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Water business in China through the eyes of an entrepreneur

Wednesday, 13 April 2016

Investment opportunities in China continue to grow

‘China has grown at an incredible pace for 30-odd years, but at the cost of the environment,’ comments Dutch entrepreneur Gijs de Bruin. The government is of course aware of this and the risk it poses to future economic growth, and it is the reason for the heavy on-going investment in environmental actions, including the water sector.

‘Water is one of the sectors in China which, for the foreseeable future, will be pushed by the government. There is a lot of money available for investment in new projects,’ de Bruin adds.

De Bruin has got to know the world of business in China, especially relating to water, very well in the many years he has worked there. He is CEO of exhibition organiser CHC Expo, which has events in the water and environment sector, including being the Chinese partner of Aquatech China. He moved to China in 1998. In that time he has established a number of ventures with a partner, meaning he is ideally placed to comment on how to approach doing business in the water sector in there.

Government action is driving opportunities. De Bruin highlights for example the ‘Water Ten Plan’ launched last year, which targets heavily polluting industries such as textiles and petrochemical industries. ‘There is a significant need for foreign technology,’ says de Bruin. ‘There is a lot of local technology to hand, but the real advanced technology is not present so much.’ Solution providers, monitoring equipment, real time data, water efficiency and reuse are all technology areas where the need is strong, and in the area of difficult-to-treat-wastewater there is also a need for expertise to adapt the technologies to the local conditions, he adds.

Partnerships are key in China. ‘If you are dealing with public-invested projects, I think it is best to work together with a very well connected local company, engineering bureau or engineering institute,’ says de Bruin. There is potentially more scope for approaching private projects directly, but again partnerships can make this more effective.

However, when setting up a distribution network or when deciding on how to serve a country as large as China, it may well make sense to have more than one partner so that they do not have too much power. ‘You have to control your own network in China. Don’t rely on one partnership only,’ comments de Bruin.

Contracts can be an area of concern. ‘A lot of people say they have no value in China. They have value, but it is just different to what we are used to in parts of Europe,’ says de Bruin. Contracts describe a general partnership and require on-going discussions and evaluation about the issues set out in the contract, he explains. 'As a partnership evolves over time, the partners are expected to have the flexibility to adjust the underlying terms along those lines,' he adds.

Intellectual property can be another concern, but, although it is a real concern, de Bruin notes that often the reports reaching western Europe tell only one side of the story. ‘Make sure you have everything registered with the appropriate authorities,’ he says, and consider splitting any manufacturing between suppliers, for example. ‘Be a bit more savvy about managing it,’ he adds.

Another important message, for intellectual property and in general, is that a company should dedicate its own resources to the country. ‘You have to make sure that you have a local presence in China, which can monitor your partners and which can also build your own networks,’ says de Bruin.

‘There is an enormous positivity and an enormous energy in the Chinese market,’ says de Bruin. This can mean that Chinese partners may sometimes appear impatient, which western companies should understand. ‘In the end, if you open up, if you make sure that your own operation is ready for China with sufficient resources allocated both at HQ level as well as in China, then there is a great opportunity,' he concludes.

Gijs de Bruin

Gijs de Bruin

98 Sparks & PureTerra Ventures

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