In April, the sanitary ware industry witnessed what seemed like a promotional festival. However, this time around, the rush wasn't as intense as before. After years of rapid growth, the sector has faced severe product homogenization, frequent price wars, and aggressive sales promotions. With rising costs, profit margins have been shrinking significantly. Industry analysts warn that continuing to engage in price battles ultimately harms consumers. To survive, sanitary companies need to differentiate themselves and find new selling points for breakthroughs.
Development: The End of the Profit Era, Entering the Promotional Economy
China's sanitary ware industry has grown for over 20 years, becoming the world's largest producer and seller of such products. According to Ge Liwei, General Manager of Henan Long Whale Sanitary Ware, before 2000, international brands like Kohler and TOTO entered the Chinese market and enjoyed a golden period with high profit returns. From 2005 onward, domestic brands began to flourish, giving rise to national names like Wrigley, Hengjie, Langyu, and Shenluda.
"Before, many considered the building materials industry as highly profitable," Ge Liwei explained. "But from 2008 onwards, the era of huge profits came to an end, and we entered the promotional economy. Sales promotion became the main strategy."
Change: Rising Costs and More Rational Consumers
Competition is intensifying, and consumers are becoming more rational. At the same time, various costs are increasing, making it harder for the sanitary ware industry to thrive. This is a common sentiment among many bathroom business owners.
"Especially in recent years, competition has become fiercer, and consumers are more cautious. You can't just invest hundreds of thousands of yuan and expect clear returns anymore. Raw material costs are up, ex-factory prices are rising, but selling prices aren’t keeping pace. Labor costs have increased by over 20%, and store rents continue to climb. Profit margins are shrinking," said Wang Wenxin, General Manager of Henan Branch of Shenluda Bathroom.
Status Quo: Homogeneous Products, Frequent Promotions, Shrinking Profits
Despite rising costs, the price war has intensified. Today, consumers are no longer easily swayed by discounts, cash prizes, or sign-up offers. They've become numb to high-frequency, low-value promotions.
According to industry insiders, the current trend of homogenized products and similar promotional strategies has put pressure on profits. Some companies' gross profit margin has dropped from 40% to about 20%. Even some special products are being sold without any profit, further compressing margins.
"A toilet costs at least 500 yuan to produce and ship. We introduced a 399 yuan model, subsidized by the manufacturer, to gain market share. Last year, some months even showed a negative profit," Ge Liwei admitted.
He also shared his strategy: "Every store must be involved in large-scale promotions. Every brand needs to offer low prices. Not participating means losing the market, and participating doesn't guarantee profits. Last year, one store had a promotion, and we made 15% profit. Sales were strong, but service and after-sales weren't discounted. We worked hard, but made little money. However, in the past two years, our market share and reputation have improved."
Way Out: Innovation for Differentiation
With highly homogenized products and excessive price wars leading to ultra-low profits, some companies are turning to OEM production within the province to cut costs. While this may boost short-term sales and benefit consumers, it's not sustainable for long-term development and ultimately disadvantages consumers.
Zhao Dong, Deputy General Manager of Henan Hengjie Bathroom, stated that price wars hinder healthy enterprise growth. Brands lack time to focus on R&D, technology upgrades, and after-sales services.
She predicted that ceramic sanitary ware companies will face a turning point in 2013. Companies are now actively seeking change, innovating, finding new selling points, differentiating themselves, and exploring new economic growth areas.
One Way Out: Environmental Protection Integration
As environmental awareness grows, sanitary products must align with eco-friendly values. From raw materials to design, they should reflect health and sustainability.
For example, Hengjie launched the Super Hover series H0129D water-saving toilet, which uses only 3.5L per flush—far below the national standard of 6L.
Zhao Dong calculated for reporters: "In Zhengzhou, water costs 2.4 yuan per ton. A water-efficient toilet saves 40% of household water. That’s like spending 100 yuan on water, 40 of which goes down the toilet."
Way Out 2: Smart, High-Tech Solutions
Sanitary products are moving toward smart technology. Future toilets will measure weight, test urine, and analyze health indicators.
Leroy Guoji, Deputy General Manager of the Kingdom, described how future toilets will automatically turn on lights, open lids, and heat seats. Users can enjoy rinsing, massaging, and sterilization, all while listening to music. These features are already available today.
Way Out 3: Urbanization Demand Offers New Opportunities
Industry insiders believe that urbanization could bring a recovery period for the ceramic industry. For example, Shenluda has expanded into third- and fourth-tier cities, establishing over 70 distributors across 18 cities in Henan.
Wang Wenxin said, "The 'surrounding the city from the countryside' approach has proven effective." In March, six local events generated a return ratio of 1:8, with the best reaching 1:23—unachievable in major cities like Zhengzhou.
Way Out 4: Enhanced Service Quality
Beyond pricing and strategy, service quality and consumer satisfaction are key. Future competition will be driven by service excellence.
Even at 399 yuan, the service isn't compromised. Previously, delivery and installation were separate, requiring customers to take days off. Now, Long Whale offers simultaneous delivery and installation.
Ge Liwei added, "After-sales service must constantly improve. Follow-ups and quality assurance should be more humane."
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