China's Intensifying War on Air Pollution Stimulates the HVAC Filter Market, Finds Frost & Sullivan

High competition from local players compel global participants to target niche applications

BEIJING, March 10, 2016 /PRNewswire/ — Severe spells of haze-smog and concerns that the particulate matter in China is well above the approved limit of 35 micrograms per cubic meter have prompted the Government to issue new air quality standards. These standards are aimed at protecting and improving the environment as well as quantitatively analysing atmospheric environmental pollution. The stringent standards and legislations will have a direct impact on the revenue growth of the heating ventilation, air conditioning (HVAC) air filters market, especially in the high-end segment.

New analysis from Frost & Sullivan, Chinese HVAC Filter Market (http://www.frost.com/sublib/display-report.do?id=MBBE-01-00-00-00&src=PR), finds that the market earned revenue of $840.0 million in 2014 and estimates this to reach $1.62 billion in 2022, at a compound annual growth rate of 8.5 percent. In this research, Frost & Sullivan’s analysts thoroughly examine the market segments of standard filters, high efficiency particulate air filters (HEPA), and gas phase filters.

For complimentary access to more information on this research, please visit: http://corpcom.frost.com/forms/CHN_PR_JZheng_MBBE_02March16

Due to the continued transfer of worldwide manufacturing to China, the industrial sector is also one of the biggest polluters as well as adopters of air filters. The most lucrative markets are electronics, especially semiconductors and flat panel display (FDP), and pharmaceutical manufacturing. Meanwhile, the standard and gas phase segments will get a boost from the sizeable growth in the commercial and residential buildings segment.

“As a result of the vast market demand, the competitive landscape in China has been changing, with local manufactures gaining market share over international participants,” said Frost & Sullivan Energy & Environment Research Analyst Gautham Gnanajothi. “As the air filter market in China is price driven, the global majors have been forced to develop new pricing strategies.”

The impact of this price pressure is felt mostly in the affordable low- and medium-efficiency filters segment, where price is a key purchasing criterion. In the high-efficiency filter segment, the price is based on the media used. Some manufacturers, mostly local, source the filter media locally, which enables them to offer economical products.

Further, the variation in price depends on the region and the intensity of competition there. For instance, the price decline over the past couple of years has been steep in South China and East China, as there are more numbers of manufacturers and therefore, competition, in those regions.

“To stave off the competition from local participants and gain an edge in the market, it is critical to target niche applications such as nuclear or biological clean rooms, which have stringent requirements,” noted Gnanajothi. “In due course, the competition from local participants will reduce, mainly for high-end filters, as certification requirements, national standards, legislation and regulations are becoming stringent.”

Manufacturers need to constantly take initiatives to educate end users on the benefits of their innovative technologies. These efforts and frequent innovations will go a long way in sustaining the rapid growth of the HVAC filter market.

Chinese HVAC Filter Market is part of the Building Management Technologies (http://ww2.frost.com/research/industry/environment-building-technologies/building-management-technologies) Growth Partnership Service program. Frost & Sullivan’s related studies include: Transformational Trends in the Global Building Energy Management Solutions Industry, European HEMS and BEMS Market, Global Smart Gas Meters Market, Global Demand Response Trends, and Beijing Data Center Services Market Analysis. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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Chinese HVAC Filter Market
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China"s Intensifying War on Air Pollution Stimulates the HVAC Filter Market, Finds Frost & Sullivan

China's Reality in the US-China Climate Change Deal

Despite the skepticism, China made some substantial commitments in this week’s agreement.

The United States and China recently agreed to reduce carbon emissions in what has been called a landmark climate change agreement. This agreement followed months of negotiation. While the U.S. agreed to reduce carbon emissions by 26-28 percent of 2005 levels by 2025, China agreed to draw 20 percent of its energy consumption from alternative fuels and peak its carbon emissions by 2030. For China, the effort is plausible and may do more than analysts believe – indeed, it can be viewed as a good start toward reducing carbon emissions and promoting renewable energy.

Often, the view of China’s environmental regime is negative. This is not only because China’s environment is severely polluted, but also because its track record on reducing carbon emissions is mixed. China has in the past set targets for the renewable energy composition of all energy sources. China’s Renewable Energy Law of 2007 aimed to quadruple GDP while only doubling electricity consumption by 2020. China also set a goal in the Eleventh Five Year Plan to reduce the energy intensity of GDP by 20 percent by 2010, implying a 2.8 percent annual growth rate in energy use. So far, these goals have not been met.

On the other side of the coin, China’s leadership is well aware that the role of its carbon emissions in climate change is problematic. Premier Li Keqiang declared a “war on pollution” in March 2014. Dan Rosen, in a report written for the Asia Society in October, points out that China has already made progress by destroying some highly polluting plants, negotiating requirements for particulate matter reduction, installing pollution controls on coal-fired plants, and revising the Environmental Protection Law (EPL) to allow for public interest lawsuits, among other moves. Rosen asserts that emissions reduction at the firm level will depend on enforcement of emissions laws, and that a litmus test for emissions law enforcement will lie in the number of public environmental interest lawsuits accepted by courts beginning January 1, 2015, when the revised EPL is put into effect. China therefore appears to be moving in the right direction using a number of different tactics.

Meanwhile, China has driven down the costs of renewable energy, particularly in the production of solar cells. China has also been investing heavily in its renewable energy supply structure, and currently has the largest renewable energy capacity in the world. The State Grid Corporation of China is working to integrate wind and solar-photovoltaic generation and storage devices into the main grid, and other efforts promise continuing strides in renewable capacity expansion.

Some analysts’ responses to this climate agreement have not focused on China’s renewable energy pledge, and therefore have been quite negative, stating that China has an easy task since it has until 2030 to peak on emissions. This goal may be less stringent than the policy implemented in the U.S., but certainly the other half of the promise to increase renewable energy sources to 20 percent of energy consumption will pose a sufficient challenge. It is also worth keeping in mind that this agreement was not meant to represent a ceiling on climate change policies but rather a floor. As John Kerry wrote in his November 12 New York Times op-ed that “there is no question that all of us will need to do more to push toward the de-carbonization of the global economy. But in climate diplomacy …you have to start at the beginning, and this breakthrough marks a fresh beginning.”

Certainly, the collaboration on research and execution described in the U.S.-China agreement will help improve the climate change outlook. The agreement expands the commitment to the U.S.-China Clean Energy Research Center, advances carbon capture, facilitates collaboration on phasing out hydrocarbons, establishes a low-carbon cities initiative, promotes trade in green technology goods, and initiates pilot programs in green energy use. These efforts move both nations in the right direction and represent clear strides toward intervening in the progression of climate change. China surely is making concerted attempts to secure our shared global future.

China"s Reality in the US-China Climate Change Deal