China: a promising market |
Author: James Lau Published by: Metering International Issue 2 2005
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| China’s economy has kept fast growing at over 8% annually since last ten years thanks to policies of Chinese government’s reform and opening to outside world, as well as domestic market demand. As forecast from the State government, China' s economy is
expected to maintain the strong steam in the upcoming five to ten years due to four dynamic cyclical demands, namely,the upgrading of the consumptionstructure,adjustment of the industry structure, accelerating urbanization and the shift of global manufacturing to China. These vigorous engines have put the reform and development of public utilities in and development of public utilities in an upward surge since 2002, and also brought greater challenges to the utilities. |
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| First, the speed-up of upgrading consumption structure and adjustment of industry structure have contributed to a strong growth of industrial and commercial sectors, which resulted in an enormous demand for energy consumption and metering products, especially the implementation of multi tariff structure and multi functional metering has been emphasized in the utilities. |
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| While the industrial and commercial sectors are booming, housing purchases in China have already entered in a long term yet fast growing phase, such a trend that is reflected by the high growth rate of investment in real estate in recent years. For property investment annual increase was averagely maintained at about 25% from 2001 to 2004, more than 7 Million new houses were built and sold. This trend has put the nationwide realization of "one household one meter" policy in a longer period. |
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| Second, the accelerated urbanization drive has kept the growth of fixed investment on a rather track China’ s urbanization has reached 40 per cent in 2003, 12 percent higher than that in 1993. The Country has just entered the middle phase of the quickening urbanization process and the urbanization is predicted to grow at least 1 per cent annually in the coming years. This process will certainly increase the demand for urban infrastructure. Therefore this will spur the investment in infrastructure construction. It is predicted that this trend will specially keep the fast growth (>20%) of Chinese water industry and water metering sectors in the coming 10 to 15 years. |
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| These driving engines have brought greater challenges to Chinese public utilities. To face it, Chinese utilities have started the process of reform and privatization, the former monopoly position will be ended and competition mechanism will be introduced into the market. Meanwhile, revenue assurance and accurate, reliable metering and billing become essential to the utilities. Meanwhile, improvement of work efficiency and production processes has become hot topics in the utilities. Therefore advanced metering technologies such as AMR and billing systems etc are most welcome for utilities to resolve their current problems such as fee collection difficulties, and to improve profitability while reduce losses. |
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| Third,China now is attractive to foreign investors not only in terms of preferential policies and cheap labor but also thanks to its stable and increasingly transparent investment environment. China becomes now a competitive manufacturing base as well as a lucrative and promising market place. This has made China an important destination for multinational investments. Since 2001, major multinationals have been adjusting China’s position in their global strategies. Of course local companies have also obtained opportunities to grow and be stronger. Therefore the access to the market is still not very easy. |
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