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In the press conference held on May 28, Antoine Frerot, board chairman and CEO of Veolia Environmental Services(Veolia), told the media that he would integrate and adjust the company. In the future, Veolia will end its activities in the public transportation and commit itself to the development of water, waste disposal and energy management. But he also said simultaneously that the strategic adjustment will not have any influence upon its business in China.
Leave Transportation without Affecting Business in China
Veolia is the largest environment-centered group and the only company that provides allround environmental services in the world. Though it is 160 years old, it entered China not earlier than the 1980s. In the public transportation section, Veolia Transportation founded a joint venture with Nanjiang, Jiangsu-based Zhongbei Corp. to provide public transportation services for six cities in Jiangsu and Anhui. Meanwhile, Veolia Transportation is also responsible for the daily operation and management of trolleybuses in Hong Kong.
When asked whether the plan to leave public transportation section could affect the public transportation business run by Veolia in China, Froret said that Veolia’s public transportation business in Asia was run by the joint venture it founded with Le Métropolitain de Paris and thus is almost immune to the effect.
“Veolia takes 50% of this joint venture’s and we halve this part with Credit National de France. It means that if Veolia gives up this business, only 25% of the shareholding structure will be changed while the rest 75% shares remain unchanged. Therefore it has no big influence upon clients of our company,” Frerot told the media.
Froret also answered the question about whether leaving the public transportation business means cutting jobs. As he said, every year a part of employees left Veolia when they reach the age of retirement. For those employees losing their jobs because of the integration, Veolia will arrange new training courses for them and provide them with new positions within the company. Therefore Veolia’s employees in China need not worry about losing jobs after integration.
Business in Emerging Countries to Be Enhanced
“The business adjustment and integration made by Veolia is to increase its business volume in emerging countries,” Froret said. Presently, 70% of this company’s businesses are from developed countries. But he hopes that the emerging countries will accommodate bigger business volume after this business integration and adjustment. Froret plans to increase the proportion of Veolia’s business in emerging to the par with developed countries.
Froret specially mentioned China in the press conference. In his opinion, the “12th Five-Year Plan” recently made by the Chinese government showed the great desire to protect environment. He thinks that the Chinese government fixes a higher standard for water quality and contaminated waste disposal, which is a godgiven opportunity for Veolia.
From July 1 this year, the new drinking water standard will be forcefully carried out and the examination index will grow from 35 items to 106 items and the examination over the heavy metal elements will become stricter, nearly the same with the strictest water quality standard – the water quality standard of the European Union.
“Though the new standard China recently made has surpassed the standard of the WHO, it is still lower than the European standard. We have great experiences in this field and thus have the confidence in improving the quality of our water to the qualified level,” said Frerot. As a company existing for more than one and a half centuries, Veolia has already accumulated abundant experiences and technologies in water disposal in Europe. This gives it the positive conditions to win the competition in China.
Veolia Water entered China in 1997 and now it is running 29 projects in 21 cities to provide the design, construction and maintenance of water supply and waste water disposal projects.
Assets Sold to Reduce Liability
The business adjustment and integration of Veolia also includes the plan of spinning off its 5-billion-euro assets before the end of 2013 to reduce its liability level and increase its financial flexibility.
Presently, the liability level of Veolia is around 15 billion euros now. It plans to reduce the liability to 12 billion euros by the end of 2013.
“This means that two fifths of the 5-billioneuro assets we sell are to be used for re-investment. The major areas for our re-investment refer to emerging countries we are very bullish on,” said Froret. The development core of the company is related with emerging countries and regions and China is ranked at the first place among them.
“China has great demand for water supply, solid waste disposal and energy services,” Froret said. “You know that the 12th ‘Five-Year Plan’puts forward the goal of reducing the water consumption for industry by 30%. It is very hard and complicated to realize this goal, but Veolia has the relevant technologies which can help our industrial clients achieve this goal.”