Global market leaders, such as Veolia and Suez, have been active in the Asia market for 20 to 30 years and have in many ways defined the terms by which private companies can operate in China’s market. Yet nipping at their heels today are local Chinese companies, whose aggressiveness is illustrative of the level of risk they are willing to take. Risk in the water sector is defined by how low a company is willing to bid a contract in terms of negotiated bulk water sale price as well as the number of total years required to recoup the capital investment. Aside from price wars, there are also Chinese companies’ political connections and the relaxed enforcement of Intellectual Property rights in China that are disadvantageous to foreign players.
Click below to download lists of major global companies active in the China market, regional players and domestic Chinese water companies.
One of the most widely-used business models in the China water market is based on public-private partnerships (PPP), preferring so-called Build-Operate-Transfer (BOT), also known as Build-Own-Operate-Transfer (BOOT), over riskier full concession contracts.
Under a BOT arrangement, the company invests the full costs required in the construction of the reservoir or treatment plant and is contracted to operate the facility for a defined period (usually 15-30 years), after which it is transferred to the public sector. The local water authority pays the company a set price per cubic metre of water for the duration of the contract.