Market environment and barriers to entry

Market sectors

China’s cookstove market is highly diverse, consists of a large number of companies, and is experiencing rapid growth. A wide range of improved cookstove products are offered, from smaller cookstoves to large traditional kang dual use stoves. Due to the fact that the coal supply chain was already developed, the coal-fired stove market took off first. Both heating and cooking coal stoves are offered that mainly utilize coal briquettes as a fuel source. Product quality is variable and cooking stoves sometimes come without smokestacks, which creates indoor air pollution. Nevertheless, technology has improved considerably thanks to efforts by both enterprises and encouragement by the Chinese government. Thermal efficiency has improved and newer stoves on the market are less polluting.


The biomass stove market is struggling due to lack of an efficient supply chain and a lack of technology. Agricultural waste or forest products are an abundant fuel source in many areas, but the use of forest products is problematic due to environmental concerns. Furthermore, agricultural waste may only be available during certain times of the year. Many enterprises are working to develop more efficient biomass stoves and more efficient supply chains.


The cookstove market, especially the coal cookstove market, is plagued with low quality stoves and bootlegged products. Although quality has increased overall as the market has matured, there needs to be more regulation to curb the distribution of bootleg products and make sure that consumers get what they are paying for. Many cookstoves are not cheap; some dual-use stoves can run around $150-200 USD; this is quite expensive for many of those who need improved cookstoves the most. The biomass stove market also needs to develop a better supply chain; this may require cooperation between enterprises due to the way the market is stratified. Some larger biomass enterprises have already taken the initiative to improve the supply chain, and offer collecting and processing services to their customers.



Biodigester market

The biodigester market receives lots of government support, as noted previously. The market is fairly large as well, but struggles in certain areas due to lack of an efficient service system and underutilization. There were a total of 40.27 million biogas users in China in 2010, the majority of whom were rural and household users. Production in the same year totaled 13.08 billion cubic meters, which is roughly equivalent to monthly household natural gas usage in the United States. Traditionally, biodigesters have been constructed on-site with brick and concrete. A majority of biodigesters today are still built this way, but new technology is gradually taking over the market. Newer biodigesters utilize the “three news,” or glass fiber-reinforced plastic (GRP), other types of plastic, and software. The objective of many enterprises that make use of newer technologies has been to produce lightweight and rugged biodigesters that are adaptable to local conditions. Currently, hundreds of enterprises are involved in the research, development, and sale of biodigester technology. The market is comprised mainly of medium and large-sized enterprises.After-sales service is extremely important because it ensures that the customer makes efficient use of the product. Although China has invested a considerable amount of money into the service system, it still provides inadequate service and fails to ensure product utilization. This ties into the second issue with the biodigester market; low utilization in areas that lack a fully functioning service system. Many underutilized systems are owned by families that lack raw materials, labor, or proper knowledge; all of which can be provided by a fully functional service system. Difficulty acquiring local-level funds and problems with fee collection discourage adoption and the continuation of ongoing projects. Another problem is the increasing price of labor and materials, which increases costs throughout the supply chain. This will inevitably lead to higher prices and further issues with funding. Improvements in coordination and the service system are necessary, and increased government subsidies may be necessary as well to encourage further growth.



Solar cooker market

China has been investing in solar cooker technology since the early 1980s, but subsidies were cut in 1985. The market stagnated until the early 2000s, when growth began again thanks to increased government support. Solar cooker stocks increased by a factor of four from 2000 to 2010, and annual production has stabilized at 200,000 units per year. Usage is concentrated in areas with high levels of insolation and a lack of biomass resources, such as Gansu, Qinghai, Ningxia, Tibet, Sichuan, and Yunnan.The market is a lot smaller, consisting of around 20 enterprises, notably GSBI alumnus One Earth Designs, which is based in Hong Kong. Most companies are either privately owned or owned jointly by both private and government entities. There are generally two types of solar cooker enterprises: local and specialized. Specialized manufacturers are usually larger enterprises that have access to advanced manufacturing equipment and technical expertise. They are typically based in manufacturing centers such as Jiangsu, Shandong, Gansu, Beijing, and Hong Kong. Their products are made of materials such as glass-reinforced concrete, cast iron, GRP, and composite material and are of high cost and high quality. The price range is usually around RMB 400-500 ($64-80 USD) per cooker, and cookers are sold in many different areas rather than only on a local level.Local enterprises sell cheaper products on an exclusively local level. They are dominant in the regions of Gansu, Ningxia, and Qinghai. Due to lower input costs, cookers run cheaper, from around RMB 200-300 (32-48) per cooker. They are typically made of a cement shell and employ waste glass materials as lenses or reflective surfaces, making them less efficient than those sold by specialized manufacturers. However, that’s not to say that the product itself is of low quality, many enterprises are committed to manufacturing good quality and reliable products and establishing relationships with locals.