the United States started early and experienced a process of development and transformation from the blue sea to the red sea to the desert flower, and the leading enterprises in the industry also alternated. At present, China's hazardous waste industry is still in the initial stage of rapid development, with low industry concentration, weak standardization and insufficient scale. Recently, the further tightening of environmental protection policies has brought about a rapid development boom in the hazardous waste treatment industry, and the higher income brought by the higher price of hazardous waste treatment has been favored by the capital market. The trend of mergers and acquisitions in the hazardous waste industry is becoming more and more intense, which inevitably leads to the elimination and integration of enterprises in the industry. Whether it can survive in the hazardous waste industry and stand out in the new round of horse race enclosure depends on the strategic layout of the enterprise's future development. Thirty years of development history of hazardous waste in
the United States: Blue Ocean-Red Sea-Desert Flower
E20 Research Institute summarized the development process of "Blue Ocean-Red Sea-Desert Flower" of hazardous waste industry in the United States through the research on the thirty years of development history of hazardous waste treatment industry in the United States as early as 2017.
The first stage is the blue ocean stage (from the 1980s to the early 1990s). The industry started and developed rapidly for ten years.
External factors: the social problems caused by solid waste and hazardous waste are becoming more and more serious. In 1976, the U.S. government passed the Resource Conservation and Recovery Act (RCRA), which laid the foundation for solid waste treatment in the United States, and for the first time made detailed provisions on hazardous waste management, and established a "cradle-to-grave" life-cycle management system for solid waste and hazardous waste. Since 1980, RACA has come into force, and the promulgation of several bills and the delimitation of hazardous waste list in the same period have directly promoted the emergence and development of hazardous waste industry.
Internal factors: The chemical industry is the main industry that produces hazardous waste in the United States. During the ten-year boom period, the hazardous waste industry and the chemical industry closely related to it are both on the rise, and the output and treatment capacity of hazardous waste are increasing year by year. Considering safety, cost and other aspects, the self-recycling or harmless disposal of hazardous wastes by large chemical enterprises occupies a dominant position at this stage. At the same time, large-scale hazardous waste treatment enterprises with technological advantages have gradually found market opportunities. Although the third-party hazardous waste disposal companies occupy a smaller market scale at this stage, they have gradually risen.
The second stage is the Red Sea stage (1990s-2002), which is the adjustment period
after the rapid expansion of the industry. External factors: On the one hand, the U.S. government has changed its policy, established a pollution control policy of replacing end-of-pipe treatment with pollution prevention, and vigorously promoted the reduction of hazardous waste sources. The United States government promulgated the "Waste Reduction Assessment Manual" in 1988, and passed the "Pollution Prevention Act" in 1990, which is the first time to legislate to confirm the pollution control policy dominated by front-end pollution reduction or prevention instead of the long-used end-of-pipe pollution control. At the same time, EPA and state environmental protection departments have issued a number of industry standards for hazardous waste incineration, landfill and other harmless disposal facilities, including hazardous waste list, hazardous waste discharge standards, shutdown standards and so on. Some harmless disposal facilities were forced to shut down because they were difficult to meet the industry standards. On the other hand, due to the demand of technological development, the chemical industry in the United States has developed and implemented many cleaner production processes and technologies, which have controlled the production of hazardous wastes to a certain extent. At the same time, with the development of economy and the increase of environmental standards in the United States, the production cost has gradually increased. Due to the advantages of stable political environment, first-class infrastructure and abundant cheap labor in developing countries, the United States has gradually transferred high-end manufacturing industries that produce more hazardous waste to developing countries, and the amount of hazardous waste produced by related manufacturing industries has been further reduced.
Internal factors: During this period, the hazardous waste harmless disposal industry was gradually saturated, and the overall overcapacity triggered a price war, resulting in a decline in the overall profits of harmless disposal enterprises, and even some enterprises operating at a loss. During the price war, the price of hazardous waste incineration in the United States dropped from about $700 per ton to $529 per ton or even lower, forcing many small hazardous waste disposal facilities to die. With the continuous mergers and acquisitions, integration and concentration among industries, the number of hazardous waste harmless disposal facilities is also decreasing, replaced by larger hazardous waste harmless disposal facilities. Some traditional giant enterprises have experienced a sharp downturn, while small and medium-sized enterprises with less impact have formed a new market competition pattern through reasonable mergers and acquisitions. Pan Gong
of E20 Research Institute believes that the hazardous waste industry in the United States during this period is not a substantial depression, and it is more accurate to call it a period of consolidation and adjustment.
The third stage is the new golden period
of desert flower (from 2002 to now). External factors: In the new golden period, the hazardous waste production in the United States has a strong correlation with the adjustment of industrial structure and the vigorous promotion of cleaner production in the United States. The output of hazardous waste has remained basically stable, and the number of waste production enterprises has been on the rise since 2013. Relevant laws and regulations are also maturing.
Internal factors: During this period, the market share of specialized hazardous waste harmless disposal companies gradually increased, the industry was further concentrated, and large and medium-sized hazardous waste harmless disposal facilities increased, forming an oligopoly pattern. Industry giants are mainly based on comprehensive full-chain treatment mode, with a full set of consultation, cleaning, collection, transportation and disposal capabilities, and assume social responsibilities such as environmental restoration and sudden crisis management. After the Red Sea, the industry has been consolidated again, and the industry leader is called the flower of the desert.
In the new golden period when the industry is mature, the overall capacity planning is more reasonable, the overflow of hazardous waste disposal capacity is steadily reduced, the number of hazardous waste disposal and treatment institutions is steadily reduced, and the concentration of the industry is further increased. The adjustment
of the industry structure caused by the development of the hazardous waste industry in the
United States has also brought about the overlapping and replacement of leading companies. Take Chemical Waste Management (CWM), Clean Harbors (CLH) and Safety-Kleen as examples.
CMW entered the hazardous waste market in 1975, and in 1976, it expanded on a large scale, purchasing hazardous waste disposal facilities in the United States, and became a super company in the hazardous waste industry in the United States. However, since the 1990s, the overall depression of the hazardous waste industry and the tightening of supervision have led to the shutdown of a large number of CWM equipment. In addition, the rise of environmental protection and human rights activities in the 1990s also made CWM suffer a lot. In addition to the external factors such as the depression of the hazardous waste industry, environmental protection and human rights activities, the decline of CWM also has its own reasons. During the period of rapid decline in the hazardous waste industry, CWM still believed that the harmless disposal of hazardous waste would grow steadily, and blindly increased investment, resulting in more losses, and a generation of giants fell. Founded in 1980
, CLH is the largest third-party hazardous waste disposal company in the United States. The company's business spans the environment, energy, general manufacturing, chemicals, oil and gas production and many other fields. Since its establishment 30 years ago, the company has increased the number and coverage area of hazardous waste treatment facilities "horizontally" and expanded the scope of services through continuous mergers and acquisitions; "Vertically", on the basis of the original hazardous waste harmless disposal technology, a series of new service areas represented by resource utilization are added, covering a number of industries and business types, such as solvent recovery, oil and gas drilling services, environmental services, etc. Under the impact of CWM, the industry leader, CLH became a new giant through reasonable mergers and acquisitions at the right time, opening up a new round of growth of the company. After entering the 21st century, because the company's main business-hazardous waste disposal can not bring forward momentum for the enterprise, the company has become the largest second-hand oil recycler and refiner in North America through the acquisition of Safety-Kleen, a leading waste oil recycling and re-refining, parts cleaning and environmental solutions company in North America. Through this acquisition, CLH has become the largest third-party hazardous waste disposal and resource utilization company in the United States, laying a new competitive pattern for the hazardous waste industry in the United States. Safety-Kleen was a solvent and waste oil recycling enterprise in the
early days, and became the largest solvent recycling company in the world in 1980. After the EPA introduced the Hazardous Waste Act in 1976, Safety-Kleen officially entered the hazardous waste industry because the solvents disposed of were included in the list of hazardous waste. From 1985 to 1987, through three strategic mergers and acquisitions, Safety-Kleen expanded the company's business distribution, expanded the types of waste liquid disposal, mastered new technologies such as rotary furnace incineration, and possessed the ability to dispose of a large number of hazardous wastes harmlessly. Then in the early 1990s, Safety-Kleen began to decline because of the double blow of "external worries"-the overall depression of the hazardous waste industry and "internal troubles"-the EPA fine of up to $2.7 million.
Note: Safety-Kleen entered the Chinese mainland market in 2006 and set up a wholly-owned subsidiary in Guangzhou, Guangzhou Shijie Environmental Protection Service Co., Ltd., to provide parts cleaning and hazardous waste management services for a wide range of industries, manufacturing and service industries. It is the first company in China to provide legal and professional recycling of waste oil and solvents, as well as environmental protection disposal and regeneration. In 2014, Guangzhou Shoulian Environmental Engineering Co., Ltd. entered the field of waste mineral oil regeneration. The first step was to aim at Safety-Kleen's hazardous waste management service business in China, incorporate Guangzhou Shijie into its business, and gradually integrate and establish the whole industry chain business system. In recent years, Shoulian Environment has developed rapidly and is seeking to deepen its cooperation with Safety-Kleen. The two sides have further explored the joint development of parts cleaning business in mainland China.
In this industry reshuffle, the traditional giant enterprises have been greatly impacted, because of their large size, it is difficult to stop losses in time through timely adjustment, while the small and medium-sized enterprises with less impact have become new giants through reasonable mergers and acquisitions, such as CLH. On the one hand, CLH's development strategy at different stages is very clear, the timing of mergers and acquisitions is appropriate, several important mergers and acquisitions are in a relatively reasonable period of financing costs, although the asset-liability ratio has increased when mergers and acquisitions occur, but the follow-up control makes the asset-liability ratio has been at a relatively stable level. On the other hand, the volume of the company is relatively small at the time of the change of the hazardous waste industry, and the degree of impact is also small. The similarities and differences
between
China and the United States in the hazardous waste industry China's hazardous waste industry started late, in terms of policy, we can refer to the perfect industry standards and technical specifications of developed countries to reduce the time of detours. However, the hazardous waste industries in the two countries are quite different, including the waste production industry, the main treatment methods, the development stage, and the (third party) market space. The specific comparison of hazardous waste industry between China and the United States is shown in the following table.
Compared with the three games faced by the hazardous waste industry in China, the game relationship faced by the hazardous waste industry in the United States is relatively simple. First, the relatively stable level of urbanization has led to the relatively stable cement production industry in the United States, and the high entry threshold of the cement industry has promoted the https://price.ccement. in the United States to a certain extent. Second, most of the self-treatment hazardous waste enterprises in the plant belong to petroleum and coal manufacturing enterprises with high profit margins. The possibility of cross-border entry into the hazardous waste treatment industry to provide third-party services for hazardous waste is also small. In the future, on-site hazardous waste treatment in the United States will also be dominant. However, for third-party enterprises, resource utilization is more in line with the priority management objectives of "reduction, resource utilization and harmlessness". In the future, the treatment methods of hazardous waste recycling, landfill and incineration in the United States will be in dynamic change. At the same time, the development of new technologies will also bring about changes in the game relationship between hazardous wastes.
3. The current standard system of industry standards
in China is still lagging behind that of developed countries such as the United States. There is still a gap between China and other developed countries in terms of emission limits and protection distances for incineration pollutants. For example, the dioxin emission standard for incineration flue gas in China is 0.5TEQng/m3, while the internationally widely adopted POPs Convention requires 0. It is an inevitable trend for China's hazardous waste industry to raise the standard, so hazardous waste companies must pay attention to their own operational capacity.
4. Market space
As China's hazardous waste production continues to rise, the demand for hazardous waste treatment is also growing. Compared with the stable American market, there is still a large gap in the hazardous waste treatment market in China, and there is still a lot of room for enterprises to divide the market. Since the 13th Five-Year Plan, 11 provinces have issued the Plan for the Construction of Hazardous Waste Disposal Facilities. According to the release of planning projects, the average capacity growth rate reached 212% during the 13th Five-Year Plan period. It can be seen that there is still a big shortage in the treatment of hazardous waste facilities in China, and there is still a big vacancy in the market.
5. Industry concentration
In 2017, there were only 1000 hazardous waste treatment enterprises in the United States, and the market share of CR10 was more than 90%, so the market structure was very mature. Industry concentration is very high.
China's hazardous waste industry is still in the development stage, similar to the hazardous waste industry in the United States in the early 1990s, the industry is still showing a "small, scattered, chaotic" situation. At present, the concentration ratio (CR10) of the top ten enterprises in China is relatively low, about 7%. The following figure shows the ranking of the treatment capacity of major enterprises in China's hazardous waste industry in 2018.
Due to the natural policy, technology, capital and talent barriers in the hazardous waste industry, there are many advantages for enterprises to seize the hazardous waste treatment market through mergers and acquisitions: 1. Hazardous waste qualification is delegated to the local environmental management department, resulting in certain regional barriers in the hazardous waste treatment industry. Large hazardous waste companies can acquire local high-quality hazardous waste projects. 1. Quickly break down regional barriers and achieve cross-regional expansion; 2. There are as many as 46 categories of hazardous wastes. For enterprises, technology will be a key link to enter the hazardous waste treatment market, and they can also quickly expand their technological advantages through mergers and acquisitions; 3. Obviously, it is easier to expand the scale of enterprises by acquiring qualified enterprises than by building new production capacity.
At the same time, the development of mergers and acquisitions in the hazardous waste industry is also inseparable from the macro financing environment: 1. When the financing environment is relaxed and the financing cost is low, the hazardous waste enterprises with capital advantages will increase the intensity of extension mergers and acquisitions, and at the same time, they will attract companies outside the industry to open up the hazardous waste market for further expansion; 2. When the financing environment is gradually tightened, the game between further expansion and stable operation of enterprises will affect the future development of the company; 3.
Similar to the hazardous waste treatment industry in the United States, the expansion of enterprises through mergers and acquisitions will also be the only way for China's leading hazardous waste enterprises. Whether it is the traditional hazardous waste treatment enterprises such as Dongjiang Environmental Protection, Everbright Green Environmental Protection, or the "cross-border" large-scale environmental protection companies such as China Environmental Protection and Oriental Gardens, which are expanding the whole industrial chain, as well as the emerging forces such as Yajule and Conch Venture, which rely on strong financial strength, have taken some actions in mergers and acquisitions.
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