Membranes in China: Boom or Bust for International Manufacturers?

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Membranes in china

Ahead of the IDA World Congress in Tianjin, there was an air of excitement about the desalination market's future growth in China.

After all, in February 2012, China's State Council announced its 12th Five-Year Plan (FYP) for desalination. In this, it established a higher than expected target of 2.2 – 2.6 million m3/day of online capacity by 2015. This compares to less than 1 million m3/day today.

And such excitement continued through the week, with multiple suppliers and OEMs holding back key news until the event in China.

California's Nano H20 kicked things off by announcing a $45 million investment into a manufacturing facility in Liyang, China – a city in the Yangtze River Delta, 250 km west of Shanghai.

Yet caution continued to remain over what could be a game-changing footnote in the FYP. Despite the high target set by the State Council, a goal stipulating that 70% of all equipment used in desalination plants should be produced in the country is perhaps more relevant to global suppliers. Potentially all equipment such as membranes and pumps in a Chinese desalination plant will come from China.

Writing in WWi magazine, Khoo Teng Chye, former CEO of Singapore utility PUB, believes such a move does not come as a surprise.

He said it's a policy "similar to that used to build up the country's wind energy industry a few years ago. In fact, besides the similarity to the wind energy industry, the aim of the government's plan for the Chinese desalination seems similar to what was achieved in the areas of rail and aviation."

Surprise or no surprise, the message is clear: China wants its water produced by Chinese equipment. By putting its peg in Chinese soil and establishing a local manufacturing presence, Nano H20 has clearly responded to this strict demand.

Other membrane companies remain guarded on China's potential.

Brett Andrews, president and CEO of Hydranautics, told WWi: "I think business in China will get more and more competitive. There are many Chinese manufacturers coming onto the scene - some of them are going international. There are literally hundreds in China.

"The Chinese latest Five Year Plan calls for an increase in local membrane technology. So this points to local competitors and maybe even shutting out the market in the future for international players. This is a big danger for us."

Speaking to WWi magazine, Dr Graeme Pearce, membrane expert said: "Only one or two [Chinese membrane manufacturers] have got into exporting their products. But the largest membrane makers of China are quite substantial given the large size of the Chinese market....I think the system integrators should be pleased as it creates another supplier for them.

"Western suppliers will find that the technology at these companies is becoming on a par with the best technology from the west – that day is fast approaching and has probably dawned."

On the positive side, the remaining 30% market share for non-domestic desalination equipment is still a lucrative amount given the predicted size of the Chinese market.

IP challenges and competition to one side, the original intrigue and skepticism of the Chinese desalination market remain. And with China's South-North Water Diversion Project under construction utill potentially 2052; clean, potable supplies provided by desalination could be a faster solution to China's water woes.

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