Top five reccomendations for succeeding on the Chinese water and wastewater market
Water and wastewater treatment in China lack behind. This has opened the market to foreign investments and offers several great business opportunities for Danish water technology companies. Especially within water resource management, drinking water, water reuse and wastewater treatment.
Great ambitions for drinking and wastewater treatment create a potential for Danish suppliers in China.
In 2015 the Chinese government launched an ambitious action plan to tackle water pollution. Some of the goals to be reached by the end of 2020 were:
- Urban sewage treatment rate should increase to 95%
- Reuse of water in larger cities should be improved and move from 10 to 20%
- A greater effort should be put in treating black-odor water bodies and cleaning river water
China’s water supply can meet the needs of economic and social development, but wastewater treatment lacks behind. If China wants to achieve their 2020 goals, significant improvements of wastewater plants and investments in new technologies are needed. This is where Danish companies can offer know how and new technology.
What should Danish SME’s be aware of when entering the market?
Danish companies usually enter the market using the BOT investment model and by cooperating with public or private, Chinese partners. Especially for SME’s it can be a challenge finding the right leads and potential projects and cases.
To get a foothold on the Chinese market, SME’s must find a concrete project to solve and hereby prove their value.
Top five recommendations for succeeding on the Chinese water and wastewater market:
1. Find a good partner with local relations, offering local service
Your partner should have the ability to deal with various situations for your business. Apart from the local relations, they must have a team with solid technical knowledge.
Local relations and service will make your company more attractive to do business with and make you appear more powerful.
2. Have an expert go over your contract to ensure that it complies with FECB
(Foreign Exchange Control Board). In China there are some very strict rules when it comes to foreign exchange. I.e. you must define every item of your products and services. If there are any parts made in China, you need to provide the Chinese HS code.
The HS codes used to classify products in China are different from Europe and will not be recognized by Chinese authorities. HS codes are used to monitor and control the import and export of commodities by customs, statistical agencies, and other government regulatory bodies.
3. Get a local project manager or supervisor to help coordinate your project
Due to cultural differences between Denmark and China it’s crucial to have someone on your side who understands the Chinese culture and knows how to navigate in it.
The project manager should also have solid experience in sales and technology. For example, a sales engineer will be a good choice.
4. Protect your intellectual property
Consult a Chinese domestic lawyer to help you design an effective protection program. Although protection in China has improved in the recent years, there are still risks for foreign companies and precautions should be taken.
Make sure to protect your trademark, the core technology and your patent. Even if your brand and trademark is registered in Europe, this does not apply in China. Before presenting your product on the Chinese market, check for similar trademarks and make sure to register your own trademark. The cost for this is very low, so even for smaller companies this should not be a hurdle.
5. Use your Danish relations to get support from the Chinese government
Government support is crucial for your project succeeding. The first case is always hard for foreign companies. If you get government support, it will be easier to find a domestic investor for your pilot project. To get government support, make use of your Danish resources in China, i.e. the Danish Export Association in China, NGO’s, Danish Embassy and local relations.
Your local relations can help you get in contact with the government and present your technology to the Chinese ministry of water resources. Here it’s important to make the ministry understand, how your technology fits into their plan for wastewater treatment.
If the government supports your idea, they will give you a recommendation. This document is very helpful when finding investors and projects. It can also give you a push when applying for funding via the BOT or the PPP model (the BOT and PPP model are investment models similar to the MUDP funding project in Denmark).
Where is the Chinese water market headed?
Current focus of the Chinese government is urban wastewater treatment.
In the coming years development of wastewater treatment will accelerate. To achieve the goal of 20% water reuse in larger cities, construction of underground reuse water plants in central cities has become very important to several major cities in China and is evolving to a general trend.
Another big market within wastewater treatment is the rural water industry. Especially for Danish SME’s this could become a great opportunity for future projects.
Do you want to know more about the opportunities on the Chinese water and wastewater market? Don’t hesitate to contact us if you want to know more about how we can help you establish contacts, identify business opportunities and find potential partnerships in the market.