What impact will the new water efficiency regulations have on the market landscape of the bathroom industry?

The new water efficiency regulations—mandated for standard toilets starting May 1, 2026, and for smart toilets starting April 1, 2027—center on raising water-saving thresholds, mandating labeling, and eliminating obsolete production capacity. This directly reshapes the sanitary ware market landscape: market concentration among leading players is skyrocketing, small and medium-sized enterprises (SMEs) are being rapidly weeded out, price bands are shifting upward, distribution channels and product structures are undergoing restructuring, and the market share held by foreign-funded enterprises is contracting.

I. Elimination of Low-End Capacity and a Leap in Industry Concentration

Steep Rise in Entry Barriers:** For standard toilets, the maximum flush volume is now capped at ≤4.8 liters per flush (with Grade 1 efficiency requiring ≤3.8 liters); regulations for smart toilets will be tightened in tandem starting in 2027. Under the previous standards, approximately 15% of existing production capacity met the requirements; following the implementation of the new standards, less than 5% of capacity remains compliant.

Mass Exit of SMEs:** Small-scale manufacturers—particularly workshop-style enterprises in regions such as Guangdong, Fujian, and Zhejiang—that lack R&D and technological upgrade capabilities are being forced out of the market due to high costs and non-compliance. By 2025, the number of enterprises classified as "above designated size" (large-scale enterprises) is projected to have decreased by 18.2% compared to 2020.

Increased Concentration Among Market Leaders:** The CR5 ratio (market share held by the top five players: Jiumu, Arrow, Hengjie, Huida, and TOTO) is projected to reach 48.3% in 2025—an increase of 2.1 percentage points from 2024. By 2027, the CR10 ratio is expected to surpass 60%, establishing a market structure characterized by "dominance by giants, niche specialization by SMEs, and the elimination of obsolete players."

II. Divergence Between Market Leaders and Foreign Brands; Domestic Leaders Aggressively Expand Their Reach

Domestic Leaders Reap the Benefits:** Domestic industry leaders—such as Jiumu, Arrow, and Hengjie—proactively invested in water-saving technologies ahead of the regulatory changes; consequently, products achieving Grade 1 water efficiency now account for over 60% of their respective portfolios. Jiumu’s proprietary "Air Kinetic Energy Water-Saving" technology, for instance, reduces flush volume to as low as 2.8 liters—boosting water-saving efficiency by 40%—thereby enabling the company to capture a larger share of the mid-to-high-end market segment. **Shrinking Foreign Market Share:** High-end foreign brands—such as TOTO and Kohler—have seen their market share in China contract by 3.5 percentage points year-on-year in 2025. This decline is attributed to high pricing and a slow pace of innovation in water-saving technologies. Consequently, these brands have been compelled to either lower prices or enter into joint ventures; as a result, their share of the high-end market (products priced above 8,000 RMB) has dropped from 45% to 32%.

Shift in Technological Leadership:** Domestic industry leaders are now spearheading the formulation of water-saving standards (for instance, Jiumu [Jomoo] led the development of evaluation specifications for the water efficiency of smart toilets). Meanwhile, 37 small and medium-sized manufacturers have exited the high-end market segment.

III. Upward Shift in Price Bands; Premiums Concentrated on Water-Saving and Smart Features

Rising Average Product Prices:** Compliance-driven technical upgrades have pushed up production costs; consequently, the average price of standard toilets has risen by 10%–15%, while that of smart toilets has increased by 8%–12%. Products with Grade 1 water efficiency now command a price premium of 20%–25%.

Restructuring of Price Bands:

Low-end (<1,000 RMB): Contracting segment, now accounting for only 15% of the market share (down from an original 30%), driven primarily by inventory clearance sales.

Mid-range (1,000–3,000 RMB):** Expanding segment, now accounting for 50% of the market share; this has become the dominant price band for Grade 1 water-efficiency products.

High-end (>3,000 RMB):** Stabilized at 35% of the market share; the combination of smart features, water-saving capabilities, and health-focused attributes (such as antibacterial properties and HIH certification) has become the standard configuration.

IV. Reshaping of Channel Landscape: Dual Upgrades in Both Project-Based and Retail Channels

Project-Based Channels:** Grade 1 water efficiency has become the standard requirement. Eight out of the top 10 real estate developers have incorporated Grade 1 water efficiency across their entire product lines within their tender specifications. By 2025, the installation rate of Grade 1 water-efficiency products in fully furnished residential units is projected to reach 46.7% (an increase of 11.2 percentage points). Furthermore, government procurement for public buildings now mandates a minimum of Grade 2 (or higher) water efficiency in 100% of purchases, with an annual procurement value exceeding 12 billion RMB.

Retail Channels:** Both consumer awareness and price premiums regarding water conservation are on the rise. A significant 82.6% of consumers now prioritize water-saving certifications when making purchasing decisions (up from 45.2% in 2020). E-commerce platforms have implemented mandatory requirements to prominently display water efficiency ratings on product landing pages, resulting in a 120% surge in search volume for SKUs with Grade 1 water efficiency. Concurrently, the display space allocated to water-saving products in brick-and-mortar retail stores now accounts for at least 50% of the total product showcase area. Cross-border Exports: Rising Regulatory Barriers—Markets in Europe and the U.S. are simultaneously tightening water efficiency standards, creating export hurdles for products lacking water-saving certification. Meanwhile, leading domestic manufacturers are capturing market share in Southeast Asia, the Middle East, and Latin America by leveraging superior cost-performance ratios (pricing their products at 50%–70% of foreign-branded alternatives); export volume is projected to grow by 18.7% in 2025.

V. Product Structure Evolution: "Smart" and "Green" Emerge as Dual Core Themes

Widespread Adoption of Water-Saving Technologies: Features such as jet-siphon flushing, air-assisted flushing, and super-vortex flushing have become standard specifications. Innovative technologies—such as tankless systems and ultra-thin ceramic walls—are being successfully commercialized, effectively balancing water conservation with space optimization.
Accelerated Penetration of Smart Technologies: New water efficiency regulations for smart toilets—set to take effect in 2027—are driving mandatory technological upgrades (requiring flushing water consumption of ≤0.6L and a 20% reduction in energy consumption). The penetration rate of **"Smart Suites" (comprising a smart toilet, faucet, and vanity cabinet)** is projected to rise from 25% to 40% (according to data from the State Administration for Market Regulation).
The Convergence of Health and Low-Carbon Initiatives: Features such as antibacterial glazes, HIH health certifications, and "zero-carbon" ceramics (exemplified by Laufen’s fully electric tunnel kilns) have become key selling points in the high-end market. Integrated products that combine water conservation, energy efficiency, and health-promoting features are becoming the mainstream trend.
Summary: Market Landscape Shifts Toward a Pattern of "Strong Domestic Brands, Retreating Foreign Brands; Dominant Leaders, Specialized SMEs"
Short Term (1–2 Years): A Period of Adjustment—Approximately 30% of small and medium-sized enterprises (SMEs) are expected to be eliminated; prices will rise, and distribution channels will undergo a major reshuffle.
Medium Term (3–5 Years): A Period of Stability—The combined market share of the top 10 players (CR10) is expected to reach ≥60%. Leading domestic manufacturers will dominate the mid-to-high-end segments, while foreign brands retreat to focus on the ultra-high-end niche; smart, water-saving products are projected to account for ≥70% of the market.