Water, water everywhere but not a drop to drink.
China has 22% of the world’s population but only 6% of its fresh water, according to the World Bank, and much of that is polluted by industrial waste.
With organisations such as Greenpeace and the World Bank highlighting the problem, pressure is building on China to cut its carbon emissions, clean up its rivers and improve its water supply, not only inside the country but from the outside too.
And Suez Environnement, the French waste and water management group, is positioning itself to cash in on the country’s efforts to clean up its act.
Speaking to FinanceAsia after the group posted a 40% increase in 2013 net profit, Jean-Marc Boursier, the company’s chief financial officer, said the country is a prime focus.
“China will have to think about water quality and desalination in the years to come, which creates opportunities for us,” he said.
It is an opportunity the group is already taking advantage of, both on its own and through its joint venture with Hong Kong-based New World Services.
Revenue growth at its China business jumped 9% in 2013 and Boursier believes annual double-digit growth is achievable in the next few years.
“We entered China in 1985 and our business there has changed over time. We started with portable water containers. But our evolution will not be in portable water containers,” Boursier said.
Treatment of waste water is the group’s primary focus and it is this area that the group hopes to expand in the years ahead.
The focus is timely.
Beijing said this week it would spend Rmb2 trillion ($326 billion) to tackle water pollution in an effort to improve the quality of its water supply by 30%-50%.
This means a huge investment in treating its water and the kind of opportunity that does not come around too often for foreign companies looking for inroads into the mainland.
“We will continue to look for industrial customers,” Boursier said.
Suez Environnement currently operates in Beijing, Shanghai, Chongqing and southern China – including Hong Kong, Guangdong and Macau.
“China clearly remains a significant focus in the future,” he added.
There are other foreign companies looking to take advantage, including Siemens and GE Water, both active in the country to a lesser extent than Suez Environnement.
But China is not just looking to attract foreign partners for its own domestic water management companies. It has been actively looking abroad to secure the know-how and potential technological transfer for use back home.
In 2012, China Investment Corp, the country’s sovereign wealth fund, bought a 8.68% stake in Thames Water, the UK utility.
Meanwhile, Suez Environnement’s global revenue breakdown reveals the true extent of the group’s global ambitions: an even one-third split between France, Europe and the rest of the world.
In Asia that means a 10% share of total revenue, including Australia.
“Asia is a very important business for us. The fastest growth engine is Asia, faster than Europe, and it [will be] the major growth driver in the future,” he said.
Boursier reserved some bullishness for Europe, which has taken a battering over the past few years as a result of the financial crisis and subsequent sovereign debt problems.
“Macro-economic affairs [in Europe] are improving,” he said. “The worst is behind us.”
