2022 is a key year for the 14th Five-Year Plan, a year of celebration for the 20th National Congress of the Communist Party of China, and a year for the vigorous development of the water industry. Topics such as the “20th National Congress”, “urbanization construction”, “smart water affairs”, “sewage treatment” and “carbon peaking” have set off a heat wave.
01
Review
of the development of the water industry in 2022
1. National policy guidance to further clarify the direction
of development In 2022, the general secretary focused on “accelerating the construction of a new development pattern and focusing on promoting high-quality development” in the 20th National Congress, promoting new-type industrialization, accelerating the construction of a manufacturing power, a quality power, a space power, a transportation power, a network power, and a digital China, promoting coordinated regional development, and deeply implementing the regional coordinated development strategy, major regional strategy, main functional area strategy, and new-type urbanization strategy… These are all directions for the development of the water industry.
The state and ministries and commissions have also successively promulgated the “Central Document No. 1 of 2022″, “Guiding Opinions on Accelerating the Construction of Urban Environmental Infrastructure”, “14th Five-Year Plan for Water Security Assurance”, “14th Five-Year Plan for the Construction of Urban Drainage and Waterlogging Prevention System”, “Opinions on Promoting Urbanization with County Towns as Important Carriers”, A large number of important policies and documents such as the Guiding Opinions on Increasing Development Financial Support to Improve Water Security Capabilities, the Guidelines for the Construction of the National Integrated Government Big Data System, and the Notice on Strengthening the Security of Urban Water Supply are expected to make major breakthroughs in smart water, water security and infrastructure construction in the water industry.
2. National financial support, investment in pollution prevention and sewage treatment
In 2022, China’s epidemic will be frequent and spread, the economy will decline, and the pressure will further increase. But the state has not further reduced the budget for the water sector.
In terms of water pollution prevention and control, the Ministry of Finance issued a budget for water pollution prevention and control in advance and allocated 17 billion yuan for water pollution prevention and control, which is slightly reduced from 18 billion yuan in 2022.
In terms of urban pipe networks and sewage treatment, the Ministry of Finance issued a budget for subsidy funds for urban pipe networks and sewage treatment in advance in 2023, with a total of 10.55 billion yuan, an increase from 8.88 billion yuan in 2022.
At the April 26 meeting of the Central Financial and Economic Commission, the general secretary of the CPC Central Committee, the president of the state, the chairman of the Central Military Commission, and the chairman of the Central Financial and Economic Commission also stressed the need to comprehensively strengthen infrastructure construction. It can be found that China will continue to ensure the normal operation of the water industry and promote the high-quality development of the water industry.
3. Formulate national standards and gradually improve the technical standard system
In April 2022, the Ministry of Housing and Urban-Rural Development issued two mandatory engineering construction specifications: the Code for Urban Water Supply Engineering Projects and the Code for Urban and Rural Drainage Engineering Projects. Among them, the Code for Urban Water Supply Projects (GB 55026-2022) is the only standard specification for urban water supply projects, which has been implemented since October 1, and its implementation has further ensured the safety of urban water supply projects.
The issuance of these two mandatory engineering construction specifications provides an important legal basis and basic guidance for the construction quality of water supply and drainage projects.
02
Is the Water Group track expected to be hot in 2023?
2023 has just begun, everyone is gearing up to get ready to do a big job, and provinces have begun to hold high-quality development conferences. At the same time, local state-owned assets began to set up their own water groups, from the previous cooperation model to do it themselves! This means that the local market is difficult to share, and if you want to make money, you have to find another way.
On February 5, 2023, Zhangye Ganzhou District Wanhui Water Group Co., Ltd. held an unveiling ceremony. With a registered capital of 700.455 million yuan, it was reorganized by eight state-owned companies and institutions, including Ganzhou District Water Investment Company, Municipal Water Supply General Company and Municipal Sewage Treatment Plant. The business scope involves hydroelectric power generation, water conservancy engineering, soil erosion prevention, environmental sanitation public facilities installation services, environmental protection monitoring, air pollution control, renewable resource processing, sewage treatment and its recycling, etc., integrating new energy, engineering construction and environmental protection business.
On December 30, 2022, Zhengzhou Water Group Co., Ltd. was inaugurated. Through the transfer of equity in Zhengzhou Water Investment Holdings Co., Ltd. and Zhengzhou Water Construction Investment Co., Ltd., Zhengzhou Water Construction Engineering Group Co., Ltd. and Zhengzhou Water Technology Co., Ltd. were newly established, forming four major business sectors of “water supply, water affairs, hydraulic engineering and water science”. Integrate water-related enterprises and water-related assets through the method of “new establishment + asset integration” to promote the integrated development of urban water affairs.
On December 27, 2022, Guangxi Water Conservancy Development Group Co., Ltd. was officially established. The registered capital is 10 billion yuan, and the water conservancy department of Guangxi Zhuang Autonomous Region is 100% controlled. It is understood that Guangxi Water Conservancy Development Group Co., Ltd. will serve the high-quality development of Guangxi’s water conservancy, undertake the investment, construction, operation and management of cross-basin, cross-regional and other key water conservancy projects funded by the state and the autonomous region, coordinate and promote water disaster prevention, water resources protection, water environment governance, and water ecological restoration, and form an integrated professional platform with water conservancy planning, survey, design, construction, operation, investment and financing as the main body.
On September 21, 2022, Handan Water Group Co., Ltd. held an unveiling ceremony. With a registered capital of 10 billion yuan, it mainly undertakes the implementation of major water-related projects of the municipal government, realizes the integrated operation of water investment and operation, water conservancy facility design and construction, tap water production and distribution, sewage collection, treatment and discharge, fulfills the responsibility of water source protection and water quality safety, and ensures the water demand of citizens’ lives and urban development.
On January 14, 2022, Fuzhou Water Group Co., Ltd. was officially inaugurated. Fuzhou Water Group integrates five major sectors of water supply, drainage, environmental protection, hot springs and comprehensive services, and establishes the water group on the basis of the original water investment and development company, which is an important deployment of the municipal party committee and municipal government on the reform and development of state-owned enterprises, and an important measure of the implementation plan of the three-year action plan for the reform of state-owned enterprises in Fuzhou.
From the water group established in the past year to the present, it can be seen that the reform and integration of state-owned assets has become imperative, which is an important symbol to open a new track of high-quality development. In fact, there are already signs of establishing water groups in various places.
03
Various places have set up water groups, are they blindly following the trend or seeing dividends?
If they blindly follow the trend, their registered capital is not a joke, it is all tens of billions of real investment. So what dividends did they see, and they all chose the track of water affairs.
In the past two years, everyone can feel the fierce competition in the market, and some local water companies are facing great pressure. atUnder the mixed reform of the entire industry, water groups with state-owned assets background have been established one after another, which is a good choice.
Some experts have analyzed that more and more local governments are exclusive or holding, mainly responsible for local urban tap water production, supply, service and urban sewage treatment, as well as the design, construction, supervision and other functions of large state-owned enterprises, will gradually begin to defend their “territory”. In the established water groups, it can be seen that they all have water sectors in their business scope, and they have expressed that they want to become bigger and stronger.
Not only that, but it can also be seen that the future development trend of these water groups is “integration”. Simply put, it is the integrated development of water conservancy planning, survey, design, construction, operation, investment and financing, and enterprises expand their products and businesses through the integrated model, improve comprehensive service capabilities, and realize the extension of the industrial chain. This integrated upstream and downstream industrial pattern helps to maximize the synergy effect and comprehensive service capabilities of various businesses of water enterprises.
So for private enterprises, what else can be done in this market pattern?
04In
the future, will you be the boss if you have money, or who has the technology and who speaks?
Looking at the environmental protection market in recent years, the biggest change is the influx of a group of rich and powerful big brothers, the original market has been disrupted, and the original big brother has also become a small brother. At this time, the younger brother was also divided into two factions, one insisted on going it alone, and the other chose to cooperate. Those who choose to cooperate naturally lean against the tree to enjoy the shade, and those who choose to go it alone need to survive in the cracks.
Then the market is not so cruel, or leaves a “technical” window for these people who go it alone. Because the establishment of a water group does not mean that it has water treatment capabilities, and integrated development also requires certain technical support. At this time, private enterprises with technology and processing capabilities will stand out, and over the years, private enterprises have a certain foundation in technology, operation and management.
Water environment governance is a long-term and complex work, so a whim cannot play a key role, and the final test is everyone’s true ability. This means that the market of the future will move in the direction of “whoever has the technology speaks”. How can private enterprises have more say, the person in charge of an environmental protection company said that it is necessary to focus on subdivided fields, create differentiated value, and form multi-dimensional transcendent competitiveness.
Finally, looking back on 2022, China’s water industry has maintained steady development, and the market scale has steadily increased. Looking forward to 2023, driven by favorable national policies, the development of the water industry is bound to accelerate.
On the track of the water group, it is a foregone conclusion that local state-owned assets will lead the troops, and what private enterprises should do and can do at this time is to focus on themselves and train a specialized and special new technology, so that they can have competitive chips.
Post time: Jul-19-2023