Local heroes steal market share Part 5
- From: Vol 9, Issue 11 (November 2008)
- Category: Analysis
- Region: Unspecified
- Country: China
- Related Companies: (RWE) Rhein Ruhr Partners , Agbar, Saur, Saur/Bouygues, Suez and Veolia
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<b>The declining legacy of the ‘Big Five’</b>
The remorseless build-up of market share by the leading five international private water companies up to 2001 has been mirrored by an equally dramatic decline.
The fall in numbers served in VE and Suez Environnement mainly reflects a remorseless weeding out of old contracts by the author and the elimination of doublecounted contracts wherever possible. Agbar, meanwhile, has made significant progress by entering new markets.
These are net of cross-holdings, so Suez Environnement does not include Agbar.
While a retreat from the peak of 2002 has been an ongoing process, the splitting up of Saur and Bouygues and the divestment of Thames Water from RWE has accelerated these changes, a process that would have gone further if market conditions had allowed a more than partial sell-off of American Water in 2008. Presuming AWW will in time be deconsolidated, the Big Five’s market share is likely to ease further to 37%.
China drives the global market
In 1989, China accounted for 8% of the people served by the private sector worldwide. In 2008, that figure is 38%. This is perhaps most usefully illustrated by the growth in contracts awarded in China as a percentage of the global total in population terms.
During the current decade, China has accounted for at least 50% of contract awards in population terms in every year so far. It has become the powerhouse of the global market, and that picture does not look like changing in the immediate future.
Local players – lots of tiddlers and a few sprats
104 smaller companies in 23 countries were identified in the Yearbook this year, compared with 97 in 2007 (these have to serve at least 10,000 people, but are still too small, or the data too incomplete, to qualify for a full entry). Over the course of the year, Ruas (which had been bubbling under for a full entry itself) was acquired by Veolia Environnement, while Han’s Technologies gained a full entry.
The impact of these companies ought to be put into a global context. The 778 contracts covered in the Envisager database that relate to companies with full entries in the Yearbook this year cover 603.2 million people with an average of 775,000 people per contract. The 32 million people covered by the 156 contracts held by smaller companies results in an average of 212,000 people per contract. 95% of people served by the PSP contract awards identified here are served by the 150 companies with full entries in the Yearbook, with 5% served by the remaining 104.