Industry Overview - The household paper industry is a significant sub-sector of the light manufacturing industry, closely related to daily life and consumer needs [3][4] - The market for household paper in China has grown rapidly, with retail market size increasing from 124.9 billion RMB in 2018 to 170.4 billion RMB in 2023, reflecting a compound annual growth rate (CAGR) of 6.4% from 2018 to 2023 [3][4] Consumption Trends - Per capita consumption of household paper in China has risen from 5.3 kg/year in 2018 to 6.7 kg/year in 2023, with a CAGR of 4.8% [6] - Despite this growth, per capita consumption in China remains significantly lower than in developed countries, where it stands at 10.3 kg/year in the US, 12.4 kg/year in Japan, and 9.3 kg/year in Western Europe [6] Product Diversification - There is a growing demand for specialized household paper products tailored to various life scenarios, moving away from the "one paper for all uses" concept to a "specialized paper for specific uses" approach [9] - The consumption structure of household paper is evolving, with toilet paper's share of total consumption decreasing from 81.9% in 2010 to 70.0% in 2023, indicating growth in other product categories [9] Market Dynamics - The household paper market is experiencing structural optimization, driven by rising living standards and increased health awareness among consumers [9] - Manufacturers are responding to diverse consumer needs by introducing a range of mid-to-high-end products, such as napkins, facial tissues, and kitchen paper, which are gaining popularity [9]

Core Viewpoint - The article discusses the challenges faced by Hengan International following the death of its founder, Xu Lianjie, and highlights the company's struggles with market competition, product controversies, and a need for strategic transformation towards high-end products [3][19][28]. Group 1: Company Challenges - Hengan International has been embroiled in controversies, including a recent incident where customer service offered "1000 yuan in ghost money" as compensation, leading to public backlash [6][7][12]. - The company has faced multiple product quality complaints, including issues with tissue paper and sanitary napkins, which have damaged its brand reputation [9][11][12]. - The company's revenue has been declining, with a reported 4.6% drop to 22.69 billion yuan and a profit decrease of 17.9% to 2.29 billion yuan in the last fiscal year [20][21]. Group 2: Market Position and Competition - Hengan International's market share has significantly decreased, with its tissue brand, "Heart to Heart," now holding only 11% of the market, lagging behind competitors like Vinda and Jieshou [20][22]. - The rise of new players in the market, such as DeYou and other niche brands, has intensified competition, particularly in specialized paper products [17][18]. - The overall market for paper products is experiencing a shift towards specialized items, with consumers increasingly favoring products tailored to specific needs [15][16]. Group 3: Strategic Transformation - Following the leadership transition to Xu Qingliu, the company aims to pivot towards high-end products and enhance its e-commerce presence [25][26]. - Hengan International has introduced new high-end product lines, including the "Fluffy Cube" tissue series, which utilizes advanced drying technology [26][27]. - The company is focusing on brand revitalization and finding new growth directions in the wake of its founder's passing [28].