The environmental industry has many "new normals"

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General Secretary Xi Jinping’s important statement that China’s economy should adapt to the “new normal” has drawn great attention from all walks of life. More and more people use this concept to analyze and explain China’s economy. The "new normal" has become the hottest economic keyword. There are 2.56 million related results in Baidu search alone. The new generation of decision-making layers define the current stage of China's economic development with the “new normal” and through the “new normal” perspective the selection of China’s macroeconomic policies is not a “temporary rise”, but rather a thoughtful move.

Similarly, China's environmental industry has many "new normals."

1 The "new normal" faced by the external environment of the environmental industry

The new government’s attention to environmental issues has reached an unprecedented height. Under the influence of the big situation, as a policy-driven market, the external environment faced by the environmental industry is also undergoing a shift and has become “normalized”. trend.

Normal one: policy change. In 2014, related policies concerning the environmental industry were published frequently. Near the end of the year or even within a day, two important ministries and commissions of the country issued separate documents for the same thing: On December 4, 2014, the National Development and Reform Commission and the Ministry of Finance issued separate documents. We will guide government and social capital cooperation from the policy level and practical operation respectively. The signal released behind this phenomenon is that the external environmental policies involving the environmental industry will be intensively introduced in the coming period, and policy formulation is entering a period of change. While the policy is full of contradictions, it is constantly changing the service boundary of the industry.

Normal II: The expansion of the environmental needs. Judging from the content-oriented policies of the state's introduction of policies, whether it is the new “Environmental Protection Law” or “Atmospheric Ten Articles” released or the forthcoming “Water Ten Articles” and “Tokuji Article” policies, the era of environmental protection with emission indicators as the core will be In the past, the era of environmental protection, centered on environmental effects, was approaching. The policy-oriented transformation has opened the ceiling-free market with trillions of environmental protection needs.

Normal 3: The capital market is highly concerned. The rapid development of the environmental industry has been universally preferred in all types of capital markets. According to data from the E20 Research Institute, as of the end of 2014, the number of listed environmental companies has approached 140. According to brokerage data, the average forecast price-earnings ratio exceeds 40 times, ranking the top six in the industry, PE/VC enthusiasm for the environmental industry The degree is also unprecedentedly high.

Normal Four: Complex and complex trading structures. With the frequent release of industrial policies, there are constantly emerging policy terms and concepts, such as franchising, third-party governance, and PPP, which to a certain extent reflect the complexity and compounding of environmental industry transaction relations.

Normal Five: Adjustment of capital and payment structure. At present, under the influence of a series of far-reaching reforms such as clearing up local financing platforms, budgetary system reforms, mixed ownership, and PPP, the capital structure of the local heavy asset sector will face changes. Triggered by local government investment and payment structure adjustments.

Normal Six: Public participation. China's environmental industry is undergoing structural changes. The original two-dimensional structure composed of government and enterprises is being transformed into a three-dimensional structure composed of government, enterprises, and the public. The strengthening and deepening of the public's influence on the government and, in turn, on the environmental industry will become an important new norm for the environmental industry in the future.

2 Under the new normal, the development trend of the environmental industry is the subversion of the industrial model and the recognition of the needs of the environmental industry. As we all know, the core of the environmental industry value chain is government procurement services based on public service responsibilities. At present, under the influence of China's economic adjustment, industrial upgrading and transformation, the dominant nature of municipal public services in the environmental industry is being shaken, and the value chain just established is facing adjustment. With the intervention of emerging environmental services such as industrial wastewater and hazardous waste, the scope of environmental industry services has expanded, and the industrial chain has continued to expand. In addition, resources are being strengthened, and services at the end of the nature of the end governance are hard to keep in sight. The industry will eventually go from harmless treatment to circular economy and comprehensive utilization of resources, and then to the blue economy and ecological recycling system. Most companies will face business models. Adjustment and reconstruction.

The second is the subversion of the concept of capital. The era of great capital has come. The advent of the era of big capital will affect a series of competition in the industry. On the one hand, the industry is entering the era of asset replacement from the era of project investment. The RMB 1 trillion to 2 trillion environmental assets controlled by the City Investment Group will be reset during the reform of the investment and financing system. On the other hand, the market-led capital market is also undergoing a change. The introduction of the registration system, the wave of mergers and acquisitions created by the equity investment market, and the large-scale entry of low-cost funds such as insurance funds and social security funds will all promote the environmental industry. The formation of the three phalances of China A (Heavy Asset Environment Group), B (Regional Environmental Integrated Services Group), and C (System Solutions Provider) may undergo transformation and change.

The third is the subversion of the industrial value chain. "Wool" is on the "pig." For a long time, the environmental industry has only played the role of a cost center. The results of environmental governance have brought many benefits to real estate and other industries. The environmental industry itself has not obtained more value, that is, other industries have cut “wool”. The advent of the mobile Internet era will change the traditional industrial value chain. The competition between enterprises will evolve from linear competition, industrial chain competition to node competition, or value flow competition. According to the Matthew's law, excellent companies will gain more room for development and opportunities, and may cut off others' "wool", that is, "wool" on the "pig." For the environmental industry, only those top brands that have made extreme standards and high standards of service can gain the same value as other industries such as subways and highways.

The fourth is the subversion of the rules of competition, the leader of the world. With the advancement of technology and the reduction of information asymmetry, no matter which industry, all future supply will be likely to be surplus, and resources and energy will also be gathered to the industrial powerhouses. For increasingly mature environmental industries, competition is becoming increasingly fierce. If we are to achieve long-term and sustainable development in the fierce competition, it should be the top priority for companies. Only the leader in the field of segmentation is the direction in which the company will advance. If you do not lead the race, you will suffer the fate of being squeezed by all parties. However, the front runners will also face more choices, and they will be the strategic core of the leader.

Fifth, the subversion of mobile internet and the profound reconstruction of business logic. Under the linear thinking of the traditional industrial era, the environmental industry is a purely political and enterprise game. It is niche, high-tech, and complex. The government is in essence a super intermediary for environmental needs, and the Internet is difficult to subvert. This is not the case. The change of the Internet to the environmental industry may be slower than that of the general industry, but change cannot be avoided. The essence of the Internet is platformization, standardization, user-oriented experience, big data, low cost, and popularity. The trend is to use the concept of the public to deal with the choice of niche, and ultimately the value of the user-oriented transmission, with the development of the Internet, the middle part will be the end, that is, the Internet will remove all the intermediary without positive value. Therefore, in the end, environmental protection is a matter for the entire people. It requires the terminal, that is, the public, to assume corresponding responsibilities, supervision, revenue, and payment. The internet and big data may be used for brand communication, water price, water saving, garbage collection, collection and transportation, perception and guidance. This trend will affect the strategic layout of enterprises, and more companies will take the initiative to become Internet environment companies.

Sixth, subversion of the industrial service chain and de-government. After the new government took office, the willingness of policy decision-makers to take the mass line is even more pronounced. With the continuous enhancement of social integration, the government will ultimately not be able to fully represent the public in purchasing public services. The era of environmental protection that only the government is satisfied with is coming to an end. The new “Environmental Protection Law” and mobile Internet have intensified this change, and the environmental industry will eventually develop from B2G to B2C, service companies and the public share responsibility for the environment, and share profits together. In the era of environmental industries entering the public brand, they will pay more attention to brand communication. Creating a brand in the public will be as important as shaping it in the minds of the government.

Seventh is the subversion and decentralization of industrial cooperation. Every link in the industrial cycle is very important. There is no contradiction between the center and the specialization and the ecological cycle. It can be achieved through collaboration and symbiosis between companies. With the extension of the environmental industry service chain, the value of the company will generate more cross-border cooperation. Therefore, coordinated development has become inevitable, and openness can be a win-win situation. The inter-industry core values ​​and core interests are superimposed on each other to achieve incremental value and incremental sharing.

For the current Chinese environmental enterprises, they need to understand and grasp the “new normal” faced by the country’s macro and industry, follow the new trend of industrial development, seize the opportunity for industrial development, and build a long-term, sustainable business logic. To maintain a place in the future of industrial development.

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