By the end of the year, all the industries released their annual statistical reports. These statistics, just like Taobao's consumption ranking or the Netease Cloud Music's song ranking, create a lot of discussion. In this era, qualifications can bring profits. One qualification not only represents your professional qualities, but also gives others a good method to evaluate you. Therefore, in environmental protection industry, we have put forward a ranking system of the regional hazardous waste processing capabilities. Through this list, we can know which company is the leader of the hazardous waste industry in each region. More importantly, we can better understand the status of the market distribution and unveil what market opportunities are available for environmental protection companies.
Opportunity 1: Regional Market Gap Caused by the Contradiction between Supply and Demand
According to the Environmental Statistics Yearbook released by the Ministry of Ecology and Environmental（MEE）, as of 2015, the total hazardous waste production in China was 39.761 million tons. The hazardous waste problem in Qinghai Province was the most serious. For a long time, with the development of mining, scenic planning and hydropower, many problems influence on the environment of Qinghai. The inadequate infrastructure and lack of environmental control aggravate the pollution of the major industrial parks in Qinghai. In 2015, the growth rate of hazardous waste production in Qinghai reached 53.3%, excluding unreported data. Under the precarious ecological environment, such a high growth rate is undoubtedly a very serious challenge to local hazardous waste disposal. From another perspective, it also brings environmental companies a very large market. In addition to Qinghai, similar situations of hazardous waste production also exist in Jiangsu, Shandong and other provinces. Therefore, we have compiled the following charts to explore the situation of the hazardous waste market among the different regions.
(Note: The growth rate of hazardous waste production is based on the data of the 2015 and 2016 environmental statistical yearbooks. As the 2017 statistical yearbook has not been published, the gap analysis in hazardous waste disposal is based on the data of the 2016 environmental statistical yearbook and provincial hazardous waste treatment qualification.)
With the statistics of the growth rate and market gap of hazardous waste in the main provinces of China, it can be found that there are three areas that deserve attention. The first is the urgent-need area of hazardous waste disposal， represented by Qinghai and Hainan. The growth rate of hazardous waste production in these regions exceeds 50% and the treatment capacity of hazardous waste is almost saturated. The provinces that have such a high increase rate and market gap in hazardous waste disposal need to upgrade their capabilities. Therefore, for new SMEs, it is a good opportunity to get a piece of the fast-expanding market.
The second is the large-need area of hazardous waste disposal, represented by Jiangsu, Shandong, and Xinjiang. These regions have faced the problem of hazardous waste disposal for a long time and their hazardous waste productions are still rapidly growing. Even if Jiangsu already contains the most 360 qualified companies in the country, it is difficult to reduce local hazardous waste production in a short period of time. Those provinces need more technology leading companies with cross regional capabilities as the main force in the future.
The third is the storage-need area of hazardous waste disposal, represented by Sichuan and Guangxi. These regions are at a critical point of transition. Capacity gaps of hazardous waste disposal will appear, and the growth of the demand is not yet fast. Take Sichuan Province as an example, as proposed in "Sichuan Province's Hazardous Waste Disposal Facility Construction Plan", by 2022, the processing capacity of hazardous waste should reach 731,600 tons in the whole province." The target capacity is very close to the existing capacity of the province in our statistics. Therefore, what the market needs most is to improve the efficiency of the waste disposal by upgrading the technical level. To meet the storage need, the market will remain relatively healthy.
Opportunity 2: Major Industry Transfers Caused by Policy Adjustments
In China, the industrial characteristics of each region are very clear. For example, a large number of the areas with abundant mineral resources, including Shandong, Yunnan and Qinghai, have gathered a large number of enterprises and mastered the nonferrous-metal and precious-metal production market in China. The chemical industry is distributed in East China and Northeast China, where the economy develops rapidly and the industrialization level is high. The Yangtze River Delta, the Pearl River Delta, the Bohai Rim, and the Central and Western China regions have formed a major electronics industry because of their high density of talents and high educational level. Xinjiang Province, Heilongjiang Province and Liaoning Province have Daqing Oilfield, Liaohe Oilfield and other important oil fields. They have become the main oil industry areas in China.
Due to the industry accumulation, there is also the corresponding problem of a clear difference in pollutants between regions. It is impossible to make use of one simple unified standard for reasonable disposal. Therefore, China's hazardous waste industry has faced high regional barriers for a long time. With the increasing requirements for inter-provincial hazardous waste transport, this regional problem is even more obvious. Looping through the top 5 companies that have hazardous waste disposal qualifications in each province, we can also find that the hazardous waste leading companies in almost every province are in corresponding with the characteristics of the local industry, which further proves the regionality of hazardous waste disposal industries.
However, with the development of traditional industries, local policies, talents programs and economic conditions, the industrial priorities of various regions have been changed. For example, as the traditional electronic information industry centers, the Yangtze River Delta and Pearl River Delta regions are currently facing serious problems of industrial shrink and brain drain. The reason is that on the one hand, a large number of companies are in the low-end of the industry chain and are losing the dominant position of overall value. However, as competitive advantage, the cost of the labor force is increasing year by year. On the other hand, with the industrial upgrading, the government is constantly closing backward production facilities, improved the production technology and required environmental protection to meet higher standards. However, companies may not be motivated at the profit level. Therefore, the transformation is also very difficult at the present moment.
In contrast, the electronics industry in central and western China is booming. Taking Sichuan Province as an example, with the help of the Chengdu National Software Industry Base, the local electronic information industry is developing rapidly. According to the data released by the Sichuan Economic and Information Commission, it is expected that by 2020, the main business income from the electronic information industry in Sichuan Province will reach 1.3 trillion yuan, accounting for 7.6% of the total electronic information industry in China. In addition, the Ministry of Industry and Information Technology mentioned in the Statistical Bulletin for Electronic Industries, released in 2015, that China's software industry exports had increased rapidly the previous two years. Guizhou, Qinghai and Guangxi Province have the highest growth rate. It can be seen that in the next few years, the center of the electronic information industry will further be transferred from the coastal regions to the inland and western regions. The corresponding environmental protection demands will also increase significantly.
In addition to the electronic information industry, other industries also have corresponding changes. From the planning of the Xiongan New Area, Hebei will become the industrial undertaking area of the Beijing-Tianjin-Hebei region, which includes the traditional petrochemical industry and manufacturing industry. In the "Opinions on Strengthening the Platforms Construction of the Industrial Transfer of Beijing, Tianjin, and Hebei Province" jointly released by the three provinces of Beijing, Tianjin, and Hebei, it was proposed to "guide the whole processing industries of steel, petrochemical, and other industries into the demonstration zones in Caofeidian," and “plan to build a platform for modern manufacturing in the area directions of Beijing-Tianjin, Beijing-Baoding-Shijiazhuang, Beijing-Tangshan-Qinhuangdao, and Beijing-Hong Kong." Thus, a large number of projects will be established in the industries of new energy, steel, petrochemical and equipment manufacturing in Hebei Province. Hebei Province will become one of the key development areas in the Bohai Rim region.
In view of the metal related industries, according to"2017 Market Statistics Express of the National Small and Medium Enterprises Share Transfer System", there were a total of 111 new companies in the metallurgical and non-ferrous metal production industries listed on NEEQ during the three years from 2015 to 2017. Part of these companies are concentrated in 9 provinces including Jiangsu, Anhui, Jiangxi and other provinces. The number of companies in each province exceeds 5, of which Jiangsu Province ranks first with 25 companies listed. According to the statistics, more than half of the small and medium-sized enterprises represented by the NEEQ enterprises in the non-ferrous metal production and processing industry now develop in the southern part of the country. We can then conclude that in the case of such an enormous upstream industry chain for metals and related industries, there is also a great deal of room for waste disposal.
Opportunity 3: Lack of Leading Enterprises Caused by Highly Dispersive Processing Capabilities
From the table, one of the features is that the concentration degree of hazardous waste markets in each province is very high. The total processing capacity of the top five companies in each province accounts for 47.83% of the total province processing capacity. In other words, in each province and region, the major hazardous waste processing markets are divided by several “big enterprises”, which will make the regional characteristics more obvious. On the one hand, these companies that are located in major industrial cities in the province have broadened their development space by infiltrating into other cities in the province. Then they form the balance of the market. On the other hand, because of the limited competitors, they have created regional cooperation, and even an alliance. They have the price agreement of the hazardous waste processing in order to meet the requirements of their customers. On the other hand, they resist the new competitors together with a subtle cooperative relationship. Therefore, it is very difficult for enterprises from other provinces to enter into a new market. However, if the local hazardous waste processing company has a big goal, this kind of regional barrier seems to be a paradox. It guarantees its living space, but also limits its own market development in other provinces. If we expand our view from the provinces to the whole nation, we can find that the enterprises in various regions are almost completely different. Nearly two thousand enterprises in the country have disposal qualifications in the hazardous waste industry, but they rarely become the leading companies with cross-regional capacity. To some extent, DJE may be a leading company of the hazardous waste industry, but the share of the national market is only one percentage point for DJE. If we add up the national TOP5 companies with hazardous waste treatment capacity, their market share may not reach 4%. This data in the sewage treatment industry is about 19%. Therefore, our enterprises engaged in hazardous waste industry are highly dispersed and generally small in size.
But are they "weak"? This is debatable. These leading companies occupy the major positions in the markets and have the absolute discourse right. Their binding relationship gives them the ability to gain sufficient bargaining power. In a seller's market, the company could have an easy time. However, the demand for hazardous waste treatment is so large that the market needs more powerful companies to drive the whole industry to a new benign circle. Breaking the regional barriers and increasing large-scale operation are better ways to become the leading company of the whole hazardous waste treatment industry. Strictly speaking, at this point the leading company of the hazardous waste treatment industry has not yet appeared.
Everyone says that hazardous waste market is the “Blue Ocean”. Indeed, the market needs to be further investigated. For environmental companies, it is also necessary to take part in this unclear market and show their values. Enterprises that already possess the qualifications for hazardous waste treatment are the regulators of the industry. Enterprises expect us to tell them where the market opportunities are. We make the use of this analysis to tell them that there may be great demand in southwest and central China. In return, we also expect companies to tell us how they plan to start their business in 2018.
1.In the statistics, a unified accounting transformation method is adopted for the qualification, including waste barrels, oilcan and packaging containers. In some areas, the data is not involved because of missing data or special standards. The source of statistics for this data is the official website of the regional environmental protection bureaus and the listed companies are based on the latest available information.
2.Most of these views are analyzed through data and public information. If there are any doubts or concerns, we welcome your comments and suggestions.