It is not the big trend of the future development of the industry, but a fact that has happened and lasted for many years. Therefore, in addition to considering the running of the horse enclosure itself as a trend, we should consider the problem of "the future of the post-horse enclosure era, the future of energy conservation and environmental protection enterprises".

Let‘s take a look at the behavior of the energy conservation industry. The main market of energy conservation and environmental protection industry, such as sewage treatment, garbage disposal and new energy, are naturally monopolistic. Simply put, a market (city) can only accommodate a limited number of businesses, such as the market for two 100,000 tonnes of domestic sewage treatment plants that are saturated and then built to waste. For example, the capacity of the grid is limited, and the roof space resources are limited, so solar photovoltaic panels cannot be laid without limit.

At the same time, these industries also have a feature, which is the long operation cycle -- the PPP deals are usually signed for 20 or 30 years, or even longer. This means that who first to have these resources, who will occupy the dominant position, and this advantage can continue for decades, so their phenomenon goes something like this: as often as possible will have the natural monopoly of the resources in his bosom, and form a solid and long-term advantage, and cause strong blow to the competitors.

At present, the traditional water service industry, the life waste treatment area, the hazardous waste area, the new energy field and so on the phenomenon is more serious. Future, soil management areas, eat hutch and parts of resources recycling industry field, such as automobile dismantling, electronic waste, slag treatment, etc., will also appear their phenomenon, occurrence time period depends on the industry development situation, main is whether the profitability and business model, mature.

, of course, the market capacity is large enough, or do not have natural monopoly, or have a higher risk of subdivision industry, their is less or even no, or only in part within the niche. For example, the air treatment, usually the first source of pollution is industrial enterprises, so the high quality industrial enterprises are the first preference targets of the air governance enterprises, and also the important objects in the field of horse RACES.

Taking power enterprises as an example, due to its good cash flow and strong environmental protection demand, it has always been a favourite in the market of desulfurization and denitration, and is also the standard object in the field of race. But also has strong environmental protection demand of steel, cement, and other enterprises, because affected by the economic cycle and high risk, provide service for its natural accompanied with high investment risk, the contrast is so popular, there is no electric power enterprises. The same products and services, in the face of coal-fired power plants and cement, iron and steel enterprise selection strategy is completely different, this is a typical industry segment in the process of their, again according to the actual circumstance of the market for segmentation.

Similar problems have been found in industrial energy conservation and industrial wastewater. Industrial enterprise of environmental protection market capacity is big enough, the weak natural monopoly, at the same time by the management situation of industrial enterprise itself restrictions, coupled with its own risk is higher, so the phenomenon of their relatively small.

Enterprises can rapidly expand the scale of operation through the field of turf, but there are limits to the turf. The finiteness of the running enclosure means that there is a peak in the number of enterprises in the industry, and more than this peak enterprise will face no project to do.

For example, in 2015, China‘s urban household garbage volume was 191 million tons, an increase of about 7 percent over 2014. Among them, the incineration volume was 617.55 million tons, accounting for 32 percent, and the landfill volume was 115 million tons, accounting for 60%. The waste incineration capacity of that year was about 220,000 tons/day. The waste incineration power plant has 220 seats, and the average waste incineration power plant has a capacity of 1000 tons per day. In accordance with the developed countries, 70% - 80% of incineration, without taking into consideration under the condition of living garbage increment, hypothesis can reach 75% of the incineration treatment in China, so we need about 393 waste incineration plant. Considering that waste incineration power plants in the future may be smaller and smaller, such as the daily processing capacity of 500 tons, there will be about 500 waste incineration power plants.

Even considering the living garbage increment, but due to the limited annual increment, and along with the urbanization rate gradually smooth, strengthening social environmental ideology, step by step of the implementation of the garbage classification, positive and negative factors related cases, we believe that industry can accommodate the garbage incineration power plant is roughly the level, basic to peak at about 500, more than this number means that a lot of garbage incineration power plant raw material shortages may occur.

And, in fact, the operation of the 2015 domestic waste incineration power plant to 220, at the same time there are about the same amount of living garbage incinerators under construction, a preliminary estimate, have made it clear that the number of planning and construction and has been operating project quantity about between 400 and 450, we expect 500 has been very close.

That is to say, living garbage incineration enterprise wants to get a project in the market will become more and more difficult, because the market is saturated, once their crazy expansion may be fleeting, enterprises will face don‘t have new project to develop the dilemma. The same situation will occur in many fields such as sewage treatment and water supply.

In this predictable trend, we have to think about the next question: when the race is over, what is the future of energy conservation enterprises? We believe that the following five changes will occur in the market for energy conservation and environmental protection in the future:

First, consolidation and consolidation has intensified

As a means of scale, merger and acquisition integration will have a big burst in the context of the basic completion, new construction and fewer opportunities for TOT projects.

In 2013, the water acquisition standard of north control water was increased by 2026 million tons per day, which caused the attention of the industry. In fact, over the past five years, north control has added 22.4 million tons of water per day, of which 48.1% or 10.7 million tons/day is achieved through mergers and acquisitions. In addition, everbright international through the acquisition of dongda water supplies, the processing scale reached 1.112 million tons/day, the rapid realization of the breakthrough in the water industry, established the status.

In the past, the main market in new and TOT and opportunity more, under the condition of energy conservation and environmental protection industries like this merger integration does not see more, once appear, is the industry peers for the big event. And in the future, small to one or two individual projects, to almost the same level and size of merger, acquisition and reorganization of enterprises will become the norm, including well-known industry giants may also occur between absorption and merger etc. In the case of saturation of market capacity, merger and acquisition integration will become the main means of scale competition.

We expect this consolidation to follow basic rules ranging from poor quality to quality, from small to large. From inferior to high quality, refers to the first in the industry to launch the acquisition target, most belong to relatively inferior projects, these projects tend to have poor management difficulties, shortage of cash flow, the standardization and general problems such as scale, unable to support continued operation of project, and the high quality project can occur in the later more.

And from small to large, is refers to the first in the industry is a large number of individual projects, generally smaller scale, but to late, rather than for the unit with the enterprise merger integration for the unit with the monomer project is more and more. Therefore, in the early stage of merger and acquisition integration, many small projects with problems were released in succession, and future projects and even enterprises in the industry as a whole sought to be integrated or normalized.

With the rise of merger and acquisition integration, the biggest change for enterprises in the industry is that the ability of operation is more important, and the ability to develop the market is equal to that of the market. In the release stage of inferior assets, if the capability is not improved, such projects cannot be undertaken under the same conditions. In the stage of prime asset release, asset acquisition costs are high, and if there is no outstanding operational capability, the cost of acquisition may be difficult to recover. At the same time, the enterprise has become more and more important to the management and integration ability of the acquired assets and the output ability of enterprise culture.

Second, channel sinks

Channel sinking is a new strategy that many companies should consider. Due to the big cities the size of the market saturation, based on the original management radius, investment income and other factors are not willing to consider small project, will soon appear in a new round of competition in the list, but these markets often under county and town or country, on the market development, obviously the original channels of major cities cannot effectively cover. Therefore, in order to adapt to a wide range of (a large number of county and below market) market trend of small-scale projects, all kinds of energy conservation and environmental protection enterprises will face the channel sink, severe market test, to build channels advantage enterprises or will stage drama "the rural areas to encircle the cities".

In the past, energy conservation enterprises, especially national ones, are usually run by investment departments across the country. After the channel sinks, companies need to face thousands of possible market opportunities. The direct operation of the headquarters is increasingly difficult. Regional companies and provincial platforms have emerged, which is the most direct response strategy and the core of a large number of regional companies and provincial companies. At the same time in order to adapt to regional market localization, we suggest that the enterprise can be considered with the strong enterprises or government for regional investment or industries in-depth cooperation platform, adopt joint venture or financial means to strengthen the channel sinking.

Third, the miniaturization process is valued

Miniaturization of the market, including distributed processing technology, will receive unprecedented attention. For example, after the main market of the main market such as garbage disposal is completed in a large-scale project, the remaining market is mainly scattered small-scale processing projects, such as 1 -- 200 tons/day waste disposal projects. Due to the problems of pollution, storage and other problems in county and village, the small-scale waste gas, compost and pyrolysis can be favored by more enterprises. At present, there are many small and medium-sized enterprises in the development of miniaturization processing technology, suggesting that you can pay more attention and reserve, and seek good development opportunities.

Fourth, the emergence of large international enterprises

International expansion will be another important choice for enterprises in the industry. Tends to be stable in the domestic market, we believe that the industry‘s leading enterprises on the one hand, on the domestic market continue to dig, on the other hand may be turned to market forces from their "environmental change resource", to deployment, strong potential in the international market to carry out the "buy buy" game with the output. Through the integration of the domestic market and the vigorous development of international market, the future energy conservation and environmental protection industry in China is expected to produce international giants such as veolia.

Fifth, enterprise competitiveness reconstruction

Under the above changes, enterprise competitiveness reconstruction is not difficult to understand. As merger integration intensifies, channel sinks, miniaturization stimulate market and internationalization of large-scale enterprise, the enterprise operation ability, cost control ability, the internationalization development ability, and a new more efficient or even revolutionary technology will become the new competition elements such as research and development capabilities.

At present, the entire industry within the enterprise basic extensive rob project stage, a lot of core competencies and resources gathered in terms of market development, government relations, public relations ability, market development is the core element of each enterprise. However, according to the industry trend, the future real industry giants should be lean management. However, the reality is that the leading enterprises in the industry are not established in the conventional strategic management system, and the lean management path is still a long way to go in the industry.

Generally speaking, China‘s energy conservation and environmental protection industry is still in the age of rough running, but the post-horse enclosure era is getting closer and closer to us. As soon as it arrives, it means that the industry‘s rapid development may be at an inflection point, and it is suggested that enterprises in the industry should carefully study and take seriously the "post-horse enclosure era".