Chinas Water Service Market:Opportunities and Pitfalls for German Companies

Masters Thesis from the year 2007 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1,0 A, University of Hamburg, language: English, abstract: Since the beginning of the "Open-Door-Policy", China has scored remarkable achievements. Its GDP has grown from 150 billion to 1.65 trillion USD and its per capita GDP from 190 to more than 1,200 USD. However, the resources that such growth demands have raised concerns about the long-term sustainability and hidden costs of the growth. Many of these concerns are associated with the state of Chinas water resources. As demand for water has increased, so too have problems with water shortages, pollution, falling groundwater tables and flood/drought damages. To tackle these challenges the Chinese government increasingly encourages foreign companies to engage in the Chinese water market. Market research studies claim that this market holds promising business opportunities for both domestic and foreign companies. This thesis questions this observation from a foreign investors perspective. It shows that the Chinese water market indeed holds business opportunities, but that these opportunities are mainly tied to certain sectors and regions. A questionnaire carried out between foreign managers showed that these opportunities go together with high market entry barriers and high market risks. Therefore, this thesis pays special attention to potential risk treatment measures which take the position of foreign companies and the special characteristics of the Chinese water market into account. The paper contains six chapters. After an analysis of the business environment of the Chinese water service market, the thesis describes business opportunities for foreign companies. Afterwards potential risks for foreign investors are discussed and measures for a strategic risk treatment introduced.