Against the backdrop of a major change in the structure of the environmental industry, a restructuring of unprecedented scale and depth is underway. In this process, 'cross-border' has become a prominent phenomenon and pattern in the environmental protection industry.
At first, many in the industry saw this phenomenon as barbarians knocking on the door and reported resentment and criticism, especially from traditional environmental companies. This was because, from the perspective of the original environmental subjects, it meant a segmentation of the market pie, a change in market rules and non-environmental professionals working in the environmental field.
Over the past few years, however, the industry's attitude toward cross-border has shifted from one of resistance to one of observation and study, and then to one of cooperation and integration. Because from a deeper perspective, the frequent cross-border phenomenon still seems to imply that the environmental industry is undergoing a major transformation, and that the various cross-border cases are actually behind the main context of industry change.
In order to see the logic behind environmental protection cross-border in a more in-depth and systematic way, Aoyama Research Institute summarized and analyzed the cross-border phenomenon in an effort to explore and present the essence of the reality and provide reference for the decision making and business judgment of our friends in the industry.
- Property companies cross-border sanitation sector decentralization brings market changes
In terms of cross-border segmentation, property companies cross-border sanitation field is the largest class of movement.
The main stimulus for this cross-border is the expansion of the sanitation market facilitated by relevant policy reforms. Since the streamlining of government agencies, the state has put forward new requirements for urban management and issued documents related to municipal sanitation and social modernization and governance, explicitly further delegating management authority to corresponding professional companies, breaking the monopoly and inherent pattern of the sanitation market to a certain extent.
Against this backdrop, the sanitation sector has seen a market-based change, and property companies are undoubtedly in the closest position to this change. Since 2019, when China launched nationwide waste separation, property companies have entered the sanitation sector at a more distinct pace.
In fact, the property companies into the sanitation field is not so much cross-border, but rather the release of urban sanitation management efficiency, because sanitation has reached a critical point of further marketization of society and the market.
From a social perspective, efficient, low-cost, high-quality services require market-based mechanisms; from a market perspective, the health sector has a low threshold, but a huge market size and a clear basis for market management.
In addition, with the development of PPP in recent years along with the rise of the concept of sanitation integration, property companies with financial advantages have ushered in more opportunities. On the one hand, companies with goodwill, standardization, professionalism, financial strength and other comprehensive capabilities are more capable of undertaking the demand released by the government; on the other hand, the government has addressed the demand to a certain extent to improve regulatory efficiency.
Of course, at present, most of the property companies entering the sanitation market are industry leaders, and there are three modes of cross-border entry.
First, the acquisition of holding quality sanitation company, fast access to the market, occupy the high ground; second is to cooperate with professional teams, in order to cooperate with professional teams, "property + sanitation" model to form complementary advantages; third is their own business, their own hands, relying on their own ability to develop the market. After all, many property companies have been thinking about sanitation cake for a long time, how to eat has long been clear.
In the future, with the intensification of marketization and marketization, "integration", "urban housekeeper" with the implementation of the model, property companies may usher in a larger market space.
Regarding this cross-border, although traditional health companies have a strong first-mover advantage, this advantage is to some extent based on a non-fully competitive market mechanism. Health is an area with low threshold, large space and favorable policies, which means that the competition between property companies and traditional health companies has just begun.
- Large state-owned enterprises cross-border environmental protection industry environmental status political upgrade
Most of the previous articles of "Green Mountain Industry Review" deal with environmental data, cases, processes and related issues of national central enterprises, so I won't repeat them here, but this article focuses on their cross-border logic.
The entry of state-owned central enterprises into the environmental protection industry in recent years has been a major phenomenon in the industry. Its tremendous momentum, broad scale, long-term duration and far-reaching impact could be called the biggest in industry change, but it has to be said that this is from the perspective of the environmental protection industry.
Strictly speaking, the entry of state-owned central enterprises into environmental protection cannot be fully characterized as cross-border, but rather as a political upgrading of the business status of state-owned central enterprises in the context of
In the past decade, environmental protection has finally attracted high attention and strong measures in the context of a long history of debt, which has brought two important signals to central companies: stimulating rapid growth in the environmental protection market, and central companies playing an important role in the environmental protection war.
As a result, state-owned central enterprises entered the market on a large scale under the dual role of market orientation and top instructions.
Among them, water treatment and solid waste treatment are the two most obvious areas for two simple reasons: first, they are relatively mature and safer to cut into; second, they are the main battlegrounds for pollution prevention and control; third, they are part of the commercial asset-heavy model; and fourth, many central enterprises themselves have an obvious need for wastewater and waste treatment, so there is a basis for converting demand into services.
With the early development in the field of atmospheric management, central enterprises in the fields of electricity, oil and steel can not only synergize to improve efficiency, but also rely on group resources to expand external markets, especially in the field of thermal power atmospheric management. Most of the leading companies are subsidiaries of power groups.
In fact, the path into environmental protection for state-owned industrial companies has been essentially this, relying primarily on their own project applications and operational opportunities to develop their own environmental departments and then enter larger markets.
As for the entry of state-owned construction-type central enterprises, mainly in accordance with the rhythm of the current stage of environmental protection engineering construction. Entry time node for PPP when the model of environmental protection field is on fire.
Discussing the entry or cross-border of central enterprises, it is important to consider the common attributes of these enterprises, i.e., to give full play to their role of undertaking national strategies and allocating market resources, and thus the cross-border of central enterprises is to a certain extent a response to national policies and calls.
From a market perspective, each large central enterprise should not be considered as an ordinary enterprise, but as a platform, a scenario or a market. Therefore, the entry of national central enterprises also means that environmental protection expands and begins to involve various industries.
Of course, in the cross-border state central enterprises, there are also followers, this cross-border ultimately how to develop, it is not known.
- Internet giants cross-border wisdom environmental wisdom trend of the new track
Another cross-border that has received a lot of attention is the cross-border wisdom of the Internet giant environmental protection.
In the past two years, Huawei, Baidu, Ali as the representative of the Internet giants have laid out the field of intelligent environmental protection, which is the trend of environmental wisdom.
One of the characteristics of China's environmental protection industry is its large scale and diverse scenarios. After decades of development, the environmental protection industry has built a large number of disposal facilities and equipment in various fields. As a major asset of the government and enterprises, these facilities and equipment are important in the operation process "compliance, risk avoidance, cost reduction and efficiency" and intelligence is an excellent tool to address this need.
With the gradual saturation of infrastructure construction, the focus of the environmental industry is transitioning to a high-quality direction, with wisdom as an important starting point imperative.
However, unlike other areas, intelligent promotion must be deeply integrated with Internet technology, which is also difficult, that is, the distance between the two is far. In the intelligent water construction, some industry insiders said that the difficulties are mainly reflected in four areas:
"First, the perception problem. At present, people's perception of smart water is inconsistent and inconsistent. They will mistake a node and a part for smart water, such as the digital transmission process; second, the lack of national system standards and top-level design for smart water. There is no plan, everyone does their own thing; third, data is not perfect and data silos problem; fourth, China's smart water still has data security problems."
It can be seen that smart environmental protection can not rely solely on the power of a particular type of business. From hardware to software, from installation to operation, from cost input to output effect, from pilot to promotion, smart environmental protection is an upgrade that requires multi-party cooperation, complementary advantages, resource sharing and data sharing.
Therefore, for the entry of Ali, Tencent, Huawei and other Internet giants, some industry insiders do not think so "cross-border robbery" and prefer to see it as a new opportunity for cooperation.
- Cross-border environmental synergies in cement and other industries bring win-win situation
Among the various cross-border models, there is one business competitiveness that is the strongest and logically most recognized by the industry, namely, cross-border with the help of synergy, of which cross-border for enterprises in cement, steel and power generation is typical.
In the cement sector, for example, in the early days, head cement manufacturing companies made good progress in environmental segments such as domestic waste treatment, municipal sludge and hazardous waste, and not only successfully crossed borders, but also became a force in the solid waste treatment field.
One typical representative, Conch Venture, is known as a cement kiln-fired solid waste giant. The key role of synergies is explained in detail in the article "Conch Environmental Protection: Cross-border Revolution|Green Mountain" by Green Mountain Research.
Another scenario that crosses borders with the help of cooperation is the treatment of sludge in thermal power plants. In the process of converting old and new energy sources, some traditional thermal power plants are facing a huge existential crisis as their generation time has dropped dramatically. In this predicament, some power plants have opened the way for sludge treatment.
A large installed capacity power plant in southwest China, for example, in the face of new energy and external power input, it came out of the road of coupling coal and sludge power generation, becoming a local crack "sludge siege" technical expert problem, to achieve thermal power plant "disadvantage " into "advantage".
For example, on January 13, 2022, Hunan Nonferrous Environmental Protection Research Institute Co., Ltd. announced the establishment of the business scope includes safety and environmental protection, comprehensive utilization of mineral resources, etc.. According to local industry insiders, the establishment of this non-ferrous environmental protection institute can be seen as a form of provincial environmental protection group in Hunan Province. The reason is that this initiative on the one hand to seize the environmental protection governance of Hunan Province "bull nose" on the other hand, the layout of this environmental protection direction and the local industrial structure has a strong synergistic effect, more conducive to the coordination of environmental governance from the provincial level.
Generally speaking, cross-border environmental protection in cement, power generation, metallurgy, chemical and other industrial sectors mainly rely on two modes of synergy, such as technical synergy with cement companies and power plants, and another is business synergy. The cross-border of the above-mentioned industrial central enterprises also follow this principle.
- New energy and resourcefulness are the top choices for environmental companies in cross-border hotspots
In addition to external crossings, there are environmental companies crossing over into other areas.
According to the Shanghai Securities Daily, since this year, hundreds of a-share energy conservation and environmental protection industry companies have carried out industrial integration through mergers and acquisitions, expanding the industry chain, and each segment of leading companies rely on their own endowments to accelerate the layout of emerging tracks.
Among them, the new energy industry chain has become a new trend in this round of mergers and acquisitions, involving new energy materials, scenic power generation, energy storage and other sub-divisions.
For example, on September 16, 2022, Tongxing Environmental Protection Technology Co., Ltd. and the University of Science and Technology of China (USTC) held a cooperation agreement signing ceremony in Hefei to jointly build the "USTC-Tongxing Environmental Protection Energy Storage Battery Materials and Devices Joint Laboratory", officially crossing the border into the thermal sodium ion battery industry.
In September 2022, the Company and Tongliao Municipal People's Government will sign a strategic cooperation framework agreement with Tongliao Municipal People's Government. During the 14th Five-Year Plan period, we have jointly built a zero-carbon industrial park and a zero-carbon industrial equipment manufacturing center in Tongliao City with 10 million kilowatts of scenic hydrogen storage and ammonia integration.
In some segments of environmental protection, energy and environmental protection are close relatives. For example, waste-to-energy generation is both environmentally friendly and a component of energy. Therefore, there is a cognitive basis for crossing borders to new energy sources, which is part of this cross-border logic.
In addition, resourcefulness has also become the leading "gold" new direction of environmental protection, including hazardous waste resourceful disposal, waste cooking oil resourceful utilization, resource reuse, etc.
For example, on November 26, Luthor Environment (688156) announced that Luthor Environment plans to establish Luthor Biological Environmental Technology (Jinsha) Co. Resourcefulness business.
In general, the logic of cross-border environmental protection companies to the outside is the same as the logic of cross-border environmental protection outside, mainly in terms of technology, industrial coordination, capital advantages, shareholder resources and so on.
- Concluding remarks
The above is a summary and analysis of the five cross-border behaviors associated with the environmental industry, each of which has its own logic behind it, and is not all simply a market driven behavior.
The logic behind the five cross-border trends is the main vein of the current changes in the development of the environmental industry, and the future development trend of the industry will unfold from there.
Cross-border is not chaos, but environmental protection to a new stage, to adapt to the emergence of a new era, which means that the main body of the environmental protection industry is changing, which itself is in line with the needs of industrial development.
Frankly speaking, in some environmental pollution problems, it is impossible to prescribe a good solution just by relying on the original environmental protection industry model and main body. Environmental protection is a scene of great demand, and the solution to many problems depends on the integration of resources from all parties.
In fact, behind the cross-border is the interlocking optimization of resources, in which there is bound to be complex competition and elimination, "newcomers" in the continuous influx of the industry at the same time, there are some "pioneers" but the edge of the industry.
But this is what an industry really looks like when it develops.
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