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China Water Affair Report (Investment and Development),2005-2006

Published: Oct/2006

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The year of 2005 is quite important for China water affair to step towards marketlization. Chinese government takes water price reformation as one of the three major price reformation projects. As waste treatment fee came into collection and the water resource fee was improved in 2004 then in 2005 the water price in main cities rose a lot, which beyond  peoples expectation. In around 2005, the increase rate of water price in major cities of China, especially in Beijing and Shenzhen etc., the waste treatment fee increased by over 50%。 During the “Eleventh Five-Year” period (2006-2010), the water price may continue to rise by 50%-100%. Such nation-wide rise in water price boosts an advancement of water affair towards marketlization.

Prices of Domestic Water in Some Cities (Up to Aug, 2006)
Unit: RMB yuan/ton






China is now speeding up the pace of city-building; meanwhile, the income level of city residents are improving constantly, which have become the Long-term driving forces of water affair development. In addition, some monopoly industries, including water industry, are gradually opened up to the social capital and a series of favorable policies are enforced to ensure the successful marketlization of water affair. Private capitals now enter the water market. Along with the document issue of Execute Water Price Reformation and Promote Water Saving by China State Council, the price of water supply in cities and the waste treatment fee will be rationally adjusted to ensure the daily operation of the enterprises and to well-balance their profit. The reformation on water price also lays good foundation for investment into water industry. In 2006, the direction of water marketlization reformation is clear and definite. The water market is gradually opened, and the overall framework of franchising operation and government supervision system is to be enhanced.

Naturally not only positive factors may act, but also negative factors such as fierce competition, capital operation risk and investment risk may have profound effect on the development of China water industry. Up till now China has been the member of WTO for 4 years and with the further open of China market, foreign capital will speed up into China water industry. It is now a real challenge for domestic water companies to win the competition against the foreign rivals.

According to the “Eleventh Five-Year” Plan, the reconstruction of old water supply network which is over 50 years in service and the rebuilding of severely damaged water supply network in old city zones should be completed by the end of 2007. By 2010 the city water supply coverage should be no less than 95%. Waste treatment rate should be no less than 70% in designated cities and areas and the recycled water utilization rate in water shortage cities should reach 20%.

Great business potential lies in China water market. The annual production of water supply is to increase from the current value of RMB 60-70 billion to RMB 150 -200 billion in 2010. The annual growth of the total water affair market is to maintain at about 15%. China is now reforming the water market, as well as the water price to create a better circumstance for investment and development. The next 5-10 year is the key period to the development of China water affair.

This report has the following four parts: status quo analysis and prospect forecasts, competition strategy, company development strategy and analysis on opportunities and risks of investment.

We offer reliable source for readers to grasp the development trend of China water affair and help outline the suitable competition strategy. We have our data from authorities such as Ministry of Water Resources, State Information Center, national Bureau of Statistics, etc.

 

 



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