Industrial water China

How you can find a market within China’s industrial water sector

Now that we’ve provided you with insights on China’s water pollution issues, the key developments in the Chinese water sector and how they will influence the industrial water market, you can find out how you – as a foreign technology provider – can find a market within this $220 billion water sector.

We’ve identified four segments within the market to offer great opportunities between 2015 and 2020: Desalination, process water, wastewater and environmental monitoring.

Challenges, such as rising competition or potential market barriers, can make entering the market more difficult, but not impossible.

It’s important to keep in mind that Chinese companies are not merely looking for equipment; they demand integrated solutions and technical support on the ground.  

Merely selling equipment is becoming more and more difficult as companies look to integrated solutions accompanied by local support.

And it’s the latter where foreign companies often go wrong: Chinese competitors usually not only offer a more competitive price, but also timely local support.

As we’ve mentioned in our last blog post, even Chinese end-users are eyeing the water technology market as an investment opportunity, meaning they are particularly willing to invest in technologies that can provide a return-on-investment.

Localising your manufacturing can help you to overcome potential market barriers and become competitive on price

The desalination industry is expanding quickly as the government plans to quadruple the country’s capacity between 2015 and 2020. This also means a rapidly increasing demand for foreign know-how and technology.

However, the government is planning to restrict imports of foreign equipment, stipulating that 70% of equipment is to be produced within the country.

You can potentially overcome this by manufacturing or assembling your equipment locally, which will also enable you to reduce costs dramatically. Just remember to choose the right partner and to properly protect your intellectual property.

Pilot-projects and references are a must for the majority of Chinese customers

Process water remains an important segment, but entering this market in China may prove to be difficult. It’s a relatively mature market and thus also comparatively conservative, as process water links directly to a factory’s manufacturing process and end product.

Chinese industrials will often ask for (a number of) references for projects already completed in China, until they are willing to try new technologies.

So it’s important to come prepared with relevant pilot-projects and references.

Which technologies will have the most prospects? Technologies that Chinese competitors cannot yet offer, such as meeting new ultrapure water requirements for the pharmaceutical and micro-electronic industries, or technologies that can help your consumer to substantially decrease resources and cost.

Merely selling equipment is simply not cutting it anymore

The wastewater treatment market will provide the most ample opportunities, as foreign companies can offer advanced technologies and solutions that are currently unknown of in the Chinese market.

However it’s important to stress the competitive advantage of complete and integrated solutions coupled with local, high-quality service.

Focus on niche markets and leverage your foreign know-how and certification

The demand for monitoring equipment will continue to increase as monitoring needs continue to grow. Especially in this segment, growing competition from local manufacturers in the low-to-medium segment of the market is driving foreign companies towards the high-end market segments.

Niche markets, such as the monitoring of nano-particles, can provide generous opportunities. More importantly, foreign companies can set themselves apart with advanced integration (e.g. online data reporting and collection) and international certification.

Ideally, Chinese end-users want to see a return-on-investment

Something we already mentioned in our last blog post: Chinese companies are mainly looking for technologies that can provide a return on investment and maybe even a new business segment.

The industry has experienced a trend moving towards water re-use and recycling. Technologies such as zero-liquid discharge, wastewater to resources and residual heat recovery are experiencing substantial growth.

Not tailoring your solution to China-specific needs could cost you your success

What’s most important is to remind yourself that China is prone to different pollution issues. To just name an example, the pollution in the water supply may change the need of industrials and industrial parks for process water solutions.

Familiarise yourself with the manufacturing process of your potential client and tailor your solution to their specific needs, this is also something that can set you apart from Chinese competitors that usually offer more generic solutions.

Position yourself against your Chinese competitors

Having raised the topic of how you can compete with Chinese competitors: localisation of your solutions and after-sales service is key.

While most MNCs and larger Chinese companies will invest in foreign advanced technologies and equipment, the majority of Chinese companies will not see the point in above-standard treatment results and will not invest more money than is required to comply with the law.

In most cases, it will be considerably more difficult for foreign companies to compete with their Chinese counterparts on price. However, foreign companies can bypass this issue by focusing on tailored solutions for high-profile projects. This makes sense, as foreign companies are often considered more trust-worthy to manage complex and long-term projects.

Found this article interesting? Stay posted for our next blog post on how to sell in China’s industrial water sector.

Launch Factory 88

Launch Factory 88

We assist industrial companies sell and distribute in China. If you enjoy reading our articles, then you'll love our resources section.
Launch Factory 88