Air purifiers are for sale at a home appliance store in Shanghai, China, Dec 10, 2013. [Photo/dfic.cn]
What do you do to battle unhealthy air? Many Chinese consumers are racing to equip their homes with a high-end purification systems that can cost upwards of $2,000. Demand for these devices is soaring in China, according to American entrepreneur Peter Mann - and he smells opportunity.
Mann's Texas-based startup Oransi LLC is one of the latest foreign brands aiming to grab a slice of China's fast-growing air purifier market. The company said it shipped the first batch of 50 air purifiers to China earlier this year and they "sold out in just a few days".
The market in China is at least 20 times bigger than the US market, said Mann, who is Oransi's founder and chief executive officer.
"In the US, it might be a $1 billion market, but in China, it's like a $20 billion to $30 billion market," he said.
Mann, who held executive posts at Tech Data Corp and Dell Inc, founded Oransi in 2009 after selling an e-commerce company that sold appliances, including air purifiers.
Oransi's initial products were focused on affordable air purifiers effective for allergies and pollen. Mann has switched his focus to make products that can screen out PM 2.5-diameter particles, which are about 100 times thinner than a human hair. Those particles are small enough to enter the lungs and bloodstream.
China and India have the world's highest average exposure to PM 2.5, according to the 2014 Environmental Performance Index, which is jointly compiled by Yale and Columbia universities.
However, air purifier market penetration in China remains relatively low, compared with developed countries such as the US and Japan.
According to a report published in July 2013 by TechSci Research, the market for air purifiers in China is expected to post a compound annual growth rate of about 34 percent through 2018.
Prices for Oransi's air purifiers in China range from $2,000 to $3,000, which is way out of reach for consumers in a country with an annual average household income of about $2,100.
About 70 overseas and domestic air purifier brands are available China's second-largest online retailer JD.com, priced from 78 yuan ($12) to 18,700 yuan.
"How can we differentiate ourselves from all those companies? We produce in the United States with high-level components and manufacturing processes. We are making products for the top of the market," said Mann.
Expensive critical components, including the medical grade filters and motors using German technology that cut energy use by as much as 90 percent drive up the price, he said.
At least half of Oransi's 2014 sales will be in China, said Mann. Sales were about $3 million in the US in 2013.
He estimated that sales will grow more than 10 times in the next three years, with China accounting for two-thirds of that.
Despite Mann's 12 years of experience in the industry, Oransi remains a newcomer to the market, and establishing brand credibility among Chinese consumers is a big challenge.
As air pollution enshrouds more Chinese cities, international air purifier makers have quickly outlined plans for expansion in China.
Top-end brand IQAir, with a starting price of $2,101, owns retail stores in seven big cities including Beijing and Shanghai. It's on a hiring drive in eight other cities such as Tianjin, Jinan and Wuxi, Jiangsu province.
Another well-known brand, Swiss-made Blueair, can't keep some its popular models available for sale.
"The model has gone out of stock, you can order now as long as you can wait," said Huang Sheng, a sales manager for Blueair. Prices range from $700 to $1,218.
Oransi only has four distributors in China who sell to consumers and some businesses. The distributors handle local marketing and Oransi supports marketing from a national level such as Internet promotion, said Mann.
