The status quo of water pollution is closely related to industrial wastewater and urban domestic sewage discharge. Since 2011, the total amount of wastewater discharge in China has shown an upward trend, and the demand for sewage treatment has been continuously improved. Based on deep concerns about the water environment, strengthening water pollution prevention and urban sewage treatment are listed as the key content of environmental governance during the 13th Five-Year Plan period. The upgrading of existing sewage treatment plants and the new requirements of sewage treatment plants will push the industry to a golden period of development.

With the government's increasing emphasis on environmental governance, the state has increased investment in infrastructure and environmental protection, various support policies have been introduced, and social demand has grown. China's sewage treatment industry has entered a rapid development, and the scale of the industry has maintained a high expansion rate. The data shows that the total assets of enterprises above designated size in China's sewage treatment industry decreased by 15.79 percentage points compared with the previous year; sales revenue increased by 4.52% over the previous year; sales profit increased by 33.65%.

As of 2016, the total assets of sewage treatment enterprises above designated size reached 195.062 billion yuan, a decrease of 15.79% compared with the previous year. The average total assets of each enterprise was 595 million yuan/home; the total liabilities of sewage treatment enterprises above designated size reached 98.458 billion. Yuan, compared with the previous year, it decreased by 23.68%, and the average debt of each enterprise was 300 million yuan/home.

From the perspective of operational efficiency, the overall operating efficiency of China's sewage treatment industry is improving. In 2016, the sales revenue of sewage treatment enterprises above designated size reached 44.278 billion yuan, an increase of 4.52% compared with the previous year. The average sales revenue per household was 135 million yuan/home; the sales profit of sewage treatment enterprises above designated size reached 10.151 billion yuan. Compared with the previous year, it increased by 33.66%, and the average sales revenue per household was 31 million yuan/home.

Analysis of competition pattern in sewage treatment industry

In recent years, China's sewage treatment industry has grown rapidly and has developed into a highly competitive industry. At present, there are 329 sewage treatment enterprises above China's scale, the industry is developing rapidly, and the market is fiercely competitive. As of the end of 2015, the national urban sewage treatment plant has a processing capacity of 140 million cubic meters per day, and the total amount of treated sewage has reached 41.03 billion cubic meters. In 2015, the national urban sewage treatment rate reached 91.97%, fulfilling the target requirements of the “Twelfth Five-Year Plan”.

At present, the proportion of state-owned enterprises, collective enterprises, foreign businessmen, Hong Kong, Macao and Taiwan investment enterprises, private enterprises and other types of enterprises accounted for 98% of the total number of enterprises in the sewage treatment industry. From the perspective of the competitive landscape of China's sewage treatment industry, state-owned enterprises have the highest market share (by sales revenue), followed by other types of enterprises, but the share of state-owned enterprises in China's sewage treatment market has declined slightly in recent years.

China's sewage treatment industry competition pattern

Source: Prospective Industry Research Institute

In the long run, along with the return of the water project model from equity transfer to the franchise system, the urban water industry will further transform into services. The national cost supervision and inspection policy for the water industry also puts higher requirements on the professional operation capability of service providers. At the same time, the series of policies such as green credit, green finance, green insurance and green securities promoted along with the energy conservation and emission reduction strategy have brought great pressure on the development of high-pollution and energy-intensive enterprises, and also promoted the professionalization of industrial wastewater. Demand for operational services will increase. As the large-scale construction peak gradually comes to an end, the development focus of China's sewage treatment industry is currently in the transition period from construction to operation, and investment space in the field of operation management is large.

In recent years, the PPP model has adjusted the operation mode of sewage treatment and has certain innovations in project investment, such as the use of industrial investment funds. The specific operation form is that financial institutions such as banks, securities and local governments work together to set up a parent fund. Joint venture with some local enterprises to establish a project company or sub-fund, responsible for investment in infrastructure construction.