified water bulk delivery has been booming across the country and it is common to see purified bottled water being delivered in most Chinese cities.

Users of relatively large quantities of water such as restaurants and cafés as well as the new elite are however not keen to rely on such delivery services, instead electing for installation of point of use treatment solutions.

As reported in June, Aquatech China: “A Changing Water Landscape” while attending the Aquatech exhibition in Shanghai, China Water Risk noted that companies offering point of use water treatment solutions were outnumbering all other type of treatment solutions. In order to understand the drivers of such success, China Water Risk talked to KY Shin, CEO of Culligan Asia Pacific based in Shanghai.

Culligan breaking ground in China

American based Culligan2is a global leader in the development, manufacture and servicing of water purification systems. The company entered China’s market just five years ago.

Culligan started its business in China by providing water purification equipment to high end apartments in Shanghai and Beijing. Shin explains that property developers facilitated the company’s brand expansion through their desire to have the best possible product for home water filters in their properties. Culligan’s filters were able to meet this expectation. The company soon became recognized as the “premium brand for water filters” in China. It also benefited from the growing mistrust around home delivery bottled water. Repeated scandals of untreated water being delivered in lieu of purified water significantly damaged the reputation of such water suppliers.

The market has been growing rapidly and by mid-2011, Culligan had nine distributers across the country namely in Jilin, Dalian, Qingdao and Yantai3, Beijing, Xuizhou, Shanghai (30% of sales), Chengdu and Shenzhen. Since last summer, the company is mostly servicing households as well as some commercial operations such as cafés and restaurants as well as industrial customers such as Coca-Cola and Heineken. Global customers rely on Culligan as an international supplier to guarantee consistent quality.

Shin stresses that today the market for commercial applications is still in its infancy with fierce competition on price. With respect to the lower end market, other factors such as durability, maintenance and servicing requirements are not considered, such that customers tend to favor cheaper units and potentially less reliable equipment.

With the exception of the filters, which are made in China (Suzhou), Culligan’s products are made, assembled and checked in North America. Its customers in China reportedly appreciate the Culligan brand for its image and reliability.

Point of use water treatment

Shin explains what a complete water treatment point of use system should be: a carbon filter to remove taste and smell, a softener4 to remove dissolved calcium ion and reverse osmosis for disinfection. The reverse osmosis disinfection units are in most cases, the only point of use equipment installed in China. To date Chinese customers do not appreciate the benefit of a water softener and carbon filters as much as their American counterparts. In terms of maintenance, Shin indicates that the reverse osmosis filters should be changed once a year if the full treatment line is installed; or four times a year if no pretreatment is installed. Not maintaining a home water filtration system can result in a bacterial growth (see also “Filtering Ideas”) and possibly water of lower quality than prior to filtration.

Figure 1: Culligan Four Stages Filtration Equipment

Culligan Four Stages Filtration Equipment

  1. Automatic Shutoff Valve – Shuts off the system when the reservoir tank is full.
  2. Manifold Assembly – Houses three separate filter technologies in a unique space saving design.
  3. Sediment Filter – Screens out sediments and particles down to 5 microns that cause cloudy water.
  4. Reverse Osmosis Membrane – Reduces dissolved substances such as radium, lead, arsenic, and many others.*
  5. Carbon Filter – A carbon filter reduces elements that cause water to taste and smell unpleasant, including the taste and odor of chlorine.
  6. Second Carbon Filter – Ensures your drinking water is clear and fresh.
  7. Designer Faucet – Delivers delicious water at the touch of a finger. Available in polished chrome or white.
  8. Reservoir Tank – Durable, high-quality steel tank ensures you’ll have a plentiful supply of refreshing water

Old habits die hard

An American born Korean, Shin has been looking at the Asian market for many years. He notes the habit of boiling or treating water at the tap is deeply rooted in many countries. Even if the water quality has improved over the time, Japanese and Koreans maintain their habits of ‘preparing ‘their drinking water. For example, despite the availability of good quality drinking water5, home disinfection is still widely adopted.

While drinking water quality remains poor in China , the government is anticipated to continue to invest heavily in its improvement, including new regulations and better enforcement to reduce contaminating sources such as pollution from agriculture and industry.

Nevertheless, the full implementation of the new drinking water regulation in China will hopefully mean safer drinking water for a larger proportion of the population. However a long history of disinfecting and thus treating water before drinking as well as persistent water quality problems, will surely pave the way for Culligan and other filtration companies to thrive as indeed old habits die hard.

1 See: Dual Water Distribution Systems in China.
2 Culligan is privately owned, the company was acquired by Clayton, Dubilier & Rice in 2004 for $610M. Culligan has a long track record on the sector with 70 years of history and a global presence in more than 90 countries
3 Water being very hard in Shandong, water softener will remove excessive dissolved minerals.
4 Hardness is the term for the calcium or magnesium carbonate dissolved in water as Ca++, Mg++, and HCO3- (bicarbonate) ions
5 In Seoul and Tokyo levels of total dissolved solids – (TDS) , a general indicator of water quality, are low at 12 to 15 ppm. The US Environmental Protection Agency defines 500 ppm to be the maximum level acceptable for drinking water
China Water Risk
Author: China Water Risk
We believe regardless of whether we care for the environment that water risks affect us all – as investors, businesses and individuals. Water risks are fundamental to future decision making and growth patterns in global economies. Water scarcity has emerged as a critical sustainability issue for China's economy and since water powers the economy, we aim to highlight these risks inherent in each sector. In addition, we write about current trends in the global water industry, analyze changes occurring both regionally and globally, as well as providing explanations on the new technologies that are revolutionizing this industry.
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