In President Xi’s report at the 19th National Congress, the ecological civilisation is for the first time included in China’s Millennial Plan. This delivers a significant message that the Age of Energy Conservation and Environment Protection is about to come officially. As an essential feature of the Age, environment protection will be involved in many major industries. The to-be-improved ecological system in China is going to be seen as a Green Mine which will bring lots of opportunities and benefits for private capitals and relevant industries.  

After a growth spurt, the environmental industry now becomes quite stable. The market is going to be divided into smaller segments where more potential business opportunities will be found. At the same time, the market tends to look to brand value rather than price when choosing a service.

In recent years, the idea of low carbon has been very influential, which has led to the growth spurt of clean energy and environment protection. In 2017, there were over 200 green manufacturing projects sponsored by government’s special funds, nearly 450 green credit projects, and more than 425 green manufacturing projects publically listed as the demonstration projects. In 2018, the scale of the environmental industry is expected to reach over 7.4 trillion yuan.

A New Landscape Is Coming into Being

Today, some market segments including water protection, hazardous waste disposal and environmental equipment manufacturing are overtaking the traditional pollution control segment to be the primary growth pole of the environmental industry. Experts have indicated that to expand the market, environment protection should trickle down to small cities on the one hand, and service providers should improve their quality of service on the other hand. This means that environmental industry is going to need more personalised, diversified and customer-oriented service. This will become the new growth point of the industry.

“Treatment after Pollution” is no longer the way people choose to do. Instead, people realise that pollution control should start from the very beginning. Such an awareness is bringing some very different opportunities. When Internet +, big data and cloud computing become more and more common, the environmental industry has also seen a new trend – intelligent environment protection. New information technologies are utilised in the industry to improve data analysis capability, so that enterprises can access more precise analysis so as to improve the efficiency of environment protection.

Statistics show that the scale of environmental industry has been growing at a high rate since 2013. It was over 4.5 trillion yuan in 2015, and increased to over 5.7 trillion yuan in 2017 before reaching over 7.4 trillion yuan this year. Market segmentation becomes more obvious, and brand value becomes more important. To improve their brand value, environmental service providers have to focus not only on the outcomes, but also on the way they develop, the overall service experience and service quality they can provide to clients. Some big environmental enterprises have even set up a special department for brand value.

The competition has changed the landscape of the industry. In the previous years, the environmental industry meant high costs in pollution control, equipment manufacturing and energy consumption while gaining very little profits. But now things are different because of this new emerging business mode, which requires not much higher costs than before but can earn higher and more stable profits.  

Brand Value Matters More Than Ever

At the same time, there is an increasingly tight connection between capitals and environmental enterprises. On the one hand, capitals are trickling down to smaller and segmented markets. On the other hand, the “Winners take all” effect is more likely to happen as more and more environmental enterprises enter into capital market. Big companies remain dominant position through resource integration and strategic buyout, whereas those small and middle-sized companies have to compete for limited resource until a few can finally survive and gain a more advantageous position.

In 2017, it was seen that those well-known big enterprises have won most of the bids in the market. Some predict that when more and more SMEs start cooperating with industry leading enterprises, they will start realising and paying more attentions to brand premium. Once these SMEs have gained more influence, it will drive other less-known SMEs to start focusing on providing quality service and building brand core value.

The competition in environmental market is more like a marathon rather than a sprint. Brand effect, customised service and ecological awareness are going to play more important roles in the industry. There is a great chance to make profits if enterprises can expand its business both online and offline and integrate capitals. To establish a foothold in the market, enterprises have to find out what different clients would need for environment protection, and provide customised service to them in different circumstances.

The government will put more efforts in implementing the green policies in 2018, which will lead the technologies, business modes and service platforms of the industry to have fundamental transformation to meet the demand of low carbon manufacturing. It’s expected that more and more industries will be engaged with environmental industry, and traditional environmental enterprises will build a supply chain that connects both upstream and downstream industries. Be it environmental technologies and business regulations, or environmental infrastructure and equipment manufacturing, we can expect to see more breakthroughs and developments in the near future.