Summary:
As a developing country, China faces serious environmental problems. Remediation of polluted air, water, and biological habitats are a top priority throughout the Northeast region. Due to various reasons explained below, solid waste management has long been neglected. But, the provincial governments of Liaoning, Jilin and Heilongjiang now have a strong commitment to solid waste management and plan to invest substantial amounts of capital during the next five years.
In 2000, Heilongjiang Province was selected by the central government to participate in a trial program to encourage ecological economic development. As a result, the central government allocated more funds to Heilongjiang Province for solid waste treatment projects in comparison to allocations for Liaoning and Jilin provinces. Heilongjiang Province
invested 100 million RMB, while Liaoning invested 45 million RMB, and Jilin invested 17 million RMB. The combined expenditure by the Northeastern provinces was 164 million RMB, which was 10.8 % of the national expenditure on solid waste management (883 million RMB).
Two thirds of the cities located in the Northeast region have failed to effectively manage solid waste. According to statistics provided by three provincial governments, the Northeast region generated 23.96 million tons of municipal solid waste, 121.96 million tons of industrial solid waste, and 870,000 tons of hazardous waste; which respectively represents 22%, 15.5% and 8.6% of total solid waste generated throughout China in 1999.
Due to outdated technology, unsophisticated equipment, insufficient capital, and backward management, solid waste treatment capabilities in the Northeast are rather limited. Most of solid waste is still dumped in the open air, which seriously pollutes the surrounding water, air and soil, and endangers public health. The accidents resulting from poor management of solid waste have occasionally occurred. For example, in 1999 eighteen accidents related to poor solid waste management accounted for 23% of the national total and 19% of all pollution accidents in this region.
Implementation of a sustainable development strategy in this region will intensify solid waste treatment. The national solid waste management plan, also known as the "Trans-Century Green Program for Environmental Protection
to 2010 (1994-2000, Phase I), identifies over 1,000 projects nationwide, of which solid waste projects number 272 projects. Fifteen of these projects will be implemented in the northeast region: ten municipal solid waste projects, four industrial solid waste projects, and one hazardous waste project. Upon completion of the Tenth Five Year Plan (2001-2005), the provincial governments in the Northeast expect that new solid waste management facilities will treat 75% of municipal solid waste, recycle 70% of industrial solid waste and safely dispose over 90% hazardous waste.
U.S. companies do not currently have a large share of the market for export of pollution control equipment in Northeast China. The competition from Japan and European countries is fierce, particularly because many of these
governments offer bilateral assistance. Although various American trade financing methods may increase trade opportunities in the Future. Prospective Chinese buyers generally lack sufficient foreign exchange; are extremely price sensitive; and prefer foreign investment transactions.
Assuming that U.S. companies can help buyers locate financing, long-term growth potential exists; while in the short and near term administrative, structural, and financial barriers will continue to impede market access.
I. Market Highlights/ Best Prospects:
This report is primarily based on information obtained directly from the provincial level environmental protection bureaus in Liaoning, Jilin, and Heilongjiang provinces, provincial government statistical bureaus, and other Chinese government agencies. The US Commercial Office in Shenyang (USCS) also visited a few projects underway in the region.
A. Market Profile
1. Municipal Solid Waste (MSW)
The Northeast region accumulates a substantial portion of MSW compared to the national MSW load. In 2000, China generated 110 million tons of MSW, of which the Northeast region accounted for 22% (23.96 million tons).
Liaoning, the most populous province in the Northeast, generated 8.38 million tons of MSW. Heilongjiang, the second most populated province in the region, generated 9.17 million tons, while Jilin province generated 6.41 million tons of MSW. MSW management in Northeast China is problematic for local governments due to three primary reasons: the number of MSW disposal and treatment sites is limited; the scale of landfill sites is too small to keep pace with the rate of continuous MSW accumulation; and the technology employed at these sites is primitive.
Sanitary landfill, composting and incineration are the three primary methods utilized for innocuous disposal of MSW in the world. In Northeast China, the preferred method is landfill disposal. Over 80% of the region's MSW load is disposed of by this method. Some cities in Northeast China, such as Shenyang, Dalian, and Harbin, have built or are currently building large and medium size MSW sanitation landfill sites or MSW treatment facilities. Most of the other cities in this region dispose of solid waste by simply dumping it at designated sites.
The combined MSW handling capacity of landfill sites in Liaoning province is 4,352 tons per day (1,300,000 tons annually), which accounts for 15% of the total annual MSW load. Therefore, 85% of MSW is simply transported to
outlying urban areas and deposited at ground level dumps. On average, 50% of MSW is safely handled in Jilin. No data was available from Heilongjiang Province. Although preferable to dumps, the region's approach to landfill appears to be ineffective because the solid waste disposed at landfill sites is not typically treated, and the landfill sites use pit linings that no not effectively prevent leaching.
MSW collection equipment is very limited in the two provinces north of Liaoning. In Jilin province, only 33 street sweepers, 31 street sprinkling vehicles, and 1301 refuse wagons collect and transport MSW to landfill sites were deployed within the province in 2000. In Harbin city, the capitol of Heilongjiang province, MSW collection equipment is more readily available, but still insufficient for the needs of such a large city: 64 garbage collection trucks, 9 street sprinkler vehicles, 285 refuse wagons, 58 fork lift hoists, 17 shovel trucks, 2731 trash cans, and 2502 refuse
transfer stations.
2. Industrial Solid Waste (ISW)
Despite recent developments in legislation pertaining to environmental protection, enforcement mechanisms remain weak. The fines levied on industrial discharge and ISW accumulation do not reflect the marginal cost of pollution control. Therefore, the enforcement mechanisms lack a deterrent effect ? and the pollution accumulates. Enforcement of standards is particularly difficult in cities where one large, inefficient state-owned enterprise employs a substantial portion of the city's population. Such cities exist in the northeast region.
In 2000, Northeast China generated 118.60 million tons of industrial solid waste, reducing total discharge by 2.8% compared with 1999. However, the region's contribution to China's accumulated ISW load is much greater-1.47
billion tons (26% of the national load).
Due to its heavy industrial base, Liaoning accounted for 64% (75.62 million tons) of all industrial solid waste generated in the Northeast in 2000. Most of the industrial manufacturers in the province use equipment
that is outdated by 20 years or more, and most enterprises use unsophisticated approaches to management of ISW. As a consequence, 63% of ISW is stored or discharged; while 34% of the cumulative ISW load was recycled, and 3% was treated in 2000.
Compared to Liaoning, Heilongjiang appears to have a better handle on its ISW management. In 2000, Heilongjiang generated 22% (26.94 million tons) of the region's ISW load. The province recycled or treated 62% of the ISW
generated within the province (44% and 18% respectively); stored 16%; and discharged 22%. Since the economy of Jilin province is primarily agricultural, it generated the least amount of ISW in the region -14% (16.04 million tons). Recycling and treatment (48% and 3% respectively) exceeded storage or discharge (43% and 1% respectively).
With regard to the accumulated ISW load in the region, Liaoning accounts for 75% (1.24 billion tons). In 2000, the three primary industry groups that generated ISW in the Northeast were: mining (56%); iron/steel smelting, rolling, processing (19%); and power, steam, hot water generation (12%).
3. Hazardous Waste
In 1999, the northeast region generated 870,000 metric tons of hazardous waste. Liaoning accounts for 76% (660,000 metric tons), Jilin accounts for 20% (170,000 metric tons) and Heilongjiang accounts for 4% (40,000
metric tons). As most of the heavy industrial activity is concentrated in Liaoning, it is obvious why Liaoning ranks first. This figure represents 6.5% of the total load within China and placed Liaoning fifth within the nation after in the lost of top five hazardous waste generation provinces. The provinces of Yunan, Guizhou, Jiangsu and Shandong ranked higher on the list. In l999, Liaoning's hazardous discharge amount did decrease compared to l998, during which the province discharged 40,000 tons of hazardous waste, which represented11% of national total and 6% of Liaoning's waste generation. Data for 2000 is not available at this time.
More than 660,000 metric tons of hazardous waste (by wet weight) are generated annually throughout Liaoning. The primary industries generating such waste are chemical and allied products (58%) and mining (20%). The
machinery, primary metals, paper, and glass products industries generate hazardous waste as well. The hazardous waste is concentrated in the cities of Anshan, Liaoyang, Fushun and Benxi.
B. Best Sales Prospects
Numerous cities and counties in the Northeast urgently need appropriate technology, equipment and skills used in solid waste management. Although direct sales may be possible if foreign equipment suppliers are willing to
assist the Chinese buyer to raise financing, the preferred transaction type is foreign direct investment. These issues are discussed below in more detail. Foreign equipment suppliers are encouraged to consult the State Environmental Protection Administration's directory titled Present Environmental Protection Industry Development Directory to identify best sales prospects. Provincial and municipal governments all issued similar directories.
SW Pollution Treatment Equipment
Safe landfill and sanitation landfill technology
Animal husbandry SW utilization and treatment
Rural solid waste disposal and treatment equipment
Recycle iron and steel slag
Recycle power plant coke breeze, industry boiler slag and coal
New high efficient plastic degradation products and equipment
Mine tailing reclamation technology
Hazardous waste and municipal solid waste dual treatment technology
Regional hazardous waste integrated treatment technology
Poisonous chemical products and their packaging materials treatment
technology
Radiant SW in nuclear equipment treatment technology
Management
Enterprise operation and management methods for MSW treatment facilities
Environmental engineering services
II. Competitive Analysis:
A. Domestic Production
Domestic production of solid waste management equipment is very limited in terms of production output and technical sophistication. In 2000, only seven out of Liaoning's 726 companies manufactured solid waste treatment equipment or provided relevant services. Over 90% of the enterprises active within China in the environmental protection sector (total 10,811) are small firms. Nationwide, the large and middle-scale enterprises account for only 2.8% of the firms and therefore this group cannot play a leading role in changing the circumstances of the entire industry. The
environmental protection equipment manufacturers and service providers in the Northeast are most active in water and air pollution control due to the availability of equipment funding through Chinese government sources. The
number of firms active in the region is 1138, which accounts for 11% of the total nationwide. Primarily small pollution control equipment firms are located in Liaoning, and number 726.
According to environmental experts in the region, most of the environmental protection equipment and technology utilized in the northeast region is equivalent to the technical level of sophistication reached by developed
countries in the 1960's and 1970's. Nevertheless, such equipment enjoys predominant market share due to lack of foreign exchange to purchase foreign equipment.
To promote development of the environmental protection industry, SEPA has conducted annual technology assessments and equipment quality certifications since 1999. Among the 150 products/equipment certified by
SEPA since that time, very few were relevant to SW treatment, and none of the products were manufactured in the northeast region. The technologies certified by SEPA enjoy priority selection in local environmental management plans. During the past three years SEPA selected 27 solid waste treatment technologies to be promoted nationwide; among which nine were developed in the Northeast. Although the region's manufacturers do not currently focus on solid waste treatment equipment, the number of technologies certified for deployment are an indication of potential for
technology commercialization.
2. 1999-B-047 Urban Medical Waste Pyrolysis/Incineration Technology
Shenyang Environment Scientific Research Institute
3. 2000-B-049 Coal Stone Multipurpose Utilization Technology
Shuangyashan East Industry Company
4. 2000-B-058 Biological Organic Fertilizer Produced by Recycling Solid
Waste
Jilin Siping City Lishan Machinery Manufacturing Co., Ltd.
China Agricultural Machinery Institute Environment
Engineering Equipment Research Center
5. 2001-B-043 ZMX Paper Pulp Molded Product Production Technology
Dalian Green Continental Food Packaging Co., Ltd.
6. 2001-B-047 Bulk Leakage-Proof Asphalt Packaging Bag Production
Technology
Dalian Xinke Packaging Material Holding Co., Ltd.
7. 2001-B-048 Manufacture of Concrete Well Lids Using Recycled Coal Dust
and Plastic Bags
Heilongjiang Dongfu Plastic Industrial Co., Ltd.
8. 2001-B-049 Producing Compound New Material with Waste Plastic and Coke
Breeze
China Scientific Research Institute Changchun Application
Chemical Research Institute
9. 2001-B-050 Paper-covered Straw Board as Building Material Production
Technology (Model 120)
Heilongjiang Shengzhong Environmental Protection Building
Wall Material Development Co., Ltd.
B. Import Statistical Data
No data was available from Chinese government sources due to: a) lack of data collection by trade or environmental protection agencies; b) lack of detailed customs data breakout; or c) lack of US imports.
Since the environmental protection industry is a new industry sector in China, there are very few statistical figures available from statistical books, websites, or even environmental protection authorities. In the past, the Chinese central government conducted two nationwide assessments of the environmental protection industry in 1993 and 1997; which were very general, incomplete and inaccurate. In 2001, the State Environmental Protection Administration undertook its third nationwide assessment of six import factors: environmental protection product production, clean product production, environmental protection service sector, source-integrated utilization, and natural ecological protection and environment trade. The State Statistical Bureau plans to create a new statistical category relevant to this industry in 2002.
Although no detailed statistical figures on third country imports are available, Chinese authorities have informed the Commercial Service that equipment manufactured by companies located in Japan and the European Union
have made inroads into the Northeast market. Foreign competition with American service providers in the market is a significant challenge because the governments of Japan and the European Union provide soft loans and technical assistance for feasibility studies, project planning, and equipment procurement.
In 1999, Japan supported the Japan-China Dalian Environment Cooperation Demonstration Program by loaning 6 million yen to Dalian as a part of its forth OECF loan package. For Jilin Province, Japan dispatched seven
environmental protection delegations, and donated four sets of automated air quality monitoring equipment. The Japanese government also loaned USD 100 million to Heilongjiang Province for urban environmental protection
infrastructure construction and key pollution treatment projects. The Japanese China Environmental Protection Assistance Committee also donated 30 sets of automated air monitoring devices valued at USD 726,000.
The EU-China Liaoning Integrated Environmental Program formally started in l999 with the dispatch of several European experts to work at the Liaoning Environmental Protection Bureau in Shenyang city. According to the program report, the EU will provide 37 million EURO (USD42 million) to work with Liaoning to carry out the program within five years. The program includes seven elements: Environmental Sensitivity and Capacity Building, Shenyang Urban Planning, Water Resource Management, Air Quality Management, Energy Management, Clean Production, Industry Structural Adjustment and Investment Promotion.
A few European nations have independently undertaken other activities in the northeast region. In 1999, Norway granted USD 1.8 million to Heilongjiang Province to support the Songhua River automated water monitoring project. Jilin Province has exchanged water pollution prevention control experience with Britain; worked on clean production and paper making plant sewage treatment with Holland; and cooperated with Germany on a vehicle emission treatment project. As a side note, Canada has discussed waste rubber treatment technology with Jilin.
Japan and Europe are likely to be more active in the future, assuming continuation of their well-established relationships with Northeast provincial governments. Due to these relationships, Chinese government
authorities tend to encourage the purchase of equipment manufactured in these countries.
C. U.S. Market Position
Although accurate statistics are not available, the general impressions of Chinese companies and Chinese government officials are useful to gauge U.S. market presence. There are few pollution control activities in the region, but they are not prominent. Research throughout the northeast region by the Commercial Service revealed that only a few U.S. firms are currently pursuing solid waste treatment projects. Although it is possible that many sensitive negotiations are underway, our sources failed to reveal any significant activity.
It is well recognized that American pollution control equipment and environmental protection technologies are world-class. But, Chinese companies and Chinese government officials have pointed out that U.S. product prices are always beyond what buyers are able to pay. Buyers must look for other less-expensive products or turn to other countries that provide soft loans. Therefore, high prices and lack of financial assistance from the U.S. government substantially hinders the entry of U.S. products in the Northeast China. Perhaps with support from trade
financing agencies such as TDA and ExIm Bank, U.S. imports will increase gradually in the future.
All Chinese government agencies that are responsible for environmental issues in Liaoning, Jilin and Heilongjiang provinces have expressed receptivity to cooperation with American companies. Chinese officials are particularly interested in receiving United States government support for technical assistance concerning a variety of pollution control topics.
American firms are becoming involved with other aspects of pollution control in this region. In 2000 Daisibi Inc., located in California, established a joint venture with the Dongyu Group in Shenyang city to manufacture air pollution monitoring devices. This joint venture inaugurated the first environmental protection joint venture in Liaoning.
According to Chinese executives at the joint venture, SEPA plans to purchase 80 sets of air monitoring equipment from Dasibi, which accounts for 80% of its whole production plan for the year 2001. Jilin has purchased several air pollution monitoring devices from U.S. but no other cooperation. In Heilongjiang, one wholly foreign owned company, Meishan, imported solid waste processing equipment from the U.S. equipment and other
European countries. The company now sources customized equipment through domestic sources.
III. End-User Analysis:
Generally speaking end users of solid waste treatment equipment are municipal governments, state-owned enterprises, and formerly state-owned enterprises that are now organized on a corporate model. These
quasi-private enterprises and state-owned enterprises are required to comply with discharge limits imposed by central and provincial government regulations. Most of these enterprises have an urgent need for more sophisticated equipment but lack financial resources to procure it. Therefore, most of the opportunities for export of pollution control equipment are characterized as foreign investment transactions.
A. Municipal Solid Waste
In Liaoning, only three city level solid waste disposal sites have been built: Shenyang (Zhaojiagou Site), Dalian (Maoyingzi Site), and Anshan (Yangeryu Site). In Jilin, there are 21 solid waste disposal sites. Yanji Municipal Solid Waste Treatment Facility (phase I) has been built and is under operation.
The 10th Five Year Plan (FYP 2001-2005), which was drawn up by the Liaoning Provincial Environmental Protection Bureau, recommends that each city in the province build at least one municipal solid waste treatment facility; and that an additional 5,400,000 tons of municipal solid waste should be safely treated each year. This objective represents a fourfold increase over the province's existing municipal solid waste treatment capacity and
would address 60% of municipal solid waste.
In the 10th FYP, the Liaoning Provincial Environmental Protection Bureau recommends construction of six large municipal solid waste treatment facilities: Shenyang Laohuchong Comprehensive Municipal Solid Waste
Disposal Facility, Fushun Dadonggou MSW Incineration Field, Fuxin MSW Treatment Facility, Chaoyang Central MSW Treatment Facility, and Chaoyang MSW Disposal Facility. When operational, the facilities' combined handling
capacity will reach 4,400 tons per day (1,400,000 tons annually).
During the 10th FYP, Liaoning will build sixteen MSW treatment facilities in fourteen cities with investment of 2.1 billion RMB. These facilities and sites will treat 11,583 tons of MSW per day (3,500,000 tons annually). By
the end of the 10th FYP, the combined treatment capacity will be 5,400,000 tons annually.
Liaoning Province
Laohuchong Garbage Integrated Treatment Facility
City: Shenyang
Project Objective: Treat 1500 tons per day
Total Investment: USD 24.2 million
Construction Period: 2002
Project Status: Under Construction
Northwest Garbage Integrated Treatment Facility
City: Shenyang
Project Objective: Treat 1350 tons per day
Total Investment: USD 31.5 million
Construction Period: 2003
Project Status: Unknown
Municipal Solid Waste Sanitation and Incineration Treatment Facility
City: Dalian
Project Objective: Treat 1500 tons per day
Total Investment: USD84.7 million
Construction Period: 2001-2005
Project Status: Feasibility Study Pending
Yangeryu Garbage Integrated Treatment Facility, Phase II
City: Anshan
Project objective: Install equipment capable of recycling MSW to produce
100,000 cubic meters compressed fuel for automobiles daily and 590 kW
methane internal-combustion engine.
Total Investment: USD 2.8 million
Construction Period: 2000-2005
Project Status: Under Construction
Qianjinling Garbage Sanitary Landfill Treatment Project
City: Benxi
Project Objective: Treat 700 tons daily and annual profit USD1.18 million
Total Investment: US D 8.1million
Construction Period: 2000-2004
Project Status: Design Completed
Maogou Municipal Solid Waste Treatment Facility
City: Fushun
Project Objective: Treat 750 tons per day (incinerate 450 tons and
composite 300 tons)
Total Investment: USD 23.6 million
Construction Period: 2001-2005
Project Status: Operational
Dadonggou Garbage Sanitary Landfill Facility
City: Fushun
Project Objective: Treat 750 tons per day
Total Investment: USD 5.8 million
Construction Period: 2001-2004
Project Status: Under Construction
Dandong Municipal Garbage Integrated Treatment Facility
City: Dandong
Project Objective: Treat 833 tons per day
Total Investment: USD 9.7 million
Construction Period: 2001-2005
Project Status: Operational
Garbage Integrated Treatment Facility
City: Jinzhou
Project Objective: Treat 650 tons per day
Total Investment: USD 21.1million
Construction Period: 2001-2003
Project Status: Design Completed
Safe Garbage Integrated Treatment Facility
City: Yinkou
Project Objective: Treat 600 tons per day
Total Investment: USD 8.2million
Construction Period: 2001-2002
Project Status: Proposal Completed
Municipal Solid Waste Treatment Facility
City: Fuxin
Project Objective: Treat 833 tons per day
Total Investment: USD 5.3 million
Construction Period: 2000-2005
Project Status: Under Construction
Panjin Municipal Solid Waste Treatment Facility
City: Panjin
Project Objective: Treat 500 tons per day
Total Investment: USD 6.7 million
Construction Period: 2000-2005
Project Status: Under Construction
Liaoyang Downtown Area Municipal Solid Waste Safe Treatment Project
City: Liaoyang
Project Objective: Treat 400 tons per day
Total Investment: USD 9.8 million
Construction Period: 1999-2003
Project Status: Under Construction
Municipal Solid Waste Treatment Facility
City: Tieling
Project Objective: Treat 300 tons per day
Total Investment: USD 3 million
Construction Period: 2001-2005
Project Status: Proposal Submitted for Approval
Municipal Solid Waste Treatment Facility
City: Chaoyang
Project Objective: Treat 417 tons per day
Total Investment: USD 2.4 million
Construction Period: 2000-2005
Project Status: Under Construction
Municipal Solid Waste Disposal Facility
City: Huludao
Project Objective: Treat 500 tons per day
Total Investment: USD 6.8 million
Construction Period: 2001-2005
Project Status: Proposal Submitted for Approval
Jilin Province
Yanji Garbage Sanitation Treatment Facility
City: Yanji
Project Objective: Phase I?to treat 550 tons per day; Phase II?to treat 700
tons per day
Total Investment: USD 4.88 million (P I USD2.47 million and P II USD2.41
million)
Construction Period: pending till
Project Status: Approved by Jilin Provincial Government.
Heilongjiang Province
Harbin Xiangyang Comprehensive MSW treatment Project
City: Harbin
Project Objective: Treat 1200 tons per day
Total Investment: USD 26.11 million, foreign investment of USD 18 million
sought
Construction Period: 2001 - 2002
Project Status: Project Proposal and Feasibility Study Approved
Harbin SW Incineration Plant
City: Harbin
Project Objective: Treat 200 tons per day
Total Investment: USD1 million
Construction Period: 2000 - 2002
Project Status: Phase II
Jiagedaqi MSW Disposal Project
City: Jiagedaqi
Project Objective: Treat 285 tons per day
Total Investment: USD 7.8 million, foreign investment of USD 4.23 million
sought
Project Status: Unknown
Jiamusi Garbage Disposal Project
City: Jiamusi
Project Objective: Treat 1000 tons of garbage.
Total Investment: USD 22.30 million (intends to attract investment of
USD14.51 million)
Construction Period: Undetermined
Project Status: Feasibility Study Approved
Shuangyashan SW Sanitary Treatment Facility
City: Shuangyashan
Project Objective: Treat 438 tons per day
Total Investment: USD 15 million (intends to attract investment of USD14
million)
Project Status: City Allocated USD 605,000.
Suihua MSW Treatment Project
City: Suihua
Project Objective: Treat 400 tons per day
Total Investment: USD 5.9 million
Project Status: Unknown
B. Industrial Solid Waste
During 1999 approximately 5572 industrial enterprises generating industrial solid waste in the region, among which 2525 are located in Liaoning, 1111 are located in Jilin, and 1936 are located in Heilongjiang. They are all
likely to be end users of industrial solid waste treatment, utilization, storage equipment and technology.
In 1999, 995 enterprises undertook 1289 industrial pollution control projects in Northeast China. Most of the projects were relevant to industrial sewage and waste gas treatment. Only 58 projects concerned industrial solid waste.
Major industrial solid waste projects in Northeast China include:
Anshan Iron and Steel Company Integrated Utilization of Industrial Waste
Resources
City: Anshan
Project Objective: Produce high value-added products through recycling
iron and steel scraps
Total Investment: USD 3.6 million
Construction Period: 2001-2002
Project Status: Proposal Submitted
Anshan Iron and Steel Company Sintering Project
City: Anshan
Project Objective: Renovate the present storage station
Total Investment: USD 12 million
Construction Period: 2003-2004
Project Status: Proposal Submitted
Benxi Iron and Steel Company Steel Scraps Integrated Utilization Project
City: Benxi
Project Objective: Recycle 450,000 tons of steel scraps, recover 240,000
tons annually
Total Investment: USD 3.6 million
Construction Period: 2003-2005
Project Status: Undetermined
Huasheng Energy Equipment Plant Broiler Coal Renovation Project
City: Yingkou
Project Objective: Abate 50,000 tons of annual solid waste discharge
Total Investment: USD 1.2 million
Construction Period: 2001-2002
Project Status: Feasibility Study in Process
Dashiqiao Magnesium Carbonate Production Project with Integrated Use of
Boron
City: Yingkou
Project Objective: Recycle 5000 tons of magnesium carbonate; produce 5000
tons of boron annually
Total Investment: USD 2.9 million
Construction Period: 2001-2003
Project Status: Proposal Submitted
Huaneng Power Plant Coke Breeze Treatment
City: Yingkou
Project Objective: Treat 100,000 tons of coke breeze annually
Total Investment: USD 1.2 million
Construction Period: 2003-2004
Project Status: Proposal Submitted
Power Plant Coal Ash Sintered Ceramite and its Products production
City: Tieling
Project Objective: Recycle 400,000 tons of coke breeze annually
Total Investment: USD 20.6 million
Construction Period: 2000-2005
Project Status: Feasibility Study in Process
Liaoyang Chemical Industry Plant Coke Breeze Concrete Block Production Line
City: Panjin
Project Objective: Produce 200,000 cubic meters annually
Total Investment: USD 4.2 million
Construction Period: Unknown
Project Status: Preliminary Design in Preparation
Liaohe Oil Field Oil Sludge Recovery Treatment
City: Panjin
Project Objective: Recover 15 million cubic meters annually
Total Investment: USD 4.1 million
Construction Period: Unknown
Project Status: Feasibility Study in Process
Liaohe Oil Field Well Drilling Discarded Sludge Treatment
City: Panjin
Project Objective:
Total Investment: USD 3.6 million
Construction Period: Unknown
Project Status: Under Construction
Lingyuan Iron and Steel Group Steel Scraps Treatment
City: Chaoyang
Project Objective: Treat 200,000 tons of steel scraps
Total Investment: USD 4.1 million
Construction Period: 2001-2005
Project Status: Feasibility Study in Process
China Petroleum and Natural Gas Jinxi Branch Solid Waste Treatment
City: Huludao
Project Objective: Treat 100 tons of waste residue annually
Total Investment: USD 3.6 million
Construction Period: 2000-2002
Project Status: Proposal Submitted
Huludao Zinc Plant Coke Breeze Utilization
City: Huludao
Project Objective: Treat 100 tons of waste residue annually
Total Investment: USD 605,000
Construction Period: 2002-2003
Project Status: Proposal Submitted
C. Hazardous Waste
Liaoning has four hazardous material disposal sites at present: 1) Hushitai Industrial Solid Waste Disposal Center (20,000 tons per year) ; 2) Zhaojiagou Medical Waste Disposal Station (1000 tons/year); 3) an incineration center in Shenyang (300 tons per year); 4) Dongtai Industrial Solid Waste Disposal Site in Dalian (1000 tons per year).
Liaoning Hazardous Waste Disposal Center
Project Objective: Integrated treatment of 1190 tons of hazardous waste
generated in Liaoning per day (phase I)
Total Investment: USD 83 billion
Construction Period: 2001 - 2005
Project Status: Proposal Submitted
Shenyang Hazardous Waste Disposal Demonstration Project
Project Objective: Treat 25 tons per day
Total Investment: USD 7.85 million
Construction Period: 2001
Project Status: Proposal Submitted
Heilongjiang Hazardous Waste Disposal Center
Project Objective: Treat 55 tons per day
Total Investment: USD 7.86 million
Construction Period: 2001 ? 2003
Project Status: Feasibility Study Completed
IV. Market Access:
A. Import Climate
1. Regulation of Domestic Manufacturers
Domestic manufacture of pollution control equipment is a relatively new industrial sector in China. The central and provincial level governments are heavily involved in the development and regulation of the industry. Internal government policy encourages procurement of domestic equipment over importation of foreign equipment. Domestic equipment may be certified by the State Environmental Protection Administration as a product that qualifies as an import substitute and is suitable for deployment throughout the nation. This certification process appears to create a defacto monopoly (local or nationwide) for certain domestic equipment manufacturers.
The provincial level environmental protection bureaus do claim that quality and technical standards exist for pollution control equipment, but the USCS was unable to obtain a copy of these standards from provincial level authorities. It is possible that these standards are available through Chinese central government agencies.
2. Regulation of Equipment Imports
Tariffs. Breakout of tariff rates applicable to pollution control equipment was not available.
Tendering. Tendering is required for major projects funded through international funding entities. Such business opportunities may be located through the China Daily newspaper, or at www.chinatendering.gov.cn For
details on tendering and the project approval process, see a USCS report titled "Partnering in China Environmental Sector," which is available from the U.S. Commerce Department through <www.usatrade.gov>.
Investment. Provincial governments throughout the northeast region strongly encourage foreign investment to support development of domestic manufacturing capabilities. The joint venture project may be eligible for a tariff exemption or reduction on importation of capital equipment because investment in the environmental protection area is a preferred category of foreign investment. Equipment to be acquired through foreign investment must be approved by provincial government authorities in the course of preparing the feasibility report and obtaining contract approval. For details on other investment issues, see a USCS report titled "Partnering in China Environmental Sector" and the "China Commercial Guide." Both reports are available from the U.S. Commerce Department through <www.usatrade.gov>.
B. Distribution/Business Practices
Plans for intensive construction of solid waste treatment projects throughout the northeast region provide many opportunities to foreign manufacturers, suppliers, and service providers. U.S. companies that desire to identify prospective endusers should first obtain information from the local environmental protection bureau, planning commission, or economic and trade commission. Such agencies can provide a list of projects that are planned and information about policy priorities for spending on environmental protection. These project plans usually include
a list of the projects, scale, and contact information.
The most important issue is unraveling the roles of various agencies that may be involved in project implementation. The agencies are vertically structured and may include the central, provincial, municipal, and district governments. For example, the environmental protection bureau maintains a list of projects planned by local governments and large state-owned companies. The local planning commission is involved in approval of these projects and regulates a separate group of projects referred to as "technical renovation" by smaller state-owned or quasi-private companies -
and maintains a separate list of these projects. (The technical renovation project list is not usually available to the public.) Therefore, it is very challenging - and important - to correctly identify the relevant project implementing authority early in the project cycle.
While the region's provincial governments have drawn up an impressive array of objectives and action plans, the financial resources are often lacking to fund the government mandates. Financing is a key issue to be considered
in assessing sales potential, and is discussed in more detail below.
1. Direct Exports
New market entrants are encouraged to approach the market in increments. A great deal of time, effort, and market research is required in order to identify prospective endusers and work through financing issues. The marketing effort will require numerous visits to China by marketing managers and top level executives because contract negotiations typically begin on the working level regarding technical issues and work up to the final decision-maker. Chinese buyers usually expect to undertake pre-contractual equipment inspection in the United States. New market
entrants are encouraged to postpone the visit until the latter part of the negotiation process to maximize commercial results.
The contract negotiation process may also include a third party, such as a trading company. China's system for regulating international trade does not permit every legally registered Chinese company to engage in international trade. A Chinese company is required to obtain specific authorization from the Chinese government to engage in international commercial transactions. Endusers in the environmental sector will probably not have trading rights because the endusers are typically government entities or state-owned enterprises, and therefore the American
firm can expect to sign a contract with a Chinese import/export company that represents the enduser. The enduser will sign a domestic purchase contract with the trading company. Chinese law does not recognize an invoice as a binding international sales contract. New market entrants are encouraged to become familiar with the requirements of Chinese contract law.
2. Distributor or Sales Agent Agreements
New market entrants are encouraged to work with a sales agent on a non-exclusive basis in a particular geographic region before committing to exclusivity. Chinese sales agents will expect substantial training with regard to how the American firm envisions the marketing process to occur. The American firm will need to acquire knowledge from the sales agent on the nuances of local distribution channels. Bribery is a common business practice in the region, and the new market entrant should clarify its policies on this issue with the sales agent at the outset of the business relationship.
It is important to clarify issues concerning the degree and nature of support to be provided to the sales agent by the American firm. The sales agent may request free product samples or demonstration equipment, financial support for advertising, or marketing training in the U.S. at the expense of the American firm. Product literature should be translated to Chinese because very few Chinese companies in this region are able to read English language materials. The cost of preparing Chinese language marketing materials must also be clarified.
Some Chinese sales agents may not have a clear understanding of the differences between the obligations of a distributor and sales agent. Most sales agents are reluctant to accept the obligations of a distributor because they lack financial resources to stock equipment/spare parts and warehouse equipment.
3. Establishment of a Representative Office
Most new market entrants consider the possibility of establishing a representative office after acquiring market expertise over the course of a few years through direct exports or sales agent arrangements. A representative office is useful to maintain key contacts, manage sales agents, implement contracts, and broaden marketing strategy. Chinese law restricts the scope of business activity of representative offices to a liaison function; and prohibits the use of a representative office to engage in profit-making activity or to sign contracts. For further details on representative office operations, please contact the USCS office in Shenyang.
U.S. Commercial Service (USCS) is committed to assisting U.S. companies to export products and services to other countries. USCS has designed many customized services to help U.S. companies achieve their business
development objectives. The USCS nternational Partner Search (IPS) service helps U.S. companies to locate, screen, and assesses potential agents, distributors, representatives, and other business partners. To order an IPS, please contact the nearest U.S. Department of Commerce District Office or U.S. Export Assistance Center. A trade specialist will verify the product's marketability, help to prepare product literature packages, and assist in sending the product information. IPS is available through the Commercial Service office in Shenyang. This office serves the
entire northeast region.
C. Financing
In 2000, Heilongjiang Province was selected by the central government to participate in a trial program to encourage ecological economic development. As a result, the central government allocated more funds to Heilongjiang Province for solid waste treatment projects in comparison to allocations for Liaoning and Jilin provinces. Heilongjiang Province
invested 100 million RMB, while Liaoning invested 45 million RMB, and Jilin invested 17 million RMB. The combined expenditure by the Northeastern provinces was 164 million RMB, which was 10.8 % of the national expenditure on solid waste management (883 million RMB).
A portion of the projects listed above are funded through central government loans and grants from the provincial governments. It appears that a substantial portion of the funds that trickle down from the central to local levels are obtained from the World Bank, Asian Development Bank, or other forms of bilateral financial assistance. Each project is partially funded, with the project developer being required to independently raise matching funds. Tendering is required for major projects funded through international funding entities. Tendering announcements may be located through the China Daily newspaper, or at <www.chinatender.gov.cn>
Other projects planned by particular enterprises or municipal governments must be independently funded through commercial loans, foreign investment or other means such as public user fees, treatment fees, and discharge
fees. The fee systems are only in the beginning stages of development in the Northeast.
New to market companies should become familiar with ExIm Bank export credit programs. The programs are designed to facilitate exports of U.S. products and services by providing loans, guarantees, and insurance for export
sales.
The U.S. Trade and Development Agency (TDA) helps U.S. companies to pursue overseas business opportunities as well. Through the funding of feasibility studies, orientation visits, specialized training grants, business workshops, and various forms of technical assistance, TDA enables American companies to compete for business in infrastructure and industrial projects. TDA is a small, independent federal agency. It responds quickly to assist U.S. companies in capitalizing on overseas business opportunities and responding to foreign competition. TDA is currently emphasizing support for export of American pollution control equipment to China.
