Tantech Holdings Ltd's Comment on Competitors and Industry Peers
The primary market for our Charcoal Doctor line of products is household hygiene
use. Our air purification, deodorizing, and other health promoting products such
as our charcoal pillow, cater to a niche but growing market of health-conscious
customers. Customers in this sector have a particular affinity to brands. Notwithstanding
this loyalty, product-switching costs are low, so manufacturers must compete on
price.
We conducted a marketing survey in Guangzhou in October 2013 for our charcoal
bag products. According to the survey, we found that a decrease in package weight
of 10% or an increase in price of 5% resulted in a loss of sales of less than
1%, showing that the market could absorb minor changes. By contrast, when the
price increase reached 10% or the package weight decrease reached 15%, we saw
that 30% of respondents were willing to choose alternate brands or forego a purchase.
We further found that for cleaning and purification products, 85% of respondents
cared about design attractiveness and approximately 65% made purchasing decisions
based on attractiveness, causing us to conclude that demand for our products is
more heavily influenced by such products than by minor (but not major) economic
fluctuations.
Because the household hygiene sector has enjoyed relatively strong growth in the
last few years as a result of increases in disposable urban income and an increased
awareness of healthy lifestyle products, we have focused on growing our market
share in this industry. In order to do this, compete by pricing our products aggressively,
often at a discount of 10 – 20% below our competitors. In addition, we pride
ourselves on providing a high quality product, so that our customers believe they
have received value for the price they pay.
With regards to household carbonized bamboo products, the Charcoal Doctor brand
is one of the largest and most famous. Our Charcoal Doctor brand name has been
recognized as a “China Well-known Brand” by the China Brand Strategy
Management Association, and our products have been recognized as a “Zhejiang
Famous Forest Product” by the Zhejiang Famous Forest Product Affirmation
Committee and have been awarded “The Fifth China Yiwu International Forestry
Product Expo Gold Award” by the Fifth China Yiwu International Forestry
Product Expo Committee. Moreover, the 2014 – 2018 China Bamboo Charcoal
Products Market Research and Corporate Strategy Analysis Report notes high brand
recognition for Charcoal Doctor products in China.
The industry is geographically concentrated in the South East of China in the
provinces of Anhui, Zhejiang and Fujian where bamboo is more prominent, the bamboo
charcoal industry is also fragmented since it is subject to relatively low barriers
of entry; low initial capital expenditure, low technical requirements (excluding
high end EDLC carbon compounds), highly homogenous products and few substitutes.
We face competition from a number of companies operating in the vicinity. Many
of these companies have similar profiles in terms of size, number of employees
and product ranges. One of the largest competitors is Zhejiang Maitanweng Ecology
Development Co. Ltd., a local company also from Zhejiang Province.
Zhejiang Maitanweng has the largest franchise in the industry with a presence
in over 100 cities in China. Like our Company, Zhejiang Maitanweng has an extensive
product portfolio of 200 household, automotive and health related bamboo charcoal-based
products.
Jie Jie Gao Charcoal is another company with a similar product portfolio. Also
located in the Lishui vicinity, it also holds many awards, and its products are
stocked by Walmart, Hualian, Century Mart and other supermarkets like our products
are. Jie Jie Gao is also one of the founding members of INBAR — International
Network for Bamboo and Rattan.