The release of China’s 13th Five Year Plan, focusing on 2016–2020, accented the country’s efforts to address the environmental issues arising from water pollution, with the Plan indicating a goal of spending 0.75% of GDP on improving wastewater treatment. The strategies within the Plan have helped create additional opportunities for investments in and applications to improve wastewater testing and monitoring, enabling leading water lab testing technology companies such as Hach and Xylem to further strengthen their presence in the nation.
China Water Risk (CWR) is a nonprofit initiative focused on highlighting the environmental and business risks of the water crisis in China, and finding solutions to enable more sustainable uses of water resources. Established in 2010 in its pilot form as the Asia Water Project, CWR was formally launched in 2011, and works alongside industry experts and investors to provide a plethora of information, data, case studies and research on water issues in China.
Yuanchao Xu focuses on sectoral and regional water and climate risk assessment at CWR, as well as China regulatory risk interpretation. According to Mr. Xu, China’s 13th Five Year Plan incorporates strategies to addresss wastewater issues, such as new systems utilizing real-time data that are planned for the future. “The total budget for urban wastewater treatment facilities in the 13th Five Year Plan is CNY 564 billion ($82.7 billion)—over half of this is allocated for the drainage network (new and retrofit), and around 35% is for new wastewater treatment facilities and upgrade of existing plants,” said Mr. Xu. He noted that monitoring and management comprises less than 1% of the total budget. “Nevertheless, the 13th Five Year Plan does propose to establish a holistic urban wastewater discharge and treatment system which comprises almost seven hundred monitoring stations, [and] a lion’s share of these (>90%) will be city- and county-level stations. A real-time monitoring system to promote the application of big data in environmental protection is also planned,” he explained.
Additionally, Mr. Xu highlighted China’s strategy of engaging the public to participate in maintaining water quality through its river chiefs program. Established in 2007 by the government of Wuxi city after the cyanobacteria pollution issue in Lake Taihu, the river chiefs program makes government officials responsible for protecting bodies of water. There are four levels to the river chiefs mechanism: provincial, urban, county and township, with each principal river chief assigned to be in charge of the water bodies in their jurisdiction. “It is important to remember that China is involving the public in monitoring its water bodies,” said Mr. Xu. “The speed of growth of this network is astounding—as of August 2017, there were 200,000 river chiefs appointed; by December 2017, this expanded to 900,000.”
In March, the Chinese government restructured the science research funding body, which affected organizations such as the National Natural Science Foundation (see IBO 3/30/18). “The ministry reform in March is aimed at improving management efficiency and doing away with overlapping responsibilities,” said Mr. Xu. “So instead of managing air, water and soil pollution separately, the newly established Ministry of Ecology and Environment (MEE) will now address these issues together as one whole ecological system.” This attempt at reducing red tape extends to water pollution management as well, Mr. Xu indicated. “Groundwater pollution control used to come under the Ministry of Land Resources, but these responsibilities have been moved into the MEE. Surface and groundwater will now be managed under one umbrella,” he explained. “We expect the budget related to such activities to thus be reallocated accordingly; however, it is still too early to say whether the total budget allocated to both surface and groundwater pollution control will be affected. This will also apply across other functions.”
Opportunities Across Segments
Wastewater monitoring generally comprises categories such as testing for organics, nutrients, solids or physical properties. According to Mr. Xu, it’s difficult for CRW to ascertain which category is the fastest growing or has the highest funding level due to the fact that, as he explained, “discharge requirements across categories differ from sector to sector.”
“While data integrity is also a high priority in other regions, there are some regional differences, and so Hach has had to make some product modifications to meet the needs of customers in China.”
In contrast, leading water technology instrument companies, such as Hach and Xylem, are able to gauge rising trends based on customer demand. According to Charles Pan, general manager of Xylem Analytics, there is a rise in demand related to nutrients testing. “Because of China water resource eutrophication, the total nitrogen (TN), total phosphorous (TP), nitrate, nitrite, etc. parameters need to be tested and monitored, both for the online and lab side,” he explained. “Also, the government increased the discharge Standard of Pollutants for Urban Wastewater Treatment Plant (GB 18918-2002) from Class 1 standard B to standard A.” To comply with the new regulations, many wastewater treatment plant–upgrade projects needed to add new instruments in order to test the new parameters. “For example, in the discharge outlet, TP and TN testing now are necessary,” stated Mr. Pan. “So this category is [among the] fastest growing over the years.”
Kevin Klau, president of Hach, echoed Mr. Pan’s sentiments. “Globally, there is a trend that reveals nutrient monitoring, especially TN and TP, is growing at above-average rates,” he explained. “Recently in China, the government has placed a high priority on TN/TP online monitoring for surface water. Meanwhile, organics, especially total organic carbon (TOC) and chemical oxygen demand (COD) are also priorities both in China and in many other regions.”
In terms of wastewater testing segments, both municipal and industrial wastewater testing are robust end-markets. “In China, our experience is that both segments are growing at solid annual growth rates, though we see industrial wastewater growing faster,” explained Mr. Klau. “Our experience is that we see the government and provinces in China requesting wastewater-discharge entities to take the cost ownership of wastewater monitoring and testing.”
Xylem has had a similar experience in China. “From the market volumes’ aspect, the municipal market volume is obviously much bigger than the industrial market by about 2–3 times, but from the new-growth market, the industrial market is increasing much faster,” explained Mr. Pan. This is also likely due to the 2015 Water Pollution Prevention and Control Action Plan (also known as the Water Ten Plan), which focuses on protecting Chinese water bodies.
As Mr. Pan explained, many water protection standards were established as part of the Water Ten Plan, including over 10 related standards for industrial wastewater treatment, more than 30 water pollutant discharge national environmental standards and over 20 local environmental water pollutants discharge standards for industry development. “Both government and industry enterprises pay attention to the industrial wastewater [segment], and the main industry wastewater market is located in the Eastern and Southern regions of China, which occupies more than 60% [of the market],” he said. “For the testing initiatives’ topic, most of the time the municipal wastewater testing will get funding from government, [while] industrial wastewater testing needs get funded by enterprises themselves.”
Both Mr. Pan and Mr. Klau indicated that wastewater testing labs in China can choose their products and instrumentation from many qualified suppliers, as opposed to their choice of vendors as being federally mandated. “Usually the government is just responsible to check and approve for big project funding. For treatment plants’ lab equipment purchasing, the government will not be involved in the purchase process,” said Mr Pan. “The testing labs themselves will make the bid to find the right products and instruments according to different companies’ branding, quality, technical parameters, service and price, etc.”
Sharpening a Customer-Oriented Focus
Service, support and training needs for wastewater testing in labs in China are generally similar to those in the US or other countries, although some companies may tailor their instrumentation to provide a more comprehensive customer experience. As Mr. Klau explained, Hach has made certain modifications its products in order to optimally serve its Chinese customers. “In China, the Dynamic Control on wastewater discharge (WWD) required by regional environmental protection administrations (e.g., in provinces of Shandong, Jiangsu and Hubei) request special functionality of WWD in-process instruments to ensure data integrity.” He added, “While data integrity is also a high priority in other regions, there are some regional differences, and so Hach has had to make some product modifications to meet the needs of customers in China.”
Furthermore, Mr. Klau pointed out, there is a trend in China in which many customers prefer in-process instruments that are installed in uniform cabinets for influent/effluent water quality online monitoring. “Companies like Hach either do this for them from the factory, or we work with operating companies and channel partners to provide the in-process instruments in the cabinets,” he explained. “While customers in other regions often prefer equipment installed into cabinets as well, it tends to be more application specific (i.e., instruments installed in a power plant for water quality monitoring is installed in cabinets a high percentage of the time).”
“Serving customers better is a key part of our overall strategy.”
Additionally, there can be a difference in the use of reagents. “In China, with different regulations, the customers of wastewater testing labs often mix their own reagents by following national standards, so as to ease the data comparison between customers’ lab testing data and the data from government supervisors,” noted Mr. Klau. “In other geographies, it is typical that customers purchase the chemistries from companies like Hach more often, as testing methods are often more aligned between regulatory agencies and technology providers.”
Most of Xylem’s products are manufactured in the US or Europe, Mr. Pan stated, which makes it more difficult to modify. However, Xylem is focused on providing a comprehensive solution in regards to service, support and training that emphasizes optimal customer support. “We set up comprehensive service abilities in China, and we have authorization service centers,” he said. “This service capability can cover most of our customers’ different requirements and improve customer satisfaction.”
Additionally, Mr. Pan elucidated, as a large water technology company, Xylem has the capability to offer many resources to its customers and opened a regional integration center in China to provide optimal customer service. “We have a strong capability to provide total solutions, we have an abundant product portfolio, we have deep technical know-how and we have many different brands with long histories,” he said. “All of these highlights help us meet most of [our] Chinese wastewater testing customers’ needs.”
Ultimately, providing customers with the best service and solution possible is a priority for both Hach and Xylem. As Mr. Pan stated, Xylem focuses on a “customer first” philosophy. “We can design and develop instrument system solutions to meet local customer requirements,” he said. “In a word, serving customers better is a key part of our overall strategy.”