The Water Council

Chinas Water Market

Eric Olson, Jake Peliska, Nancy Maring and Heather Cleveland

December 12, 2012

Dean Amhaus, President and CEO

The Water Council
710 N Plankinton Avenue, Suite 340
Milwaukee, WI 53203
Dear Mr. Amhaus,
Thank you for giving us the opportunity to assist the Water Council in developing its
international water market strategy. In our experience over the last few weeks, we have learned
both that Chinas water problems are many-fold to which no singular approach applies and that
China represents a golden opportunity for Water Council members to increase their global
market share. In that light, our preferred alternative is to specifically target and match Water
Council members with manufacturers operating in Chinas industrial sectors in Liaoning
province. Chinas economic growth has been fueled by their intense industrial development and
output, and Liaoning province is the most industrialized province in northeastern China.
The members of the Water Council collectively have vast experience and innovative
technologies that span across multiple industrial manufacturing processes. The match can be
made using the U.S. Commercial Service, referrals from local companies already in China,
connections to non-local multi-nationals operating there like Michelin and General Motors, and
perhaps investment firms in the Milwaukee area that have experience in or connections to China.
There are also potential key local allies in this endeavor such as the Milwaukee 7, Milwaukee
World Trade Association, and the MMAC that have a vested interest in increasing trade with
China and may also share their resources and experiences. Implementation would be funded by
private industry (i.e. the members of the Water Council themselves) and directed by both the
environmental regulations established by the Chinese central government and the ability of
Water Council members to market their best management practices (BMPs) and technologies. It
also aligns with the several targets and goals from Chinas 5-year plan with respect to water
quality and global collaboration.
This alternative will face the same challenges as any international export. Exporting is not an
easy process, and China is a difficult market to enter due to bureaucratic, financial, and cultural
challenges. The U.S. Commercial Service has a branch in Shenyang and will be a key resource in
overcoming common political and economic barriers to entry. The Gold Key program is quite
inexpensive (ranging from a few hundred to a few thousand dollars) and can provide valuable
market research, local insights, and logistical support for Water Council companies looking to
enter the Chinese market. However, due to demand and available staff at the US Commercial
Service in China, the Gold Key may require a lengthy wait ranging from a few weeks to a few
months.
We appreciate your time and consideration and wish the Water Council great success as it
explores foreign markets. Please contact us with any questions or concerns.
Sincerely,
Eric Olson, Jake Peliska, Nancy Maring and Heather Cleveland

Executive Summary
Since the late 1970s, a series of economic reforms catapulted productivity in Chinas agricultural
and urban industrial sectors, making China the second largest economy in the world. This growth
came at a steep price. Approximately 70% of Chinas lakes and rivers are contaminated and half
of Chinese cities have significantly polluted groundwater. Lack of attention to environmental
protection and a nearly singular focus on economic growth, largely through urbanization, has
overwhelmed its existing water infrastructure. In response, Chinas 12th Five Year Plan includes
binding goals for improving water quality and efficiency and increased environmental protection.
In 2010, Chinas water industry was valued at $47 billion and is expected to grow annually at a
6% rate or higher. When considered alongside extensive water problems and the Chinese
governments new emphasis on ecological civilization, it becomes clear that the Chinese water
market presents a tremendous opportunity for members of the [Milwaukee] Water Council. To
date, however, these opportunities have not been successfully identified and capitalized upon.
To approach the problem, we examined four alternatives: target wastewater treatment plant
operators, form a Global Business committee, target and match Chinese manufacturers with
Water Council companies, and partner with companies following the CEO Water Mandate. The
criteria used to validate these alternatives were political feasibility, effectiveness, equity, and
location. We evaluated the alternatives based upon the criteria, and concluded that the preferred
alternative is to target and match Chinese manufacturers with Water Council companies.
Chinas current Five Year Plan indicates that it is aware of environmental issues. One of its most
prominent environmental issues is point-source pollution, particularly from industrial facilities.
Similarly, Wisconsin has long been a manufacturing powerhouse in the U.S. However, its
manufacturers have learned how to effectively treat point-source pollution from industrial
facilities over the past several decades, in part because there are numerous water companies that
provide the goods and services that help manufacturers become cleaner and more efficient.
The recommended alternative will connect Water Council companies with Chinese
manufacturers to assist with the design and construction of complete treatment systems.
Targeting particular manufacturers could be an overwhelming task as thousands of
manufacturing facilities line the eastern coast of China and the shores of the Yangtze River.
Therefore, the alternative targets the Liaoning Province in northeastern China. Liaoning is one of
Chinas oldest manufacturing hubs and is home to one of its largest cities, Shenyang.
Liaoning province presents several advantages as a target for Water Council companies. First, it
is an older, well-developed province with one of the larger port cities in China (Dalian), making
transportation easier than in many other Chinese provinces. Second, the U.S. Commercial
Service has a branch in Shenyang and could potentially help cut through common political and
economic barriers to market entry. Finally, several well-known multinationals such as General
Motors and Michelin have major industrial facilities in Shenyang, creating a sense of familiarity
with area businesses. Targeting manufacturers in the Liaoning province has the potential to
significantly increase the Water Councils market share in China. It utilizes Wisconsins vast
manufacturing and water technology expertise to provide beneficial goods and services to a
heavily industrialized Chinese province and would help establish the Water Council as an
authority on industrial water efficiency and treatment systems.

Problem Definition
Starting in the late 1970s, Chinese economic reforms resulted in tremendous economic growth as
the nation transitioned from a planned economy to a socialist market economy. These reforms
placed an emphasis on increasing the productivity of agricultural and urban industrial sectors, as
well as inviting foreign investment to help drive Chinese economic growth. The success of these
reforms is evidenced by Chinas immense GDP growth - an increase of an entire order of
magnitude since the reforms started in the 1970s - and Chinas current place as the second largest
economy in the world.
This growth came at a steep price. Approximately 70% of Chinas lakes and rivers are
contaminated and half of Chinese cities have significantly polluted groundwater. Around 18
million people move into Chinese cities annually (amid a push for greater urbanization), though
there are already around 110.4 million unmetered water connections and a need for several
thousand more water and wastewater treatment plants (278 cities do not currently have a
WWTP). Most of Chinas water is located in its southern provinces, yet most of the demand is in
the agricultural lands and the urban cities of the north. There are incredible inefficiencies--half of
the water diverted for agriculture never gets to cropland and Chinese industry reuses only 25% of
its water (compared to 85% for developed countries). Simply put, Chinas singular focus on
economic growth over the last several decades has been and continues to overwhelm its existing
water infrastructure and already-poor environmental protection regime.
However, China appears (at least on the surface) to have more recently tempered their zeal for
unchecked growth at the expense of the environment. Chinas 12th Five Year Plan, which spans
2011 to 2015, included binding goals for improving water quality and efficiency and increasing
environmental protections. The Communist Party of China (CPC) recently amended its
constitution to include an emphasis on ecological civilization - a philosophical balance of
development and the environment. Toward this end, the Chinese government has earmarked the
equivalent of hundreds of billions in US Dollars and invited foreign companies to help them to
address their water problems.
Water is around a $500 billion industry internationally ($47 billion in China as of 2010), and is
generally expected to grow to over $600 billion by 2016. With the added billions in Chinese
investment in water problems between 2011 and 2015, this has created a tremendous market
opportunity for members of the [Milwaukee] Water Council. As an emerging name in the global
water marketplace, the Water Council represents hundreds of local water companies whose
goods and services together span the entire water cycle - including water extraction,
conveyance, efficiency, treatment/filtration, and more - and already has approximately 4% of the
world water market.
Though the geography and extent of Chinese water problems vary, from a technical standpoint,
the Water Council has solutions ready for export. However, exporting is not an easy process.
China, in particular, has traditionally been a difficult market to enter due to bureaucratic,
financial, and cultural challenges. Some of the larger members of the Water Council, such as AO
Smith, Badger Meter and Pentair are already operating in China with varying degrees of success;
however, to gain greater global market share, more Water Council members must join them. The
evolving Chinese water market represents billions of dollars in revenue growth available for the
1

taking and the Water Council must better prepare itself to identify and exploit its opportunities.

Problem Statement
Chinas immense growth over the last several decades has resulted in a multitude of waterrelated problems in areas of conveyance, efficiency, and quality. Members of the [Milwaukee]
Water Council have many products and services that could assist China with these water
problems, but to date are not fully prepared to identify and exploit its opportunities.

Criteria
Political Feasibility: The preferred alternative must not conflict with the Chinese Governments
current Five Year Plan.
Rationale: Chinas most recent Five Year Plan includes a provision for drawing foreign
investment and technology into China (specifically in areas of agriculture, high-tech industry,
and environmental protection) and calls for several water-related goals, including a reduction in
overall pollution, a reduction in water consumption, and an increasing in industrial water use
efficiency. Although some doubt Chinas actual commitment to these goals, it is largely believed
that China attempts to strictly follow its Five Year Plan. Therefore, a successful alternative
should be formulated to mirror the goals China has set out to accomplish.
Effectiveness: The preferred alternative must keep the Water Councils share of the global water
market at or above 4% through 2015.
Rationale: By 2016, the global water market is expected to grow in value to over $600 billion.
Currently, Wisconsin water industry businesses account for 4% of the approximately $485
billion industry. Although the U.S. water market will be the largest in the world for many years
to come, several other markets, including China, are growing at a rapid rate. In 2010, Chinas
water market was valued at $47 billion, and is expected to grow at a rate of at least 6% annually.
Capturing some of this growing market would go a long way toward growing the Water
Councils importance at the global scale.
Equity: The preferred alternative must provide opportunities for at least two sub-sectors of the
water industry in Wisconsin to provide goods and/or services to China.
Rationale: One of the core strengths of Wisconsins water industry is that it is able to provide
solutions to nearly every water-related problem. Accordingly, the preferred alternative should
attempt to maximize the number of companies that would be well-positioned to provide goods
and services to China. By requiring it to account for at least two sub-sectors, this criterion
ensures that the preferred alternative addresses more than just one niche market. As of December
2012, the Water Council had identified 249 companies in 12 water industry sub-sectors (see
Appendix A).
Location: The preferred alternative must be implemented in provinces that have a branch of the
U.S. Commercial Service located within their boundaries.
Rationale: It is widely known that China is a difficult market for foreign businesses to enter,
particularly in regard to the provision of public goods such as water. Oftentimes, one must have
2

connections to Chinese government officials in order to provide such goods. However, decisions
are made on many levels and by many government officials. To make the task less daunting, the
U.S. Commercial Service has branches in six Chinese cities Beijing, Shanghai, Shenyang,
Chengdu, Guangzhou, and Hong Kong. One of the primary tasks of these branches is to connect
U.S. businesses with Chinese decision-makers and businesses. Rather than allocating large
amount of time and financial resources, the Water Council should attempt to use current
resources rather than start from scratch. Within the U.S. Commercial Services, programs such as
The Gold Key exist to facilitate market research and entry.

Alternatives
Target Existing WTP and WWTP Operators in China
To address its shortfall in water and wastewater treatment capacity, China continues to invite
foreign investment and has allocated a total of $65 billion (USD) for investment into urban water
supply systems by 2016 (of which one-third will be used to upgrade water treatment
technologies, and two-thirds to build new water infrastructure such as treatment plants/pipes).
Accessing the Chinese water market does not necessarily require that members of the Water
Council deal explicitly with the Chinese. Though major operators of Chinese WTP and WWTP
facilities include local companies like Shenzhen Water, Beijing Capital and Tianjin Capital,
foreign companies are significant participants in the market. Private companies, foreign
companies and local companies (under joint partnerships) already own and/or operate around
20% of water utilities and 70% of wastewater facilities in China. This will increase as companies
compete for Chinese contracts. Foreign companies often have strong finances and superior
technology and management practices, which provides them a competitive advantage competing
against Chinese firms (which benefit from their experience with the Chinese government and
local market knowledge) for water projects.

Veolia Water (linked to Veolia North America, a member of the Water Council) operates
in approximately half of China and provides water to over 43 million people.
SUEZ Environment, a French company, operates 190 WTP and WWTP treatment
facilities across China and provides water to over 14 million people.
Berlinwasser, a German company, owns and operates five WWTP facilities in four
provinces in China, which together serve over 5.3 million people.
Sembcorp, a Singaporean company, owns and operates 14 WTP facilities that provides
water to approximately 2.3 million people
AECOM, a US company, operates a WWTP in Guangzhou and provides water to
approximately 400,000 people.

In this alternative, the Water Council will identify and record in a database the locations of
existing (and future - by tracking the awarding of contracts) WTP and WWTP plants across
China (most of which are located in large cities in coastal provinces), their operators, and the
technologies employed at each location. From this, members of the Water Council will attempt
to identify possible linkages in technologies and build partnerships between the Water Council
members and these operators. The current and future operators, as shown above, may or may not
3

be Chinese, but all the same represent access to the Chinese market. Some Water Council
members might actually find it easier to connect to the German, French or other foreign
companies in China and may potentially even bypass some of the bureaucratic, financial, and
cultural challenges faced by direct exporters to China. The benefit to this approach is that the
Water Council leverages both the changing market landscape in China and the heavy lifting
that both Chinese and foreign companies already did to acquire market share.
Corporate Social Responsibility
As consumers around the world become more aware of corporate actions and adjust their buying
decisions accordingly, many multinational corporations have responded by putting greater focus
on efforts to cultivate a positive public image and social impact. This shift toward socially
responsible actions prompted the International Organization for Standardization (ISO) to create
the ISO-26000, Guidance on Social Responsibility, in 2010. This document is meant to inform
businesses on the benefit of Corporate Social Responsibility (CSR), which are socially
responsible actions and ways businesses and organizations can implement them.
CSR is a growing presence across the world and is practiced in many industry sectors. The
United States is a leading nation in the practice of CSR and has the most companies with
international CSR codes. The United Nations Global Compact, the largest voluntary corporate
responsibility initiative in the world, recognized the importance of CSR in the area of water
stewardship and in response created the CEO Water Mandate. The CEO Water Mandate is a
public-private partnership of organizations and business leaders from across the globe who have
committed to focusing CSR efforts in the area of water management and sustainability. It has
also created an available list of businesses willing to commit to focusing resources to develop
strategies and solutions to address existing water problems such as scarcity and sanitation.
For this alternative, the Water Council will engage the companies on the CEO Water Mandate
list as potential clients and customers. Since members of the Water Council represent the entire
water cycle, they collectively have the goods and services needed to complete any of their
water-related CSR projects. Partnering with these companies may aid the Water Council
members in entering or expanding in foreign markets, including China. Any partner will already
be operating in countries where their CSR efforts take place, so Water Council businesses will
not have to attempt to enter foreign markets alone. As Water Council members become more
involved in foreign water improvement projects they will gain more notoriety in foreign markets
and between multinational corporations. On a similar note, CSR projects also provide positive
press for the implementing businesses; through this alternative Water Council businesses can
gain a positive foreign image.
This alternative will allow the Water Councils members to partner with firms engaged in
markets around the world. Though this alternative does not directly focus on getting Water
Council businesses into the market in China, it does allow for the opportunity to supply goods
and services to projects being implemented in China (and thus, indirectly enter the market) if the
CEO Water Mandate companies are already there. Chinas new focus on ecological
civilization strongly correlates to the tenets of CSR, so companies on the CEO Water Mandate
list may find themselves more attractive trade partners as China looks abroad for water solutions.
4

Target and Match Chinese Manufacturers with Water Council Companies

It is clear that China is in dire need of clean water. As manufacturing and the populations
increases so has the pollution. The Chinese are learning to treat point-source pollution; just as the
United States of America learned during and after our industrial revolution. Several goals set
forth in the most recent China (12th) 5-year plan indicate the countrys awareness of
environmental issues and global collaboration. A target for the 5-year plan is to decrease the
emission of the following major pollutants such as chemical oxygen demand (8%). The 5-year
plan also includes chapter goals and discussions about the following topics: Chapter 23:
Vigorously develop circular economy, Chapter 24: Intensify environment protection, and
Chapter 53: Actively Participate in global economic governance and regional cooperation.
This alternative seeks to connect Water Council companies with manufacturing facilities in
China. The companies will be from within the Water/Wastewater Treatment Systems category
that includes: businesses that focus mainly on design and construction of complete treatment
systems. The specific area to be matched within China is Liaoning province (which includes the
large industrial cities of Shenyang, Dalian and Anshan).
An example match company is Procorp Enterprises
(Procorp) located in Milwaukee, Wisconsin. Procorp
specializes in environmentally and economically sustainable
water and wastewater treatment solutions. They can offer
turnkey solution packages for industries such as: dairy
harvesting, meat harvesting, meat processing, pharmaceutical
manufacturing, and metal finishing 1. According to their
website, In 1987, Procorp Inc. was founded as a family
business in Elkhorn, Wisconsin, to help industrial clients
solve their wastewater treatment needs. Not too long after its
inception, the organization moved to Milwaukee and became
a nationally recognized expert for treatment of high-strength biological waste streams, typically
experienced in dairy and food processing operations. Through their treatment process and
solutions they reduce and prevent contamination from entering the environment. Procorp will be
matched with industrial manufacturing facilities in Liaoning province. The U.S. Commercial
Services has an office located in the City of Shenyang. According to the U.S. International
Commercial Services, Liaoning is the most industrialized province in the region, while an
October 4, 2011 article from world.edu explained how the city is going from gray to green2.
With the help of United States of America Water technologies, this may be done without
deindustrializing the city and region.
The match can be made using the U.S. Commercial Services, referrals from Water Council
companies already doing business in China, connections to multi-national companies operating
there like Michelin and General Motors, and perhaps investment firms/hedge funds in the
Milwaukee area that have experience in or connections to China. This alternative is funded by
private industry (i.e. the members of the Water Council themselves) and directed by both the

1
2

www.procorp.com
http://world.edu/oncepolluted-chinese-city-turning-gray-green/

environmental regulations established by the Chinese central government and the ability of
Water Council members to market their best management practices (BMPs) and technologies.
Form a Global Business Committee
Uncertainty of payment is one of the main sources of hesitation for those considering entry into
the China market. However, the Chinese water market presents myriad opportunities for the
Wisconsin water industry. China has an estimated water market of over $45 billion 3, but those
unfamiliar with the country have little knowledge of exactly where or how to enter it. It is
possible to identify key Chinese decision-makers (see Appendix B) who have influence over
water projects, but the list is continually changing and responsibilities often overlap between
government agencies.
This alternative seeks to simplify the process of obtaining procurement contracts in China, thus
providing more opportunities for the Wisconsin water industry. The Water Council currently has
four committees that address specific issues such as global communications and water
stewardship 4. This alternative results in the formation of a fifth committee. The primary task of
this Global Business committee would be to identify procurement bid opportunities through
global organizations such as World Bank and the Asian Development Bank (ADB). After bid
identification, the Global Business committee proceeds by identifying water companies with
interest in submitting a proposal and subsequently provide guidance to the company or
companies in forming the proposal. In some cases, multiple companies that offer the same goods
or services may compete for a part in the contract. In such a case, the Global Business committee
would select the winner through a bidding process.
Focusing on procurement notices from the World Bank and the ADB provides several benefits.
First, these banks are international and reputable; much of the uncertainty of payment is reduced
because the projects are financed by a large third-party bank. Second, requests for proposal from
the two banks are geographically diverse. This allows for the chance to network with a variety of
Chinese decision-makers, potentially resulting in the formation of a high level of trust and longterm relationships. The projects also often involve work in several water industry sub-sectors,
thus providing opportunities for a wide range of Wisconsin businesses.
The projects financed through World Bank and the ADB are typically large projects. For
example, the ADB currently lists 7 proposed water projects in China with total project amounts
of up to $150 million 5. The ADB (19) and the World Bank (30) 6 list a large number of active
procurement notices. These projects total well into the billions of dollars in products and
services. While some of these projects have already begun, they still require on-going
contracting of goods and services. There are an additional 7 projects awaiting loan approval (in
the pipeline) with totals up to $840 million. While these two sources are not representative of a
3

Master, Farah, and Samuel Shen. "Analysis: Investors chase big catch in China's muddy waters." Reuters [Hong
Kong/Shanghai] 21 April 2011, n. page. Web. 10 Dec. 2012. <http://www.reuters.com/article/2011/04/21/us-chinawater-idUSTRE73K1GL20110421>.
4
Milwaukee Water Council, . "Committees." Milwaukee Water Council. Web. 10 Dec 2012.
<http://www.thewatercouncil.com/about/committees/>.
5
Asian Development Bank, . "Project Records." Project. Asian Development Bank, n.d. Web. 10 Dec 2012.
<http://www.adb.org/projects/search/21304,518>.
6
The World Bank Group, . "Projects and Operations." . The World Bank Group, n.d. Web. 10 Dec 2012.
<http://www.worldbank.org/projects/search?lang=en&searchTerm=&countryshortname_exact=China&src>.

majority of the Chinese water market, they provide a reliable process of obtaining business in
China for the Wisconsin water industry. Finally, this alternative retains the possibility of finding
business opportunities in several other countries rather than focusing on one market.

Evaluation of Alternatives
Target Existing and Future WTP and WWTP Operators in China
Political Feasibility: The alternative meets the criterion. The Five-Year Plan includes a provision
for drawing foreign investment and technology into China and other goals related to water
problems. In both ways, the approach by the Water Council to target existing and future WTP
and WWTP operators is consistent with the 5-Year Plan.
Effectiveness: The alternative meets the criterion. With the Chinese government set to spend
approximately $65 billion on urban water systems, capturing at least 4% would result in at least
$2.6 billion in revenues for Water Council Companies through this alternative. WTP and WWTP
projects represent multi-billion dollar projects, and China needs a very high number of them
moving forward. If successful in connecting and contracting with WTP and WWTP operators in
China, there is the possibility to obtain both Chinese and foreign capital as more markets (even
beyond China) become open to Water Council companies.
Equity: The alternative does not the criterion. Though this alternative may ultimately create
China market opportunities for several more sub-sectors of the Water Council if relationships are
established or expanded, the primary beneficiary of this alternative is the Water/Wastewater
Treatment Systems sub-sector.
Location: The alternative meets this criterion. It could be implemented in any area of China, but
here targets locations with existing WTP and WWTP facilities, which are primarily located in
the more populous provinces in eastern China. The majority of these provinces have a city with a
U.S. Commercial Services branch, which makes local support and knowledge more accessible as
Water Council companies would move forward.
Corporate Social Responsibility
Political Feasibility: This alternative meets this criterion. This alternative doesn't specifically
address the 5-year plan but does aid in environmental projects that will assist China in reaching
the goals laid out in the 5 year plan regarding environmental sustainability.
Effectiveness: It is unclear whether this alternative meets this criterion. This alternative would
help businesses in the Water Council enter new markets and continue to expand. It is not known
how much money will be spent by multinational corporations in CSR efforts in China that relate
to water, therefore it is unclear how much this alternative will affect the Water Council's share of
the global water market.
Equity: This alternative meets the criterion. Corporate social responsibility projects can range in
scope and size. These projects can target problems such as scarcity and sanitation and would
provide opportunities for many sub-sectors of the water industry in Wisconsin to participate.
7

Location: This alternative meets the criterion. Although this alternative does not directly target
any specific provinces, the majority of CSR activities are in eastern china. There are three
regions with the most concentrated CSR efforts: Beijing, Shanghai; and Guangdong. All of these
regions contain U.S. Commercial Service branches.
Corporate Social Responsibility
Political Feasibility: This alternative meets this criterion. This alternative doesn't specifically
address the 5-year plan but does aid in environmental projects that will assist China in reaching
the goals laid out in the 5 year plan regarding environmental sustainability.
Effectiveness: It is unclear whether this alternative meets this criterion. This alternative would
help businesses in the Water Council enter new markets and continue to expand. It is not known
how much money will be spent by multinational corporations in CSR efforts in China that relate
to water, therefore it is unclear how much this alternative will affect the Water Council's share of
the global water market.
Equity: This alternative meets the criterion. Corporate social responsibility projects can range in
scope and size. These projects can target problems such as scarcity and sanitation and would
provide opportunities for many sub-sectors of the water industry in Wisconsin to participate.
Location: This alternative meets the criterion. Although this alternative does not directly target
any specific provinces, the majority of CSR activities are in eastern china. There are three
regions with the most concentrated CSR efforts: Beijing, Shanghai; and Guangdong. All of these
regions contain U.S. Commercial Service branches.
Form a Global Business Committee
Political Feasibility: The alternative meets the criterion. Nearly all of the Chinese projects
financed through the World Bank and the ADB are overseen by the Chinese government at some
level. Therefore, it is reasonable to assume that the projects are consistent with the 5-Year Plan.
Effectiveness: The alternative does not meet the criterion. Although the World Bank and the
ADB list nearly 50 projects with overall values well over $1 billion, they are still procured
through a bidding process. Therefore, no bid is guaranteed to provide business for Water Council
companies. Over time a few successful bids may result in an increase of future business
opportunities, but a majority of current bids for Chinese water projects are won by Chinese
businesses.
Equity: The alternative meets the criterion. Most of the projects that are up for bid through the
World Bank and the ADB are extensive and varied in scope. Many are multi-phase projects that
involve a broad range of water products and services. Therefore, most of the projects that would
be bid upon by Water Council companies would include multiple companies from several subsectors.
Location: The alternative does not meet this criterion. Procurement notices from the World Bank
and the ADB are generated from a wide range of areas, some of which do not lie within
provinces that have a US Commercial Service location. Although the alternative does not meet
8

the criterion, it is not necessarily perceived as a negative aspect due to the level of reliability that
the World Bank and the ADB provide. In effect, the banks simply take the place of the US
Commercial Service because they are heavily involved in many affairs throughout China.

Recommendation
We recommend a strategy to target and match Chinese manufacturers in the Liaoning province
(which includes the major industrial cities of Shenyang, Dalian, and Anshan) with Water Council
companies. This recommendation connects the Water Council's greatest strengths with some of
China's most pressing problems to implement solutions that will create new business
opportunities for Water Council members while improving China's water quality. This
alternative is directed by both the environmental regulations established by the Chinese central
government and the ability of Water Council members to market their best management
practices (BMPs) and technologies. It also aligns with the several targets and goals from Chinas
5-year plan with respect to water quality and global collaboration. This recommendation
provides opportunities for Water Council members to expand into Chinese markets by focusing
on products and expertise already in hand.
Although language barriers exist, the problems and goals are the same. This approach allows the
Water Council to relate Milwaukee's industrial past and present experience to China's current
situation as a marketing strategy. Water Council members have already implemented solutions in
Wisconsin that can be easily transferred to China. The preferred alternative would facilitate this
progression by identifying manufacturers with water problems, specifically point-source
pollution, in Shenyang and team them with a Water Council member who has a solution to that
type of problem. The match can be made using the U.S. Commercial Service, referrals from local
companies already in China, connections to non-local multi-nationals operating there like
Michelin and General Motors, and perhaps investment firms in the Milwaukee area that have
experience in or connections to China.
Implementation of this recommendation is ideal for several reasons. First, this solution is
privately funded and would not require governmental funding which is hard to locate. Secondly,
Water Council members could rely on operational assistance from their Chinese partners rather
than attempt to enter this market unaided. Third, the U.S. Commercial Service has a branch in
Shenyang which could abate common political and economic impediments businesses face when
entering a foreign market. And finally, Shenyang, Liaoning is the most industrialized area in the
region, and is attempting to attain a higher level of sustainability in accordance with China's 12th
Five-Year Plan.

Monitoring and Evaluation

Upon implementation, the Water Council should take several steps to track the progress and
success of the recommended alternative. First, it could prove helpful to track the number of
contracts signed by Water Council companies in China. This would allow the Water Council to
recognize strengths in the China water market as well as areas of opportunity. A second issue of
importance is the understanding of Chinas environmental regulations. The Water Council
9

should undertake an in depth examination of Chinas (and individual provinces) environmental

regulations in the effort to pinpoint markets with large potential and, consequently, tailor goods
and services to those needs. Third, the Water Council should start an inventory of member
companies that are already in China, so as to capitalize on existing connections and business.
The U.S. Commercial Service can also provide a list of other U.S. companies in markets of
interest, as well as Chinese businesses who may be interested in Water Council goods and
services. In the long-term, it may prove beneficial for the Water Council to examine its strategies
and progress in China at the end of each of Five Year Plan. This will also provide a chance to
address opportunities brought forth by the incarnation of a new Five Year Plan. Each of these
steps would help measure the degree of success of targeting and matching Chinese
manufacturers with Water Council members.

10

Evaluation of Alternatives
Alternative 1:
Target Existing and Future
WTP and WTTP Operators
in China

Alternative 2:
Corporate Social
Responsibility

Political Feasibility

Consistent with foreign

investment goals and water
goals of 5-Year Plan.

Aids projects that assist

China in meeting goals set
in the 5-year plan.

Directly helps China meet

their water quality targets
and aligns with three
chapters from the most
recent 5-year plan.

Meets Criterion:

Yes

Yes

Yes

Effectiveness

4% of China's allocation
for urban water systems is
$2.6B. Most projects are
multi-billion in scope. Also
may open other markets
beside China

Would help businesses

expand into new markets,
but unsure how much will
be spent on these projects.

Meets Criterion:

Yes

Maybe

Equity

Primarily focused on the

market for the
Water/Wastewater
Treatment sub-sector

Projects range in scope,

size, and subject and would
provide opportunities for
multiple sub-sectors

No

Yes

Meets Criterion:

Meets Criterion:

Doesnt target specific

provinces, but most all
WTP/WWTP projects are
in populated areas a US
Commercial Service
presence
Yes

Most Preferred

Preferred

Location

Doesnt target specific

provinces, but most
projects take place in areas
with U.S. Commercial
Service branches.
Yes

Alternative 3:
Target and Match Chinese
Manufacturers with Water
Council Companies

Heavy industry accounted

for over 80.7% of
Liaonings gross industrial
output. Combined with the
environmental goals,
capturing at least 4%
would result in at least $2.6
billion in revenues for
Water Council companies.
Yes

Alternative 4:
Form a Global Business
Committee

The Chinese government

oversees nearly all World
Bank and ADB financed
projects, so they are likely
consistent with the 5-year
plan.
Yes
There are over $1 billion
worth of water projects
accepting bids, but there
are no guarantees.
Additionally, $1 billion is
not enough to capture 4%
of the water market.
No

Industrial manufacturing
facilities can involve
multiple components
including pipes, valves,
filters, meters, and design.

A majority of the projects

up for bid are extensive
and multi-phase projects
that would involve a
variety of sub-sectors.

Yes

Yes

Targeting the industrial

manufacturing industries
connects the Water Council
to cities with a U.S.
Commercial Services
location.
Yes

Procurement notices are

from a wide range of
provinces. That said, this
alternative does apply to
other markets as well.

Not Preferred

Preferred Alternative: Target and Match Chinese Manufacturers with Water Council Companies

No

Appendix A
Distribution of Wisconsin Water Companies
Category
1
Water/Wastewater Treatment Systems
2
Industrial Water Process Systems
3
Water System Products: Non-mechanical
4
Water System Products: Mechanical
5
Water System Components
6
Chemical/Biological Treatment Producer
7
Engineering/Planning/Software Services
8
Maintenance Equipment & Services
9
Distributor
10
Well Equipment & Services
11
General Consumer Products
12
Miscellaneous Product Manufacturers

Wisconsin
27
8
11
26
54
14
42
7
25
6
21
9
Total:

249

Appendix B: List of Chinese Authorities by Political Agency

Politburo Members
The 18th Politburo was elected at the 18th National Congress of the Communist Party of China
in November 2012:
Xi Jinping - General Secretary of the CPC, Vice-President, Chairman of the Central Military
Commission, President of the Central Party School
Ma Kai - State Councilor
Wang Qishan - Vice-Premier, Secretary of the Central Commission for Discipline Inspection
Wang Huning - Director of the Policy Resarch Office of the CPC Central Committee
Liu Yunshan - Top-ranked Secretary of the CPC Secretariat
Liu Yandong - State Councilor (Female)
Liu Qibao - Secretary of the CPC Secretariat, Head of the CPC Propaganda Department
Xu Qiliang - Vice Chairman of the Central Military Commission
Sun Chunlan - Party chief of Tianjin (Female)
Sun Zhengcai - Party chief of Chongqing
Li Keqiang - First Vice-Premier
Li Jianguo - Vice-Chairman and Secretary-General of the National People's Congress
Li Yuanchao
Wang Yang - Party chief of Guangdong
Zhang Chunxian - Party chief of Xinjiang
Zhang Gaoli
Zhang Dejiang - Vice-Premier
Fan Changlong - Vice Chairman of the Central Military Commission

 Meng Jianzhu - Head of the Central Politics and Law Commission of the Communist Party of
China
Zhao Leji - Secretary of the CPC Secretariat, Head of the CPC Organization Department
Hu Chunhua - Party chief of Inner Mongolia
Yu Zhengsheng
Li Zhanshu - Secretary of CPC Secretariat, Director of the General Office of the Communist
Party of China
Guo Jinlong - Party chief of Beijing
Han Zheng - Party chief of Shanghai
Politburo Standing Committee members
Xi Jinping
Li Keqiang
Zhang Dejiang
Yu Zhengsheng
Liu Yunshan
Wang Qishan
Zhang Gaoli
Chairman:
Zhang Ping
Vice Chairmen:
Zhang Guobao - Minister level
Xie Zhenhua - Minister level
Zhu Zhixin - Minister level
Peng Sen
Xu Xianping
Zhang Xiaoqiang
Du Ying
Mu Hong
Liu Tienan
Senior Supervisory Commissioner:
Su Bo - Vice Minister level
Deputy Secretaries General:
Meng Xiangyue
Ma Liqiang
Yang Weimin[3]
Departments within the NDRC:
General Office
Office of Policy Studies
Department of Development Planning
Department of National Economy
Bureau of Economic Operations (Inter-Ministerial Office of the Alleviation of Enterprise
Burden under the State Council)
Department of Economic System Reform

 Department of Fixed Assets Investment

Department of Industrial Policies
Department of Foreign Capital Utilization
Department of Regional Economy
Department of Rural Economy
Bureau of Energy (National Oil Reserve Office)
Department of Transportation
Department of Industry (Office of Rare Earth, Office of Salt Industry Administration,
National Chemical Weapons Convention Implementation Office)
Department of High-Tech Industry
Department of Small and Medium-Sized Enterprises
Department of Resource Conservation and Environmental Protection (Office of National
Coordination Committee for Climate Change)
Department of Social Development
Department of Trade
Department of Fiscal and Financial Affairs
Department of Price
Department of Price Supervision
Department of Employment and Income Distribution
Department of Laws and Regulations
Department of International Cooperation
Department of Personnel
The NDRC Party Committee
Office of National Economic Mobilization
Office of Key Project Inspectors
State Bureau of Material Reserve
State Grain Administration
State Tobacco Monopoly Administration (China National Tobacco Corporation)
Office of the Leading Group for Western Region Development of the State Council
Office of the Leading Group for Revitalizing Northeast China and Other Old Industrial
Bases of the State Council
Office of the National Energy Leading Group
NDRC Leadership:
Chairman:
Vice Chairmen:

Zhang Ping
Xie Zhenhua

Minister level

Zhu Zhixin

Minister level

Sun Zhigang
Xu Xianping
Zhang Xiaoqiang
Du Ying
Mu Hong
Liu Tienan

Lian Weiliang
Senior Supervisory Commissioner:

Liu Xiaobin

Vice Chairmen:

Hu Zucai

Member of Leadership of NDRC:

Wang Qingyun

Secretary General:

Li Pumin

Deputy Secretary Generals:

Meng Xiangyue

Vice Minister level

Zhao Jiarong
Ren Long
Li Yang
List of current provincial leaders, including Communist Party committee secretaries
Province
Anhui
Beijing
(Municipalities)

CPCC
Secretaries

Tenure

Governors

Tenure

Zhang Baoshun

29 May 2010

Li Bin

12 December
2011

Guo Jinlong

3 July 2012

Mayor (acting)

25 July 2012

Wang Anshun
Chongqing
(Municipalities)

Sun Zhengcai

20 November
2012

Mayor

30 November
2009

Huang Qifan
Fujian

Sun Chunlan

30 November
2009

Su Shulin

21 July 2011

Gansu

Wang Sanyun

11 December
2011

Liu Weiping

29 July 2011

Wang Yang

22 October
2007

Zhu Xiaodan

5 November
2011

Guo Shengkun

16 November
2007

Chairman

28 December
2007

Guangdong
Guangxi
(Autonomous)

Ma Biao
Maj Byauh
Guizhou

Li Zhanshu

28 September
2010

Zhao Kezhi

28 September
2010

Hainan

Wei Liucheng

4 December
2006

Jiang Dingzhi

30 August
2011

Hebei

Zhang Qingli

28 August
2011

Zhang Qingwei

30 August
2011

Heilongjiang

Ji Bingxuan

9 May 2008

Wang Xiankui

30 August
2011

Henan

Lu Zhangong

30 November
2009

Guo Gengmao

17 January
2009

Hubei

Li Hongzhong

16 December
2011

Wang Guosheng

10 September
2011

Hunan

Zhou Qiang

26 April 2010

Xu Shousheng

6 June 2010

Inner Mongolia
Nei Mongol
(Autonomous)

Hu Chunhua

24 January
2010

Chairman

3 April 2008

Jiangsu

Liang Baohua

4 January
2008

Li Xueyong

2 December
2011

Jiangxi

Su Rong

18 November
2007

Lu Xinshe

5 December
2011

Sun Zhengcai

23 January
2010

Wang Rulin

14 December
2007

Liaoning

Wang Min

30 November
2009

Chen Zhenggao

22 December
2007

Ningxia
(Autonomous)

Zhang Yi

24 July 2010

Chairman

12 May 2007

Jilin

Bagatur

Wang Zhengwei
Qinghai

Qiang Wei

31 March
2007

Luo Huining

12 January
2010

Shaanxi

Zhao Leji

26 March
2007

Zhao Zhengyong

19 June 2010

Jiang Yikang

31 March
2008

Jiang Daming

13 June 2007

Han Zheng

20 November
2012

Mayor

24 March
2007

Shandong
Shanghai
(Municipalities)

Han Zheng
Shanxi

Yuan Chunqing

Sichuan
Tianjin
(Municipalities)

10 June 2010

Wang Jun

8 September
2008

Wang Dongming 20 November

2012

Jiang Jufeng

31 January
2007

Sun Chunlan

Mayor

28 December
2007

21 November
2012

Huang Xingguo
Tibet
Xizang
(Autonomous)

Chen Quanguo

25 August
2011

Xinjiang
(Autonomous)

Zhang Chunxian 25 April 2010

Chairman

15 January
2010

Padma Choling
Chairman

28 December
2007

Nur Bekri
Yunnan

Qin Guangrong

25 August
2011

Li Jiheng

31 August
2011

Zhejiang

Zhao Hongzhu

25 March
2007

Xia Baolong

13 August
2011

Hong Kong
Xianggang
(SAR)

Director of the
Hong Kong and
Macao
Affairs Office

8 October
2010

Chief Executive

1 July 2012

Wang Guangya

CY Leung (Leung
Chun-ying)