Overview of the environmental monitoring industry in China – drivers and barriers
Third Bridge Forum spoke to a former C-level executive at Poten Environment Group Co Ltd to paint a picture of the environmental monitoring landscape in China, including what is driving – and hampering – its growth, who the main players are and other relevant factors.
Of note, the Interview explored how the industry is very “policy-oriented”, as seen by the rapid developments in online pollution monitoring since China introduced a system for total emissions reduction.
Similarly, the Air Pollution Prevention and Control Action Plan issued in 2013 has been the “powerhouse” for air quality monitoring instruments, while the China haze incident of PM2.5, a closely-monitored pollutant, catalysed the development of PM2.5 devices.
Because market growth is “occasional” and triggered by incidents, it is difficult to predict how its size may change from one year to the next, our expert said. But if new elements are incorporated into legal reduction targets or other standards, the picture could soon change. For instance, if volatile organic compounds are brought into scope – something very much on China’s radar – “there will be another new and huge market”.
There are also interesting dynamics in terms of the distribution of profits among instrument manufacturers, system integrators and those in the operation and maintenance business. The former have high gross margin for a single instrument but lower net margin because of limited sales volumes, according to our expert. Meanwhile, the major operation and maintenance players are local enterprises, and some manufacturers are trying to penetrate this field.
The Interview covered the difficulties experienced by the industry at large, with market capacity – at just tens of billions of RMB – emerging as “the real problem”. However, capacity could become “several times that of the present” as technology evolves and more stringent policies are introduced.
To access all the human insights from the China’s Environmental Monitoring Industry Interview, click below to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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