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Time for Accelerating Overseas Businesses
Environment Industry
Time for Accelerating Overseas Businesses
  • By matthew
  • July 30, 2013, 02:27
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Conversion of waste to energy resources (source: EBI).The Ministry of Environment is accelerating its overseas business in an effort to contribute to the Park Geun-hye administration’s pursuit of a creative economy. By doing so, the ministry is aiming to turn the environment sector into Korea’s future growth driver, with the global environment industry expected to grow to US$1.09 trillion by 2017.

Overview of International Environment Industry

​According to US consulting firm EBI, the global environment industry is estimated to be three times larger than the semiconductor sector by 2020. Between 2000 and 2010, the market grew from US$540 billion to US$780 billion with an average annual growth rate of 4%. In particular, markets in emerging regions such as Asia, the Middle East, Latin America and Africa have grown at 9% or so per year, led mainly by the water and waste treatment sectors. Although the growth rate of markets in advanced economies is less than 2% a year, emerging markets are likely to continue their rapid growth for the next 10 years thanks to their high demand for environmental infrastructure.

This continuous growth since the 1990s can be attributed to the ongoing climate change, water shortage, and a depletion of natural resources. Countries all around the world are trying to deal with such issues by speeding up the development of their environment industries.

The increasing awareness of the situation and interest in living standards is creating larger market demands along with the United Nations Framework Convention on Climate Change (UNFCCC), strengthening investments to respond to them. Furthermore, major emerging nations are tightening their regulations regarding air quality, water quality, waste disposal and the management of harmful substances, which implies further growth in the industry worldwide. Under such circumstances, governments are striving to achieve environmental protection and economic growth by nurturing green technologies.

Growth rate of global water industry (source: GWI).The United States, which boasts the biggest environmental industry in the world, is currently running three support programs; environmental aid programs for developing countries, assistance for the export of related technologies, and financing support, in order to help local companies make inroads abroad.

Domestic Market Conditions

The annual sales of the environment sector of Korea reached 59 trillion won in 2011, accounting for 4.7% of the national GDP that year. Sales grew at an average rate of approximately 14.9% during the past five years, with water resources management, waste treatment and air quality management accounting for 23%, 48% and 5% of the total environmental business, respectively.

Growth of Local Market Slowing Down

Still, the industry is showing some signs of slowdown as the domestic market reaches a saturation. The industry’s turnover increased 7.8% to 44 trillion won between 2008 and 2009, yet the growth rate was far lower than the average between 2004 and 2009 at 15.5%. Meanwhile, the amount of international contracts won by Korean environment companies soared from 51.8 billion won to 322 billion won between 2008 and 2012.

The government is considering using this year as momentum for it to take the initiative in the industry as the Green Climate Fund (GCF), the Global Green Growth Institute (GGGI) and the Green Technology Center (GTC) have been set up, while the Kyoto Protocol is scheduled to be extended to create new business opportunities in the field of greenhouse gas reduction.

Growth rate of environment industry by region.In this context, it is setting the stage for an export-oriented industrial ecosystem at home. The Ministry of Environment has already announced plans to achieve 15 trillion won in exports in the environment industry by 2017, a global market share of 1.3%, and to grow at least 10 local companies into world-class players by 2020. The Third Five-year Plan for the Promotion of the Environment Industry and Environment Technologies, which covers 2013 to 2017, and the Long-term Plan for Overseas Market Penetration made public last year, also share the same goal.

Green Export 100 Project to Nurture 100 Global Players in Environment Industry

Conversion of waste to energy resources (source: EBI).More recently, the government announced on June 27 that it would pick 100 small firms in the industry in the framework of the Green Export 100 Project in order to provide full support for the globalization of their businesses, ranging from the selection of export destinations to marketing assistance and legal consulting.

Specifically, it will send business delegations to regions with high growth potential, including North Africa, Southeast Asia and Central and Eastern Europe. Both government officials and privatesector entrepreneurs will join the delegations.

In addition, it is planning to further establish joint growth between big businesses and small firms, allowing for the fact that no less than 95% of companies in the industry are small-scale enterprises that lacks global competitiveness. President Park Geun-hye recently expressed her will to promote the environment industry. “The global environment market is growing so fast, despite the ongoing economic recession, that its growth rate is estimated at around 9% per year,” she said on June 5 during her congratulatory speech for the 18th Day of Environment, adding, “We need to make more aggressive investments in the industry in order to not lag behind the Green Race.” She also remarked that the government would spare no efforts on its part. “The government will continue to assist venture firms in the sector based on the convergence between the industry and information communications technology, while also helping them find their way into overseas markets,” she added.

Total exports in the industry grew approximately 30% per year between 2007 and 2011 to reach 4.9 trillion won, while exports to the Middle East and Southeast Asia skyrocketed between 2009 and 2011. The water quality management sector took up 64.2% of the total environmental business as an increasing number of overseas construction projects were won during the period.

Export amount in environment industry (units: 100 million won, %).