Better Early than Too Late
By Wendy Wei
SUEZ first entered mainland China with its Treatment Infrastructure business in 1975. Now, SUEZ NWS has over 70 joint ventures with local partners, and is helping authorities and industries develop innovative solutions to address climate change and sustainable resource management. The company has built over 260 water and wastewater treatment plants in Greater China, supplying drinking water to over 20 million people.
At the recent IE Expo China, SUEZ introduced its AQUADVANCED® solutions for Smart Network systems, Urban Drainage systems and Smart Energy management – Water & Wastewater Asia spoke to Steve Clark, chief executive officer of SUEZ Asia, and Jose Maria Paredes, senior vice president of advanced solutions at SUEZ Asia, to find out about the new technologies and business models on “going digital”.
WWA: SUEZ has a long history of ties with China. How has the development of the environmental sector in China, as well as China’s general business environment, changed over the past years?
SC: The first big difference is that local partners are getting younger and more sophisticated. As operators, the local competition is increasing, and the local enterprises are showing more abundant and stronger skills. We need to keep the edge that we have, and integrate into local work.
On the other hand, I have noticed that transparency has improved. When I first dealt with the domestic government officials, they emphasised more on the GDP growth of the economy, but now I see more people talk about how to solve the environmental protection problems in their development process. It further proves that environmental protection is not a stumbling block to GDP growth, but can actually develop simultaneously in the process.
The emphasis on environmental protection is increasingly prominent in China, which is why we concentrated on drinking water when we first arrived, and are now arriving to the current wastewater and waste treatment. 20 years ago, the homogenisation in China was quite obvious – when foreign capital entered China to carry out operations, they focused on Shanghai and Beijing as the best choice for their location in terms of safety. Now environmental protection is more standardised throughout the country.
WWA: We know that SUEZ had a good year in 2018. How did the Chinese market and trends in industrial water treatment contribute to this?
SC: China was a major contributor to this: when we bought GE water, which is now SUEZ-Water Technologies and Solutions (SUEZ-WTS), China represented 10 per cent business of SUEZ-WTS. SUEZ-WTS had a global growth of 6.7 per cent last year, while China doubled the digit growth rate in terms of revenue.
In terms of the business layout of SUEZ-WTS, we make use of both domestic and foreign markets. We produce water treatment equipment in Wuxi and export them to other markets, which leads to very fast growth for our business. To put that in figures, in 2018, our revenue of SUEZ-WTS in Greater China has exceeded US $200 million. And this year it is growing even more.
WWA: China is home to a large universe of chemical businesses, but different industrial parks have different waste service providers. Will SUEZ give some support to the smaller parks to improve their operational safety?
SC: Absolutely yes. We don’t have a particular requirement on size. If you are referring to hazardous waste, up till now, we’ve concentrated mainly on incineration. Generally, there is a business model which would have to be 10,000 tons or above to make that possible.
What the government and industry care most about is the ability to safely move hazardous waste around to collect, as well as subsequent transportation and management, and the different technologies needed. Indeed, we are currently providing services for them in one of the biggest chemical industry parks, namely the Shanghai Chemical Industry Park. But we also provide services in some fairly small parks as well.
WWA: When it comes to hazardous waste, what are the core management concepts and practice of safety operations to chemical waste?
SC: In China, we have different contributor structures. For example, in Shanghai Chemical Industry Park, we adopt a 50/50 joint venture. It is also 50/50 in Changzhou. Of course, there may be different business models in different regions. In Taixing, we will take a majority stake of 85 per cent. In other projects, we may be minority shareholders. However, in all of them, we appoint the general manager and provide technical knowledge for the facility.
SUEZ has also signed an agreement with the environmental protection department to provide a full suite of operational and managerial expertise for government officials managing hazardous waste disposal facilities, which is targeted at meaningful collaboration. Through such global experience and concept outputting, we have also established strategic relationships with central ministries and local governments, as we hope that we are a trusted partner and not just a big operator to the Chinese government.
WWA: Many Chinese environmental companies are turning to industrial wastewater as the municipal wastewater market becomes more saturated, which means tougher competition. How does SUEZ cope with this competition?
SC: The municipal market is becoming very competitive, but we are not weaker than that of local environmental protection companies even though SUEZ is a foreign company. Many of our employees have been localised, and most of our engineering research and development is done in China.
The industrial market is still big here, with more options, and more industrial parks are being constructed. In the field of industrial wastewater treatment, we are competitive because we can introduce technologies and experience from other parts of the world. And now our new Business Unit, SUEZ-WTS, can graft on some very technical solutions that are added to our existing portfolio.
That’s also why we bring digital AQUADVANCED® solutions to China - it allows us to help some of our existing customers reduce costs and optimise the efficiency of the facilities, or reduce chemical and energy cost – therefore optimising the operation.
WWA: What’s the biggest challenge of promoting digital applications such as AQUADVANCED® in China?
JMP: The main challenge we are facing now is that maybe we arrived in this market a little bit early. Right now, China is mainly in the stage of rapid, high-cost expenditure and investment to develop large environmental protection projects, and to do this reliably. When it comes to assets, the performance of these projects may not be a major consideration in terms of cost savings.
We believe that in the next few years, China will gradually move towards cost-effectiveness and performance optimisation. In the process, it's going to open up huge opportunities, and we've been talking about these digital solutions as enabling tools to support our operational capabilities. Because we're project operator and management of suppliers, we can enhance asset efficiency and reduce cost through digital tools and systems, but challenges may be relative to the demand of the market. Of course, we hope to gradually promote and guide the market toward our concept to reduce cost and increase efficiency.
SC: Well, it’s better to be a little bit early than too late!
*Article may be found in Water & Wastewater Asia May/June 2019 issue.