Guide

The state-owned environmental protection "group army" has entered the scene one after another, and a new chapter is being opened in the change of environmental protection.

The large-scale entry of the state-owned environmental protection "group army". In this transformation of the role of industrial power, the state-owned environmental protection "group army" has gone from a small group at the beginning, to a large group later, and then to the current big wave. Vastly, it is evolving towards the order of magnitude of the "Hundred Regiments War". Regardless of the market attitude, the current state-owned environmental protection tide is reshaping the "Chinese model" of the environmental protection industry. In this unprecedented scale and long-lasting environmental protection battle, how will the various forces compete and what will be the ecological environment of the industry? evolution. To clarify the logic of industrial evolution and response strategies behind this big wave is believed to be a topic that all participants in the environmental protection industry are paying attention to.

01

State-owned environmental protection enters the field

Three big tides and the three logic behind them

Three waves of state-owned environmental protection entering the market

Although state-owned assets have entered environmental protection intermittently, the situation of high concentration and large scale has occurred three times so far.

The first time it dates back to around 2015

Before and after 2015, some state-owned enterprises that cross-boundary from traditional infrastructure entered the environmental protection market, mainly large-scale state-owned enterprises such as Gezhouba, China Communications Construction, China Power Construction, CRRC, and CITIC. Remember, at that time, they had a unified name in the environmental protection industry, barbarians.

The second time is around 2019-2020

Everyone should be most impressed this time. A large wave of private enterprises' environmental protection capital chain has broken. State-owned assets and central enterprises from all over the world have "bailed out" private enterprises, accelerating the reverse mixed reform of the industry, mainly with state-owned assets in Sichuan, Zhejiang, and Guangxi. And giant central enterprises such as the Three Gorges Group. Everyone should have not forgotten that this group of war-invested gold masters also had a unified name in the environmental protection industry at that time, "Dad".

The third time is around 2020 to now

A number of local environmental protection groups have emerged during this period, mainly based on local state-owned platforms such as Jiangsu, Henan, Shaanxi, Sichuan, Zhejiang, Guangdong, and Fujian. This trend is still accelerating.

Provincial-level environmental protection groups are becoming the standard equipment in all provinces, and even municipal-level environmental protection groups are also appearing one after another, especially in Jiangsu. The announcement of the establishment of the provincial environmental protection has not yet come down, and the following several large prefectures The city announced the establishment of the Municipal Environmental Protection Group, which is very characteristic of Su Daqiang.

Although they are all provincial-level environmental protection groups, the sources of actual controllers of environmental protection groups are slightly different.

In addition, for these provincial-level environmental protection groups, we also discovered a feature in the process of contact and research. Their establishment did not come from a higher-level unified political arrangement, but more of a self-issued behavior. .

In some provinces, there will even be two provincial-level environmental protection groups, such as Anhui. Previously, there had been a mixed-ownership provincial environmental protection group composed of large-scale central enterprises and private enterprises. There is a lack of a provincial-level environmental protection group, and it is planned to establish one in the near future. The same situation has occurred in Sichuan Province.

It is worth mentioning that among these provincial-level environmental protection groups, a considerable part of them use the Academy of Environmental Sciences as their starting point to carry out their work. Of course, this is also what the local environmental academies have been thinking about for many years. .

In a private exchange last year, a vice president of the Provincial Academy of Environmental Sciences confessed to me that they had long thought of extending the industrial chain, and planning consultation has been done for a lifetime, but they have not found the right time to go downstream. Expanding the business, this time is a good opportunity. This is the characteristic of the current wave of state-owned assets entering the market. What kind of name will we give to these state-owned roles entering the market? I believe that everyone's vision and creativity will be able to "give" a decent title.

The triple logic of state-owned environmental protection entry

In five years, state-owned assets have entered the market three times. What is the logic behind such a large-scale or even slightly high-profile entry?

Although the identities of entering the venue are different at different points in time, in summary, it mainly contains three logics.

First logic: political mission

Frankly speaking, although the factor of political demand is often mentioned by various experts on various occasions, it is not the core factor in reality. In other words, the core logic of the current state-owned environmental protection It is not a political factor.

The reason is simple. We have had a strong political orientation in the field of eco-environmental protection since ten years ago. This orientation has been strengthened year by year in the past ten years, and there has been no slack.

Whether it is policy, law or law enforcement, it has reached unprecedented intensity.

But we know that state-owned assets did not enter the market on a large scale ten years ago. In the period before they entered the market, who was the most active?

It is an environmentally friendly private enterprise. From this point of view, the political sensitivity and political position of private enterprises are indeed worthy of praise.

So, political demand can be used as the logic for state-owned environmental protection to enter the market, but obviously, it must not be the most important one.

Even the Three Gorges Group really started its environmental protection business after the leadership "calling". Therefore, the Three Gorges Group's environmental protection is a typical political appeal. It has to take responsibility for the protection of the Yangtze River and is seen by the leaders. For the seeded players in China, the burden is the only way to go.

Second logic: transformation needs

The traditional infrastructure market is saturated and has passed a major stage of development, and real estate, which is a considerable part of the sideline business of central enterprises (which has become the main business in many cases), is now strongly held, and it is impossible to continue the previous development logic.

Under such a predicament, central enterprises naturally need to adjust their strategies. Where do they turn? If you follow the priority, then everyone should be a matter of conquering the neck.

But these central enterprises, which are good at infrastructure construction, are transforming to get stuck in their necks? It doesn't seem to be reliable, after all, there is a specialization in the surgery industry.

Thinking about it, we still have to rely on our core strengths to transform. Then continue to do the project, what other projects can be done right now? Ecological and environmental protection infrastructure.

The third logic: changes in the competitive landscape

When private enterprises were most active, state-owned assets, especially non-state-owned enterprises and lack of industry experience reserves, were not able to compete with private enterprises on the same stage in terms of business operations, engineering capabilities or technical reserves, and their strengths were very different. Too big.

This can be seen from the number of private listed companies in the environmental protection industry.

Environmental protection is not an industry that can be done with a small amount of money and a team. It is much more difficult than building roads and houses.

But these private enterprises are no matter how good they are. Once the overall environment changes and their blood is cut off, their combat effectiveness will drop sharply. This is also giving the state-owned assets a chance to take the stage.

A friend of a well-known large-scale private enterprise environmental protection company in China told me that we have been doing government business for so many years. Why can a private enterprise do government business? Why does the government trust us? To put it bluntly, it is two words, interest. To solve the same problem, our technology is good, cost control is low, local governments' money is not blown by strong winds, and in recent years, local governments' finances themselves are tight, and some are even heavily indebted. The rigid demand is naturally to spend the least money to achieve the effect of the peak requirements.

At present, this kind of market structure obviously no longer exists. At least on a large scale, it is not easy for private environmental protection enterprises to directly do government business. Whether it is BOT, PPP or EPC, where does the money come from?

No money, what will the government talk to you? Feelings? I don't have money in my pocket, and my feelings seem to be less bright. There is no way to help the government solve the problem.

The old pattern has been broken, what is the new pattern? Private enterprises shrink the front line, withdraw from the front-line battlefield to the rear, concentrate on making ammunition and weapons (technology and products), and concentrate on post-war matters (operations).

Then who is going to fight? The state-owned assets went to war, and they rushed to the forefront to negotiate business with the government. This is the new pattern.

02

The evolutionary trend in the reshuffle

Accelerating the evolution of the 4 major factions

The power evolution of the environmental protection industry is very different from other typical state-owned businesses, such as electricity and telecommunications. Of course, its importance in national strategy and security will be weaker than these key areas. Therefore, in the early stage of its development, this industry has shown a big difference from other state-owned monopoly areas.

First of all, the characteristics of the industry determine that this industry will produce super giants, but will not produce players at the level of the State Grid. The power industry has a strong online division of labor relations and national network relations. The five major power generation groups ( Huaneng, Huadian, Datang, Guodian, State Power Investment) and the three major power equipment groups (Harbin Electric, Dongfang, Shanghai Electric) are also formally based on this clear industry division of upstream and downstream giant enterprises.

The ecology of the environmental protection industry is more like the ecology of a "third-class hospital" plus a group of professional doctors. It not only has a division of labor based on the industrial chain, but also reflects a stronger problem-oriented, large-scale and super-large integrated management services. Quotient is generated based on this industry attribute.

Secondly, the living space of private enterprises has always existed, and with the deepening and upgrading of environmental protection, this living space has become clearer, which is also determined by the characteristics of the environmental protection industry. After more than 10 years of rapid development and the three large waves of state-owned investment mentioned above, the ecology of the environmental protection industry has become increasingly clear.

In summary, it can be roughly divided into four camps.

First camp: Environmental protection central enterprise "aircraft carrier class" service group

Such companies are giant companies born with the in-depth implementation of the country's major ecological and environmental protection strategy, such as the Three Gorges Group and its wholly-owned subsidiary Yangtze River Eco-Environment It was born out of nowhere, but has a strong ability to integrate industries, in other words, it is a true industry integrator. Why use the word "real"? Because as far as a larger company is concerned, everyone will talk about integration, but integration is the easiest and most difficult thing. It's easy to say because there is no quantitative indicator for integration. Anyone can say a few words, and no one will chase you. It is difficult to say because it is difficult to have a substantial say in the upstream project resources and at the same time to fully mobilize and integrate the downstream. To do things at this level, at least the following characteristics must be possessed:

1. Top-level structure design ability

In our country, this usually requires political work arrangements from the central government to promote some super projects across multiple river basins, such as the Yangtze River and the Yellow River from top to bottom. In addition, this top-level structural design ability is also reflected in the transformation and innovation of business models. This is the basic skill of central enterprises. How to achieve a win-win situation between the government, society and itself is to be able to do more quickly. To get things done, it must be able to run things lasting and healthy.

2. Integration capability

To be more precise, it should be the awareness of integration. Since the problem to be solved is usually beyond the capabilities of one or even several companies, it is necessary to integrate more technical capabilities into one's own aircraft carrier. This requires a strong sense of integration, and you cannot do everything by yourself, let alone reinvent the wheel, resulting in a major waste of resources.

3. Funding capacity

To be able to do things at this level, one must first have a large amount of cash reserves and the ability to raise capital. Although the country will give strong support in this kind of task with strong political orientation and people's livelihood orientation, if one does not have A few cash cows are not a long-term solution. In the end, this type of company will have a scale of hundreds of billions, and it will also be the core force for China's environmental protection industry to export abroad.

The second camp: a national comprehensive environmental service group

Compared with the first camp, the companies in the second camp are more in line with the characteristics of competitive market players. Most of them are players who have been in the industry for many years. Such companies are also star companies in the industry, and most of them are listed companies, such as the well-known Beijing Enterprises Water, Beijing Capital Environmental Protection, and Everbright Environment. Most of these companies are mixed-ownership companies, but they are usually dominated by state-owned assets. They usually have the following advantages:

1. Excellent M&A capabilities

In the second camp, some started out on their own research and development, but the number is very small. Most of them still obtain real tickets through mergers and acquisitions during the development process and the vertical and horizontal expansion of the subsequent business.

Beijing Water, which is now well-known in the industry, has achieved take-off through mergers and acquisitions of environmentally friendly private enterprises. In 2008, Beijing Enterprises' Public Utilities Department was established shortly. In order to enter the environmental protection industry, it won the development of Zhongkecheng Environmental Protection at that time. With its capital, technology, management and government resource advantages, Beijing Enterprises Water has rapidly increased its scale and industry influence and became the industry leader.

This kind of state-owned assets + private enterprises' entry-level play is so effective that when laying out the sewage resource recycling track, Beijing Enterprises jointly initiated the initiative, and the imperial capital and the two heroes teamed up to win Zhejiang's pioneering environmental protection. Same recipe, same taste.

2. Strong financing ability

In the environmental protection industry with significant geographical restrictions, such a national comprehensive environmental service group, the core reason why it can compete in the Quartet is its strong financing ability. The founder of a well-known listed environmental protection company in Shenzhen once teased his own company in public. He said, don't think that we are eating on the basis of appearance. The government will buy it if we bring our faces. Our magic weapon is to bring capital into the group. This kind of strong financing ability is not only reflected in the front end, but also in the later period. For example, this year's public infrastructure Reits. Environmental protection companies can package their own (franchise) assets on the market to achieve a rapid return of funds. Use your own project to finance, and then take this part of the money to continue to take the project. Does it sound a bit like a Ponzi scheme, but don't get me wrong, this is completely compliant and legal. This kind of financing ability is a test of the company's management and management level, and the challenge is very big. However, it is obvious that once this capability is acquired, traditional environmental protection companies will also have financial attributes, which is a qualitative change to their own competitiveness in the industry, because it has an additional dimension of competition.

3. High-level operation and management cost control ability

Accounting for mergers and acquisitions, financing is very important, but whether it can be a long-term national comprehensive service group, the basic skills at the bottom level are still operational management and cost control capabilities. If the basic skills are not good, mergers and financing will become self-accelerated. Boosters toward destruction, such as the recent Tianxiang environment is a very typical example, as well as the previous Shengyun Environmental Protection and Kaidi Ecological. These "models" all tell us that the basic skills of environmental protection must be solid, otherwise it will not be played by capital, but by capital.

The third camp: Regional Environmental Integrated Service Group

Most of these enterprises are controlled by the local SASAC, which can make good use of local human resources and political and business resources. They have strong territoriality and regionality, and their business activities are usually bounded by the province. Strong motivation to go out. The most popular recently is the appearance of such state-owned environmental protection groups. I guess you are likely to see your colleagues in your circle of friends line up to forward the official announcements of the establishment of these groups every month. Although these all claim to be a provincial-level environmental protection group, there is still a big difference in the identity of everyone in the group. The most important thing behind this is to find the funder.

Some places are directly funded by the SASAC, but more are funded by industrial forces. They stand behind to provide financial resources and some project resources. Organizations such as the Academy of Environmental Sciences are responsible for professional and organizational work. Professionals and experts, a tall provincial environmental protection group can be officially announced. This operation can be described as killing three birds with one stone:

1. Helping institutions like the Academy of Environmental Sciences, which originally only focus on front-end consulting and planning, realize the vertical expansion of the industrial chain;

2. Helping the province's industry to achieve "autonomy", self-governance of pollution, not only save money, but also earn money, I heard from friends that this operation can also rely on the concept of third-party governance, I believe people in the industry I will make my own judgment on this point;

3. To a certain extent, a provincial-level external communication calibre and mechanism has been established, which is mainly prepared for groups in the first and second camps, but many veterans in the industry have reservations about the effects of this level opinion. This is because there is neither precedent nor policy and legal constraints. Eventually the forces of the first and second camps will come in to do business, and whether they can succeed or not depends on whether the owners can be dealt with. Whether they buy it or not is decisive. Recently, construction of the largest urban-rural integrated sewage treatment PPP project in northern Jiangsu, with a total investment of 2.922 billion yuan, was undertaken by Gezhouba. From this we can see the capabilities of the first and second camps in local public relations. Although facing strong pressure from the first and second camps, this kind of emerging regional environmental integrated service group also has its own significant advantages, that is, the ability to perceive local policies, and even the ability to predict, they even to some extent It will have a substantive impact on local policies and the priority of each environmental protection subdivision. This unique advantage is enough to make this type of environmental protection group live comfortably in the future. While chatting with a friend who works in an environmental protection group in a certain province, I asked them how they plan to expand their business. He said that they do not have sales and marketing, and they mainly rely on leaders to go out for meetings. Once the meeting is in place, the matter is settled.

Fourth camp: system solution provider

I finally talked about the fourth camp. This is the camp that has the greatest relationship with existing practitioners in the industry and the camp that has created the most professional jobs in the environmental protection industry in the past 20 years.

Compared with the three camps above, the nature of the work of this camp is significantly different. They are solution providers and provide professional services related to technology, products, and operations. After the development of the past 20 years, many listed companies have emerged in this camp, and this trend has not diminished momentum. Players in this camp are still working hard to land on the Science and Technology Innovation Board and the ChiNext. From last year to now, more than a dozen companies have successfully listed. In addition, there are a considerable number of environmental protection companies lining up to go public.

The 14th Five-Year Plan period is a window period for companies in this camp. Under the new structure, how to transform their positioning and how to achieve close integration with the three camps will be the next key. Although there are three major camps above, the companies in this camp are worth looking forward to, because China's environmental protection market will become bigger under the mixing of the three camps, and they will inject more funds and resources into this industry. From the overall perspective, this is indeed not a zero-sum game, but a historic opportunity to make the cake bigger.

Over the world, in the field of environmental protection, apart from some world giants who may go abroad to do business, the rest are the leaders in the subdivisions. Standardized technical solutions and products will also become their market players outside the country. The most powerful lever.

03

Follow the trend under the new pattern

Strategic play of the four camps

1. Mixed reform strategy

The central government has a clear strategic direction on what state-owned central enterprises should do. Therefore, when we look at the strategies and play styles of these large groups in the environmental protection industry, we cannot deviate from this background.

During the 14th Five-Year Plan period, the state's strategic guidance to these state-owned assets, especially central enterprises, can be summarized as two cores:

First, it shifts from managing assets to managing capital; second, it improves its own efficiency through mixed reform;

In layman's terms, it means that the rich will contribute the money and the country and the people will do things together.

In the 40 years of reform and opening up, whether it is a state-owned enterprise or a private enterprise, in these 40 years of great development, everyone's long-term and short-term have been clearly revealed and exposed. But historical experience tells us that the following reforms can neither move towards a substantial increase in the market share of state-owned enterprises nor towards complete privatization. These two extremes are not scientific ideas. The mixed reform is the right way in the middle of these two roads.

We have turned our attention back to the environmental protection industry, and what is happening in this industry is the wave of mixed reforms of state-owned groups. The difference from other industries is that the environmental protection industry is a reverse mixed reform.

Take the telecommunications industry as an example. In 2017, China Unicom, which introduced private capital, fired the first shot of the A-share mixed reform. China Unicom's mixed reform has introduced strategic investors such as China Life, Tencent Cinda, Baidu Penghuan, JD. The Structural Adjustment Fund agreed to transfer approximately 1.9 billion shares of China Unicom's A-share company held by it. Judging from the situation after the mixed reform of China Unicom, the results of the mixed reform are encouraging. Talents are activated, innovation is promoted, and the efficiency of capital use is improved. In the stagnant state-owned enterprise development process, the mixed reform is undoubtedly a booster. Unicom's mixed reform is the introduction of private capital, which is called positive mixed reform.

What is happening in the environmental protection industry is the introduction of state-owned investment by private enterprises, which is called reverse mixed reform. But to sum it up, to put it simply, state-owned enterprises are not good at mixing, and private enterprises should be used for help, and private enterprises are not good at going to state-owned enterprises for help. This is an important feature of the current round of mixed reform. This round of mixed reform in the environmental protection industry is more of an attack by state-owned assets.

2. Horizontal full coverage

For the state-owned armies of the top three camps, full horizontal coverage is the guiding ideology of almost every company already written in the strategic planning book. This kind of strategic play has a lot to do with the characteristics of the environmental protection industry. The core customers of the top three camps are the government. The government's demand is environmental protection, not just a certain type of environmental protection problem, it is all environmental protection problems.

This is very similar to the medical industry. State-owned tertiary hospitals should develop in the direction of general hospitals. This is not the demand of hospitals, but the demands of customers. Patients only recognize the brand of the hospital. I will go to you whenever I get sick. Give me a stable expectation that it can help me solve most of the problems most of the time, which is enough.

Customer needs determine strategic positioning and play. In the past two years, many groups have removed water, solid waste, and atmosphere from their names and changed to environmental protection groups to take advantage of the trend and adapt to the needs of the new era.

3. Local strategy and going global strategy

For the fourth camp of enterprises, especially private enterprises, how to take advantage of the trend in the new situation, the strategy is also very clear:

On the one hand, we must dig deep into the local area to establish and consolidate the base area in front of the house. This strategy may not work in other industries, because the market space may be too limited, but for the environmental protection industry, it is completely feasible. There are companies in the industry that have established a prefecture-level city market to achieve listing. This is the environmental protection industry. The characteristics are also due to the fact that the environmental protection market in a district has achieved a performance of over 100 million, which is a very common phenomenon. If you can get a province, you can directly find a reliable brokerage to quickly discuss an auspicious day and go to the Science and Technology Innovation Board to ring the bell.

The other aspect is to go out and share cakes from other places. If you want to go out and go for a drive outside, you have to take care of the group army of the first and second camps, and their business can reach the whole country. Friends around me ridiculed that one group army can guarantee a well-off, and two group armies can put the listing on the agenda. Of course, these words are not very rigorous, but the general direction is correct. Consolidating local strategies and actively expanding the strategy of going global are the topics that enterprises in the fourth camp should study well.

04

Write at the end

The "Chinese model" of the environmental protection industry

Looking back over the past 20 years, in the process of building an ecological civilization, we have experienced many challenges and encountered many difficulties. Among these were the obstruction of vested interests and temporary mistakes in our work, but in the end we all Survived. In this process, our entire country has taken action.

Now our ecological outlook has begun to change dramatically. From the Qinling Mountains to the Qilian Mountains, from the Yangtze River Basin "to protect and not develop" to the ecological protection and high-quality development of the Yellow River Basin, it has become a major national strategy.

We can clearly see that in the process of indus