• Frost & Sullivan takes a look back at China's Environmental Monitoring Industry in 2008 and its market outlook for 2009
SHANGHAI, China, Mar. 17, 2009 -- Water pollution issues in Yancheng, Jiangsu Province in late February has driven people's attention to the safety of drinking water again. Besides the absence of efficient supervision on industrial waste emission, insufficient capability of water quality monitoring in the water plant leads to the accident.
Environmental monitoring is becoming an increasingly important sector of environmental protection industry as Chinese government pays more attention to emission control and reduction. It mainly involves environmental quality monitoring, pollution source monitoring, and emergency monitoring on various objects such as air, water quality, soil, noise, acid rain, radiation, light, etc. A four-level environmental monitoring system has already been established in China, with more than 5,000 professional and industrial-use monitoring stations nationwide.
Environmental monitoring industry in developed countries can be dated 50 years ago, and has already stepped into the era of environmental quality monitoring. Whereas, the industry in China is still at developing stage -- pollution source monitoring. The environmental monitoring industry generates several ten billion USD each year worldwide. A huge gap exists between China and developed countries in terms of regulatory system, equipment technologies, professional level of employees, product diversity, and service coverage, etc.
According to Vivian Chen, Frost & Sullivan's China Industry Research Manager for Environmental Practice, around 150 companies provide environmental monitoring equipment and instruments currently in China, with an annual revenue of around RMB600 million, among which the most high-end products are mostly foreign brands, such as HACH, ABB, and Agilent. Most local manufacturers are small and medium companies, whose products are not likely to possess advanced technologies and high added value. With regard to environmental monitoring services, the number of participants is over 1,300 in China presently, with an annual revenue of more than RMB2 billion.
Under the world economic recession, the greatest challenge comes from the downturn of end-use applications especially industrial applications which traditionally create demand for environmental monitoring. Key industries include power generation, petrochemicals and chemicals, construction materials, metallurgy, paper making, and food processing. For instance, on-line monitoring equipment and analyzers are used in industrial pollution sources or pollutant emissions, including waste gas and wastewater discharge. However, this segment occupies a limited proportion of the environmental monitoring industry and is predicted to be recovered with the stimulus plans in China. However, Chinese Environmental monitoring industry still embraces great opportunities. Besides 10 major measurements and RMB4 trillion investments, China provided guidelines for reviving ten industries in late February 2009. Eight industries covered in this program are relevant to environmental monitoring, which include automotive, steel, textile, equipment manufacturing, electronics and information, light industry, petrochemicals and chemicals, and nonferrous metal.
"Ministry of Environmental Protection (MEP) of China released a RMB15 million investment package on environmental protection in April 2008 for the 11th Five-Year-Plan period. The investment involves 50 key projects with priority in establishment of an advanced risk prediction system as well as a comprehensive law enforcement and supervision system in China." Chen continues, "Furthermore, Department of Environmental Monitoring of China was founded in late 2008. This indicates the Chinese environmental monitoring industry is moving towards a modernization, standardization, and information trend."
Chen foresees that China environmental monitoring industry will be upgraded in four major aspects. Firstly, product technology and quality is enhanced. With more and more MNCs manufacturing equipment in China, more state-of-the-art technologies are introduced utilizing biological, electronics, and optical techniques. Local manufacturers are pushed to pay more attention to research and develop value-added products so as to meet increasing demand in high level. Secondly, the automation level in China is elevated. Currently in developed areas such as U.S., Japan, and EU, the whole process of environmental monitoring services has basically realized automation, from sampling, analysis, to data processing and transmission. However in most of developing areas in China, services are still provided manually. Therefore, the Chinese market is developing at an automatic, intelligent, and network orientation. Thirdly, product and service portfolio is expanded. In mature market such as U.S., as many as 1,600 items can be monitored, with majority in organic pollutants. Nevertheless the number only accounts to 400 in China. Potential demand does exist within various pollutants in China. Last but not least, quality assurance (QA) and quality control (QC) with monitoring services is improved. QA and QC is essential for ensuring the services quality. Developed countries have a complete system for QA and QC during the monitoring process, while in China the system is far from perfect.
In line with the industrial development practice, high value-added equipment which is automatic, multi-functional, instant, systematic, and intelligent is considered the most promising in China. Typical products include automatic monitoring systems for water quality, on-line auto monitoring systems for soot or SO2, automatic and continuous monitoring systems for organic pollutants, continuous monitoring system for key pollution sources, and on-site portable emergency monitoring equipment.
Chen elaborates, "A lot of equipment and services are engaged with environmental protection at the national level. For instance, regular air quality report and acid rain monitoring in key cities result in stable demand increase for equipment and relevant services. China is also showing increasing concerns for key watersheds in the 11th Five-Year-Plan period from 2006 to 2010, including 'Three Rivers' (Huai River, Hai River, and Liao River), 'Three Lakes' (Tai Lake, Chao Lake, and Dianchi Lake), 'One Jiang' (Songhua River), and 'One Reservoir' (Three Gorges)." Meanwhile, China's emphasis on the protection of ecological environment has created a great demand base for remote sensing and monitoring equipment. The industry is gradually transferring from merely ground monitoring to both ground and remote monitoring. Potential segments include vehicle-borne, ship-borne, and satellite-borne equipment and instruments, such as lesser radar monitor for pollution.
Statistics show that the total annual investments on environmental monitoring equipment exceed RMB200 million in recent years within all levels of governments and corporations in China. The conclusion should be reached that the Chinese environmental monitoring industry is experiencing renovation and upgrade period. The indirect effects caused by the financial crisis can be rewarded by industry restructuring. Frost & Sullivan forecasts it has an average annual growth rate of 15% from 2009 to 2012.
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