The latest report – “China’s Environmental Protection Industry Development Report (2018)” is released!

Junxi Lai

5 years ago

Publisher: China Association of Environmental Protection Industry

Translator: EnvGuide.com

Recently, China Association of Environmental Protection Industry released the “China Environmental Protection Industry Development Status Report (2018)” (hereinafter referred to as the “Report”). This is the second consecutive year that China Association of Environmental Protection Industry issued this report. According to the “Report”, the operating income of the national environmental protection industry in 2017 was about 1.35 trillion yuan, an increase of 17.4% compared with 2016. Among them, the environmental service operating income was about 755 billion yuan, an increase of about 23.8%, and the sales revenue of environmental protection products was about 600 billion yuan, an increase of about 10.0% year-on-year.

The report data comes from the National Environmental Protection Industry Key Enterprise Survey and the National Environmental Service Industry Financial Statistics commissioned by the China Association of Environmental Protection Industry by the Ministry of Science and Technology of the Ministry of Ecology and Environment. The two surveys involved nearly 8,000 environmentally friendly enterprises (including 498 three-board enterprises). The report comprehensively analyzes the scale, structure, distribution, development capability, development effectiveness, existing problems and development trends of the environmental protection industry. The system reflects the status, characteristics and trends of China’s environmental protection industry development in 2017-2018. The report shows:

Driven by factors such as policies and the improvement of the upstream industry, the environmental protection business revenue and profits continue to maintain a good momentum of rapid development.

In 2017, the total operating income of the companies was 1,168.14 billion yuan, and the total operating profit was 123.70 billion yuan. Among them, the business income of environmental protection business was 620.90 billion-yuan, accounting for 53.2%, and the operating profit of environmental protection business was 80.45 billion-yuan, accounting for 65.0%. From the same period of last year, the total operating income increased by 17.5%, and the operating profit decreased by 6.9%. Among them, the operating income of environmental protection business increased by 17.9%, and the operating profit of environmental protection business increased by 15.2%. Specific to the segmentation area, compared with 2016, in addition to air pollution prevention and control, water pollution prevention, solid waste disposal and resource utilization, environmental monitoring business income, environmental business income, operating profit, environmental business profit, there are varying degrees of growth.

The trend of industrial agglomeration is highlighted, and the concentration of industry is gradually increasing.

From the perspective of the scale of enterprises, the operating income, environmental protection business income, operating profit, and environmental protection business, profit of the enterprises within the statistical scope are highly concentrated in enterprises with an operating income of more than 100 million yuan. This contributes to the proportion of 11.6% of enterprises with near or over 90% of operating income and profits.

Figure 1 Distribution of environmental protection enterprises included in the statistics in 2017

From the perspective of work segment distribution, the environmental protection industry mainly covers four major segments of water pollution prevention, air pollution prevention, solid waste treatment and disposal, resource utilization and environmental monitoring. In the 4 fields, about 90% of environmental protection enterprises and 95% of industry revenues are gathered and profit.

Figure 2 Distribution of environmental protection enterprises in various segments listed in 2017

Figure 3 Distribution of operating income of environmental protection business in various fields included in 2017

Figure 4 Distribution of operating profit of environmental protection business in various fields listed in 2017

In terms of geographical distribution, nearly half of the enterprises are concentrated in the eastern region of China, and the environmental revenue of environmental enterprises in this region accounts for 62.1%, which exceeds the operating income of enterprises in the three regions of China, the West and the Northeast. Beijing, Zhejiang, Guangdong, and the four provinces (cities) of Jiangsu contributed nearly 52% of the country’s revenue, of which Beijing contributed more than 23%.

The industrial competitiveness continues to increase, and labor productivity and innovation capacity are further improved.

From the perspective of labor productivity, the per capita operating income and the average operating income of enterprises surveyed above the scale are lower than the average of industrial enterprises above designated size in 2017. This reflects the lower production efficiency of the environmental protection industry compared with the average level of the traditional industrial industry. Compared with 2016, the average per capita operating income and average business revenue of the same sample companies in 2017 increased by 9.3% and 15.4% respectively.

Figure 5 Per capita operating income of the same sample enterprises listed in the survey of key enterprises in the environmental protection industry in 2016 and 2017.

Figure 6 Business income of the same sample enterprise in the survey of key enterprises in the environmental protection industry in 2016 and 2017

From the perspective of innovation capability, the proportion of R&D expenditures of the surveyed enterprises to operating income is higher than the proportion of R&D expenditures of industrial enterprises above designated size in the operating income. Compared with 2016, the average R&D expenditure and research and development expenditures of the same sample companies in 2017 accounted for an increase in the proportion of operating income. The independent intellectual property rights development and technological innovation of environmental protection enterprises are active. The R&D, management and engineering technicians with high education and senior technical titles account for a relatively high proportion, and the talent base is generally good.

Figure 7 R&D expenditure of the same sample enterprises in the survey of key enterprises in the environmental protection industry in 2016 and 2017 accounted for the proportion of operating income

The industry’s profitability has declined, asset operation capacity and solvency have remained stable.

From the perspective of profitability, the average return on net assets of the surveyed enterprises is lower than the excellent value of the return on net assets of industrial enterprises in the 2016 corporate performance evaluation standard. Compared with 2016, the same sample companies’ return on net assets and profit margins of their main business declined in 2017. Reflecting the decline in the asset return capability and profitability of China’s environmental protection enterprises, profitability needs to be improved.

Table 1 Return on net assets, profit margin of main business in various fields

Profitability	Investigated company	Water pollution control enterprise	Air pollution control enterprises	Solid waste treatment and disposal enterprise	Soil remediation enterprise	Noise and vibration control enterprise	Environmental monitoring enterprise
Return on net assets	9.2%	10.0%	7.5%	9.9%	9.6%	11.8%	12.0%
profit margin of main business	12.7%	13.5%	8.4%	13.1%	11.0%	13.0%	13.9%

From the perspective of asset operating capacity, the total asset turnover rate and accounts receivable turnover rate of the surveyed enterprises are lower, but compared with 2016, the total asset turnover rate of the same sample enterprises in 2017 is the same as that of 2016, with the accounts receivable turnover rate rising slightly. It reflects that the asset management capacity of environmental protection enterprises has increased slightly, but the problem of payment is still outstanding.

Table 2 Total asset turnover, Accounts receivable turnover in various fields

Profitability	Investigated company	Water pollution control enterprise	Air pollution control enterprises	Solid waste treatment and disposal enterprise	Soil remediation enterprise	Noise and vibration control enterprise	Environmental monitoring enterprise
Total asset turnover	0.4	0.3	0.4	0.29	0.4	0.4	0.40
Accounts receivable turnover	2.3	1.9	1.8	2.1	2.3	1.4	2.3

From the perspective of solvency, the asset-liability ratio of the surveyed enterprises is lower than the average of the asset-liability ratio of industrial enterprises in the 2017 corporate performance evaluation standard value. At the same time, compared with 2016, the asset-liability ratio of the same sample companies fell by 1.3 in 2017. Percentage points, reaching 55.7% shows that the financial risks of environmental protection enterprises are relatively moderate, and the solvency is relatively strong.

There is still strong demand for industrial development.

In the field of air pollution prevention and control, the investment demand for winning the blue-sky defense war (including the two landmark campaigns of blue-sky defense and diesel truck pollution control) is about 107.8 billion yuan, and the products and services directly invested in purchasing environmental protection industry are about 253 billion yuan. In the next three years, the income from environmental protection in the field of air pollution prevention and control will increase by an average of 84.3 billion yuan per year.

In the field of water pollution prevention and control, the investment in clear water protection (including water source protection, the battle of urban black and odorous waters, the battle for the protection and repair of the Yangtze River, the comprehensive battle of the Bohai Sea, and the fight against pollution in agriculture and rural areas) invested about 1.8 trillion yuan in the environmental protection industry. The demand for products and services is about 920 billion yuan.

In the field of soil pollution prevention and control, the investment demand for the Pure Land Defense War is about 660 billion yuan, and the products and services of the environmental protection industry are about 415.8 billion yuan.

In the field of solid waste pollution prevention and control, during the “13th Five-Year Plan” period, the newly-added domestic garbage disposal capacity was 509,700 tons/day, the newly-added transportation capacity was 442,200 tons/day, and 803 stock management projects were implemented. The kitchen waste treatment capacity is 34,400 tons/day, which further enhances and rationally configures the safe disposal capacity of hazardous waste.

In the field of environmental monitoring, it is estimated that the sales growth rate of environmental monitoring equipment during the “13th Five-Year Plan” period will be about 25%, and the market space will exceed 100 billion yuan.

Forecast of scale: In 2020, the total operating income of China’s environmental protection industry is expected to exceed 2 trillion yuan.

In the future, the environmental protection industry will continue to maintain a rapid development trend. The three methods of environmental protection investment, industrial contribution rate and industrial growth rate are used to predict that the development scale of environmental protection industry in 2020 will be between 15,000 and 2.2 trillion yuan, corresponding to an annual growth rate range of 12.9% to 20.0%. According to the environmental protection situation and the development trend of the environmental protection industry and the annual growth rate of 16%, the total operating income of China’s environmental protection industry in 2020 is expected to exceed 2 trillion yuan.

According to the statistics, the “Report” released a list of enterprises with an environmental protection business income of more than 1 billion yuan, 500 million yuan to 1 billion yuan, and 100 million yuan to 500 million yuan.