The economy of China is expected to maintain this strong growth in the next five to ten years, due to four dynamic cyclical trends – an increase in local consumption, adjustment of the industry structure, accelerating urbanisation and the shift of global manufacturing to China. These vigorous engines have put the reform and development of public utilities on an upward path since 2002, while also bringing greater challenges to the utilities.
The first two trends have contributed to strong growth in the industrial and commercial sectors, which has resulted in an enormous demand for energy and therefore for metering products. Utilities have especially emphasised the implementation of multi-tariff structures and multi-functional metering.
While the industrial and commercial sectors are booming, the housing market in China has also entered a fast growing phase. The annual increase in property investment from 2001 to 2004 was about 25%, and seven million new houses were bought and sold. This trend has encouraged the develop-ment of the ‘one household one meter’ policy.
China’s urbanisation reached 40% in 2003, 12% higher than in 1993. The country has just entered the middle phase of the urbanisation process, which is expected to grow at least 1% annually in the coming years. This process will certainly increase the demand for urban infrastructure, and will influence the fast growth (>20%) in the Chinese water industry and water metering sectors in the next 10 to 15 years.
These drivers have brought great challenges to Chinese public utilities, which have started the process of reform and privatisation. Their former monopoly position will be ended, and competition will be introduced to the market. Meanwhile, revenue assurance and accurate, reliable metering and billing have become essential to utilities, and improved efficiencies and production processes have become hot topics. Utilities are looking to advanced metering technologies such as AMR and billing systems to resolve problems such as fee collection difficulties, and to improve profitability while reducing losses.
China today is attractive to foreign investors – not only in terms of preferential policies and cheap labour, but also thanks to its stable and increasingly transparent investment environment. The country offers a competitive manufacturing base and a lucrative and promising marketplace, making it an important destination for multinational investments. Since 2001 major multinationals have been including China in their global strategies, while local companies have also enjoyed opportunities to grow, both locally and inter-nationally.