Water Stress in China: Desalination Takes Centre Stage, According to Frost & Sullivan

LONDON, February 22, 2012 /PRNewswire/ --

- The Chinese government is encouraging domestic companies to pursue innovative desalination technologies

With China's tremendous growth, the migration of people from rural places into urban areas is becoming more significant. The expansion and the development of Mega Cities and of some coastal cities in China (eg. Beijing, Shanghai, Hong Kong, Guangzhou, Shenzhen) led to a steeply increasing requirement of human resource as well as natural resource supply.  Today, 400 cities out of 668 in China are faced with the challenge of water scarcity. The Chinese government is taking different steps and actions to solve the problem and desalination certainly is one of the key solutions. But what is the potential of the desalination industry in China?

Frost & Sullivan analyst Jennie Peng explains: "The Chinese desalination market is still very young with immature regulation and market environment. Several projects have been established in Northern China coastal areas which significantly enhance the confidence for the government and project developers in the wide adoption of desalination in water scarce coastal areas of China. However, there still is lack of supporting policies in terms of risk proof mechanisms, allocation of funds or subsidies, and measurement for development of desalination projects."

Three important documents:  China Ocean Agenda 21, The Outline of the National Planning for Development of Ocean Economy and The Special Plan for Seawater utilisation set the guidelines for the Chinese seawater desalination industry. Particularly, The Special Plan for Seawater Utilisation clearly states the potential for seawater desalination development, investment environment, and regional targets for desalination and seawater utilisation. Furthermore, the 12th five year plan on seawater utilisation is expected to issue more up-to-date development plans on a city-level next year.

The central government is encouraging the development of renewable energy projects (wind-powered/nuclear-powered plants, etc.), in which desalination can be adopted as auxiliary water supply and treatment system. This is to utilise either the abundant power or heat to generate desalinated water and integrate the energy and water recycling system. Desalination can then benefit from the special fund allocated to the renewable energy industry by the Chinese government.

"Though detailed policies for the desalination industry are yet to be confirmed for the 12th five year plan (2011-2015), it can be expected that favourable policies will become clear and will be translated into city-level goals with regulations on both privatisation and long-term risk proof," states Jennie Peng.

The Chinese government is pushing domestic companies to pursue innovative desalination technologies and increase the product quality, lifespan and services. This is seen as important to catch up with the international established suppliers and further reduce the overall desalination cost. At present, the gap in cost between domestic and imported desalination equipment is still significant. Imported equipment is still preferred by large scale project developers, mainly on account of the assurance related to stable quality and treatment efficiency. But along with the growth in the industry, localisation is the trend. The localisation rate of desalination products/systems (the ratio of production/supply from local manufacturers or technology suppliers vs. overall supplies in China) is about 60% now, and this rate is targeted to reach 90% by 2020.

For further information on the desalination market in China, please send an e-mail with your contact details to Chiara Carella, Corporate Communications, at chiara.carella@frost.com

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Contact:
Chiara Carella
Corporate Communications - Europe
P: +44-(0)-20-7343-8314
M: +44-(0)-753-3017689
E: chiara.carella@frost.com
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