72% of private enterprises get 30% of the project funds, how to "establish and then break" the environmental protection industry in the post-mixed reform era?

China Times (www.chinatimes.net.cn) reporter Liu Shimeng reported from Huzhou

In the past five years, after experiencing the sudden change of state-owned assets, the environmental protection industry has already bid farewell to private enterprises, forming a new pattern in which state-owned assets and state-owned holding enterprises account for the majority.

Recently, the China Environmental Services Chamber of Commerce announced the list of China's top 50 environmental enterprises in 2023, including 11 central enterprises (and subsidiaries), accounting for 22%, the same as in 2022, 24 local state-owned enterprises (and subsidiaries), accounting for 48%, the same as in 2022, and 15 private enterprises, accounting for 30%, an increase of 2 from 2022.

Behind the central enterprises and local state-owned enterprises steadily occupying the head position of the environmental protection industry, the environmental protection rivers and lakes have also become the red sea of "small fish". "At present, the competition of environmental protection enterprises is very fierce: the central enterprises take 24% of the winning bid amount with 6.7%, close to 1/4 of the market; state-owned enterprises take 45% of the winning bid amount with 19% of the number, that is, about 1/5 of the number; private enterprises take more than 18,000 projects, that is, 72% of the number, only 30% of the winning bid amount; foreign capital and other enterprises get less than 1% of the winning bid amount with 2% of the number. At the 2023 China Ecological Environment Industry Summit Forum, Li Xiangqun, vice chairman of Hejun Consulting, told the media, including reporters from the China Times.

For the environmental protection industry, how to break through the cage of "involution" and reshape business value is still an important topic that needs to be solved when the entire industry reorganizes its business formats and matches factors.

The "new normal" of a strong country and a weak people

In 2016, the National Development and Reform Commission (NDRC) and the Ministry of Ecology and Environment (MEE) proposed to cultivate more than 50 Chinese environmental enterprises with an output value of more than 10 billion yuan, leading technology, fine management, strong comprehensive service capabilities and great brand influence. However, according to the data of the top 50 companies in 2023, the average operating income will be 7.439 billion yuan, a year-on-year decrease of 3.19%. Among them, there are 4 companies with operating income of more than 20 billion yuan, namely Everbright Environment, GEM, BEWG and Capital Environmental Protection, which are the same as the number of the previous year, 4 companies with 10 billion to 20 billion yuan, a significant decrease of 3 companies from 2022, 20 companies with 5 billion yuan to 10 billion yuan, an increase of 1 from 2022, and 22 companies with less than 5 billion yuan, an increase of 2 companies from 2022.

"Why is it that the scale of our country's industrial and environmental protection enterprises is stuck at more than 1 billion yuan or 2 billion yuan, and it is difficult to break through 5 billion yuan?" Li Xiangqun threw out such a question. In his view, this is not unrelated to industry protection and non-market competition.

He pointed out that in recent years, due to the greater pressure on local debt, various local government platforms have suffered damage to bond issuance, banks and financial institutions have paid more attention to cash flow, operational capacity and debt repayment ability, and many local governments have given projects that could have been directly given to private enterprises with market competitiveness to their own platform companies, so that platform companies have cash flow, income and profits. However, the platform company can't do it, so they subcontract the project, and often dozens of subcontracts are contracted out by one general contractor. "The whole of China's environmental protection is a 'big market' and a series of 'small enterprises' with Chinese characteristics, and we look forward to the emergence of a Veolia enterprise in China that spans 100 billion yuan and stands at the forefront of the world's environmental protection field. He said.

Li Qilin, president of the China Environmental Services Chamber of Commerce and president of Fresh Environment, also thought about this issue. He believes that compared with new energy and other industries, the degree of intelligence and standardization of environmental protection is not high, which is why so many state-owned enterprises continue to enter the market. With the construction of Beautiful China, the promotion of "double carbon" cities and "zero-waste" cities, the demand potential in various ecological and environmental fields is huge, and there is still a lot of room for investment in the future environmental protection industry in the field of shortcomings, weak links and opening up new industrial fields and new tracks.

Create a better competitive environment for private enterprises

Looking forward to the new year, the Central Economic Work Conference will continue to put environmental protection in a very important position. The meeting proposed to focus on supporting key core technology research, new infrastructure, energy conservation, emission reduction and carbon reduction, and cultivating new momentum for development. It is necessary to further promote the construction of ecological civilization and green and low-carbon development, build a beautiful China pilot zone, and create a green and low-carbon development highland. Actively and steadily promote carbon peak and carbon neutrality, accelerate the construction of a green and low-carbon supply chain, and continue to fight the battle of blue sky, clear water and pure land.

Tang Yandong, chief expert of the Foreign Cooperation and Exchange Center of the Ministry of Ecology and Environment, told the China Times at the meeting that the Central Economic Conference further took the construction of ecological civilization and green and low-carbon development as the key content of the country's next step to further promote, and energy conservation, emission reduction and carbon reduction are still the core technical areas of key support, once again emphasizing that enterprises are the main body of scientific and technological innovation, and to restart PPP and continue to support the development of private enterprises. She believes that these policies are good news for environmental enterprises, and it can be said that China's economy is building a new industrial form with green and low-carbon development as the core, and green and low-carbon technology innovation is also becoming an important way and a strong driving force to promote the high-quality development of China's economy and society.

Li Yuezhong, chairman of WELLE Group, pointed out in the meeting that environmental protection actually bears a lot of responsibility from local governments, and it is not a complete market behavior, so it is understandable that the government or central enterprises and state-owned enterprises are more involved in the industry. Private enterprises can drive the entire environmental protection industry to a new level in terms of innovation ability, execution ability and experience. He believes that although the recently issued No. 115 document proposes some special preferential policies for private enterprises, the current problem of private enterprises is mainly the commercial credit problem of enterprises, and further reform of the mechanism is still needed.

An Lijia, vice chairman of the All-China Federation of Industry and Commerce, said in his speech at the meeting that the current ecological environment industry is in a critical period of transformation from scale and speed to quality and efficiency, and the majority of private enterprises should adhere to innovation and leadership, increase R&D investment in key core areas, promote the application of key core technologies, promote industrial competitiveness with independent product innovation, and accelerate the cultivation of a number of innovative industry leaders. Whole-process green development practices such as end-of-line governance will accelerate the formation of new qualitative productivity in the field of ecological environment.