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Who we are Your Market Research Company in China The strengths of Daxue Consulting 6 crucial competitive advantages 1.Localized & Creative创造和本土 2.Responsive & Flexible负责和灵活 At all levels at daxue consulting, daxue is creating anenvironment wherefreedom and responsibilitygo together.daxueconsulting has a commitment toansweremails within a day.We are result-oriented and donot count our time to accomplish our tasks. Our team has an internationalbackground, leveraging the best ofboth worldsTeams are tailor-madedepending 3.We manage from A to Z内部 4.Actionablerecommendations可行建议 Wecare about resultsand design ourresearch in order to be operational.We aredriven by metricssuch ascustomer acquisition costs, business daxue consultingdoes not outsourceits services. We manage our ownassistants and use directly technologicaltools.We have adeep understanding on the 6.Professional专业 5.Innovative创新 Our methodologies are rigorous andserious, taking information from thebest practice in the world of consulting Constant on the lookfor newresearch tools and methodologiesOur goal is tocombine Demanding on the results,detail-oriented, respectful towards ourcommitments. Our services Experienced in answering to a wide variety of strategic business questions 350+ clients with 600+ projects for the past 7 years Examples of references A recognized expertise on the Chinese market Regularly featured and quoted in global publications TABLE OF CONTENTS The untapped market potential of adult toys in China Determinants of consumer behavior Key Takeaways The untapped marketpotential of adult toys in Mainadult toys inthe market Typical examples of adult toys History of the adult toys market in China •Government policies have loosened allowingthediversity ofsale channelsand products innovation. •The scale of e-commerceis growing, online stores aremorefocusedon product design, userexperience and packaging•Most online storeswon’t mark products’ namesand other information to protectcustomers’privacy. The adult toys market grew fast •The attitudes of the Chinese people towards adult toys has opened up therefore the number of consumers is increasing•Considerable revenue attractsentrepreneurstoinvesttheadulttoysmarket,thereweremorethan700newenterprisesinthisindustryin2017. The ecosystem of the adult toys industry in China Overall structure of the industry is dispersing, and each department is independent China adult toys’ sales are concentrated in export & offline stores •China’sadult toys manufacturing companiesare willing to sell products overseas sincedeveloped countries have a higher demand. •At present, offline sales are still the mostsignificant channel of China’s adult toysretail, but the ratio of online & offline adulttoys’ sales is close to 4:6. With the currentdirection of e-commerce growth it is likely •Ecommercecan effectively protect users’privacy by not marking products’ names and Main E-commerce business models Main drivers of the market Moreopen culture andlooseninggovernmentpolicy People’sattitudestowardsadulttoysaremoreliberalandgovernmentpoliciesareloosening,adulttoysarenotonlysuitableforyoungadultsbutalsoolderconsumers,sopenetrationofadulttoysisgrowingandmanyChina’sconsumersshowdesiretobuyadulttoys. Sophisticated distributionchannels ofe-commerce Distribution channels of adult toys are not limited to offline stores anymore. E-commerce is the most diversified distributionchannel, it includes official websites, mobile apps, and social media. Meanwhile, multiform marketing modes promote sales volume Considerable revenue attractsinvestors The adult products industry is emerging and there are onlyahandfulofcompetitorsinmarket,whichleadstohighturnoverofadulttoys.Considerablerevenueattractsincreasingnumberofentrepreneurstoinvest. Pain points of the market Determinants ofconsumer behavior Young men are the main force behind adult toy purchases •Young adults are the main force for adult toys purchasing, concentrated among those under 35 years old which make up63% of sales.•Men are still the dominant force in buying adult products as we can see the graph below. At the same time, womenbecome more and more open to adult toys as showing an obvious upward trend. Do men and women share the same preferences for adult toys? Although the categories of male and female toys are very rich, the sales concentration of sub-categories differs greatly. Among female toys, lingerie and clitoral stimulation (suchas massage sticks / devices) accounted for more than 90%of individual sales, which are the most mainstream female Amongmale toys,sex dolls(such as inflatable dolls)andmasturbatorsaccountedformorethan90%salesonTmall/Taobao, which are the most popular adult toys for men. Consumers purchasing areas are gradually diversifying The distribution ofChina‘sadult toys industrybeltis mainly in the 1-tier cities,and e-commerce (Tao series). At present,China’sadulttoys sales have gradually mov