Utilities Membranes China

Interview: Bruno Lhopiteau, doing business in China

Monday, 10 June 2024

Bruno Lhopiteau has lived and worked in China for 25 years. He moved there at the end of 1999 after convincing the company he then worked for that the 2000s would see an infrastructure boom and that he was best placed to go there and find opportunities.

Now that China is home, the place he founded Siveco China and Bluebee Tech, and from where his businesses direct international operations, he is in the perfect position to tell Aquatech Online all about doing business in the country, as well as the challenges and opportunities.

Let’s start at the beginning.


From Singapore to China and finding a gap in the market

The company Lhopiteau worked for in Singapore specialised in providing IT solutions for infrastructure projects. Once in China, he was put in charge of operations, working on big multi-billion-dollar projects,

“We were supporting those with our niche computerised solutions. I lucky to work on a nuclear power plant, hydro-power plants – for example, The Three Gorges – as well as Metro systems. All computerised maintenance management systems.”

He quickly realised that there was a market for smaller, municipal projects, particularly in water, which was an emerging market. Around this time, the company he worked for sold its China operations, a decision which led him to set up Siveco China, which he still runs today.

People thought I was crazy at the time, including water companies I talked to.

The growth of the water market and Siveco

The infrastructure market was what brought Lhopiteau to China. That industry’s boom led to the growth in the water market with growing urbanisation and the need for larger wastewater infrastructure and associated regulations.

“I never thought of it as a start-up. I was used to working in a medium-sized IT company and its formulated way of working. So, I set up the company in the ways that I already knew from my experience. It was a bit different to how entrepreneurs work today. It was not that hard, but we had challenges; at that time, the capital requirements were high, they weren’t really set up for smaller companies, so I set out to find money.”

Once set up, it took about a year for the company to become established.

We did it and we survived.

“I had the idea that the environmental market, water and wastewater, and other municipal markets would emerge. And I had an idea that we could use IT and digital tech to help implement good/best practices in operation and maintenance. To use tech to formalise and implement and optimise tech management, operations, and maintenance work practices.”

The idea of combining IT together with consulting was initially hard to get this across. Gaining business in the water industry was slow.

“We had to convince people; we were a small company starting from a blank page. We had challenges. We had to understand the market.”

Investing in people

Coming from a corporate background, Lhopiteau knew that he needed a team to make the business a success. He put together enough capital to hire five people.

“One thing I did quickly – the concept and industry was new – was instead of hiring experienced people, with their ingrained habits, I hired fresh young graduates that I could then train.”

The strategy has paid off. The current board of directors includes the young graduates he hired 20 years ago, and who are recognised for their work in the water industry. The company currently employs 50 people.

We have ups and downs, but we are doing ok and in terms of personal satisfaction, it’s been good.

Siveco is a very specialised business and is now the largest in China in its particular niche.

Working in China: it’s a different market

One factor that benefitted Siveco in the early days was that the business has always been native to China. The idea for the business was borne from the market conditions and a gap that existed.

“China is an interesting market, in the tech field, there is a tendency to simply try and bring in an innovative solution that has worked abroad and then ask the client in China how they want to use it. Often, the local client doesn’t know because they are not used to the systems. So, you have a situation where the beautiful software you bring to China does not get used and the international company tends to blame the customer, it’s team and organisation.”

This is a common mistake, to think that what works elsewhere will automatically work in China. Even though Chinese companies now operate in many other countries and has itself opened up to more international businesses, there are still differences that need to be taken into account.

It is easier to be part of a solution when you are part of the ecosystem.

“We have seen a number of companies from outside China bring in software and it never works. The whole design of the project is wrong. Most Chinese water companies don’t manage their operation and maintenance in a very systematic way, they do not use modern IT solutions, their team members don’t have the same experience that a tech manager in a European water company would have.”

This must always be taken into account, as Lhopiteau says, ‘it is one of the inputs of a project’ and, for example, any IT solution would need to be designed accordingly. It is a lesson that he learnt even before starting Siveco.

“Recently, we had an ongoing project with the two largest wastewater treatment plants in Asia in Shanghai. We delivered a project for them. They tried to work with a US software supplier, they spent a lot of money, but the system remains empty, they do nothing with it. We expected that we could recover data from the software, but there was nothing, not even something to look at.”

To cooperate with a Chinese company, you need to understand how they work and why they work like this. It is easier to be part of a solution when you are part of the ecosystem.

The challenges and opportunities in China

The growth of the water industry over the years makes China an interesting market. Lhopiteau built his company on the ‘realities’ of that market, but how can a company gain a level of understanding that will help it succeed.

“Learning the reality of the market only comes from spending time in China with your customers.”

Challenges comes from many areas, for example, a shortage of skills. Regulatory changes provide their own challenges, but also opportunities.

“Twenty years ago, environmental regulations were simple, not very strict and not consistently implemented across the country. Regulations have been built up over the years, and that is an interesting challenge because international companies have had a chance to influence regulations by being a pioneer in different areas with their products serving the water market. This is continuing today. China is more developed as is the regulatory system.”

Learning the reality of the market only comes from spending time in China with your customers.

The Chinese market can be contradictory. It can move quickly and require agile working practices, but it can also move very slowly, and international companies can find this contradiction difficult to overcome. It takes time and effort to understand the complexities in the market.

At present, there are few international operators successfully working in the Chinese market.

“Many international companies have found it hard in China. It may be easier if you are a supplier. Even for a successful company like Suez, it took a long time to grow their business. It can be frustrating and a real challenge. You need to be a long-term investor and also be prepared to lose money for years, if you think you know where you are going. The decision making of clients can be slow, but the tech and market changes can be fast. How do you reconcile these complexities?”

Siveco took a long time to build up business and has, despite working with large water and environment companies in other cities, only recently started working with the Shanghai Water Company, where the company is based.

These challenges present ample opportunities for international companies if they are prepared to do their homework, invest and be patient. Lhopiteau shares the example of the Beijing Environment Company, with which it works.

These challenges, in the local market, are where international companies can try and bring solutions.

“It’s major, national level player, a super large company, with water treatment infrastructure and distribution networks all over the country, agreements with local municipal governments all over China; a large geographical spread. One of their challenges is how you manage this huge territory, including the differences between one place and another, in terms of skills, construction quality, the age of infrastructure you operate – you might acquire old facilities, while also building new ones. These challenges, in the local market, are where international companies can try and bring solutions.”

First China, then the world

One of the major developments in the China market in recent years is the outward international focus. Chinese investors are acquiring companies in other countries, infrastructure projects are being developing in Africa and elsewhere. The domestic market is now opening up the world.

“For me, it gives my business a very international dimension. On average, about 50 per cent of my business is outside of China in this way. This is an exciting opportunity that China brings. As an international company, we can help with some of the challenges that Chinese companies face abroad.”

The lessons my team has learned in China, I am applying to my work around the world.

Companies, therefore, need to think about not only how they work in China, but how they also work with Chinese business partners, investors, and companies abroad.

“The lessons my team has learned in China, I am applying to my work around the world. In North Africa, Brazil, the middle East, Asia. What is happening here is something you can learn from. Doors are opening, what China is doing is becoming recognised by other countries and influencing others around the world.”

What is exciting about the Chinese market?

“If I look back on what we’ve done, it’s great to be part of the big Chinese water market, we serve an essential industry and we are very happy to contribute and to play a small role in it.”

The market in China is still changing, there is always something happening. China is very good at defining and delivering an industrial strategy. Five years ago, the government launched a policy to develop a high-tech manufacturing industry. Now, the Chinese markets for new energy, electric vehicles, semi-conductors, etc, is huge and competitive globally.

This is a good time to move into the market. There are needs across all kinds of disciplines.

“This shows how China can work, and if you are supplier or you solve a problem, it is good for your business.”

Water is one of the government’s priorities, but the industry has faced challenges post-Covid. For example, urbanisation has slowed, which reduces demand for water infrastructure and many businesses have struggled. However, this period of economic slowdown is easing, which once again provides opportunities.

Lhopiteau has invested in R&D to ensure the company is in a good position to take advantage of these new opportunities.

“This provides a market opportunity for players who are more agile and who have money to come in and solve problems. So, this is a good time to move into the market. There are needs across all kinds of disciplines, but you need to understand the market. China is a very open market. For most businesses that suppliers are in, there are few restrictions and customers are very open. But it is a competitive market, for international companies. It is all about assessing the market, identifying need and your offering, and so it can be slightly easier for a foreign company.”

Defining your China strategy

China is a different market to others around the world, with different ways of working and challenges and opportunities. Lhopiteau believes that a company will need its own China strategy to succeed.

“If the company is not organised in that way it will be hard. I see family-owned businesses appoint someone trusted by the shareholders especially for the Chinese market, which could help with your strategy. A cookie-cutter approach usually doesn’t work and can cause lots of frustration.”

Come and see for yourself what China is like and what it offers. Talk to people who already work here.

“You need to invest time and money and be prepared to be patient. It is does not mean that you don’t want to succeed fast, or that you can’t succeed fast, it doesn’t mean that you need to move slowly, you need to be ready, to be capable of spending time and investing money.”

Lhopiteau has one final piece of advice: “It can help to have people on the ground in China for a hew years before you expect your business to grow. But most of all, come and see for yourself what China is like and what it offers. Talk to people who already work here, whether and conferences or exhibitions, but be prepared to invest time.”

- Aquatech China is the leading water technology trade show in China, covering all aspects of water: drinking water, industrial water, waste water treatment, sludge treatment, smart water solutions and water management.