A Study On The Scale And Merger Policy Of Chinese Water Tap Companies

In China, for a long time, all local governments have the right to operate almost allof the water companies. Only one or two water companies within each region, noothers to compete with them. This has led the water supply industry to Low marketconcentration, water enterprises are small and dispersed. It also Resulting inefficient,lack of international competitiveness, difficult to guarantee quality and service,capability of independent innovation is not enough and some other problems in watersupply industry.In recent years, Government pay more attention to large-scale development of thewater supply industry.Issued a series of guidance documents, created an upsurge ofmergers and acquisitions.Favorable to eliminate barriers,and promote to cross-regionalmergers and acquisitions. Local state-owned enterprises, Private enterprises andforeign-funded enterprises actively join the competition of Water management projects.In this background, although the scale of China’s large water enterprises had expanded.The number of firms did not change much. Studies had been found that the efficiencyof enterprises did not get raise. So, it is very important and urgent to strengthening theScientific in corporate merger process and expand the scale of water enterprise, only inthis way, can we effectively improve efficiency and competitiveness of business.Obviously, the relevant theoretical researches are not enough in depth in theparticular field of water. In this paper, the author will starting from the characteristics ofthe water supply industry, expanding research field of economies of scale and corporatemergers, expect to be able to provide a theoretical basis to support for the practicalwork from the perspective of economic theory. Analysis of the water enterprise scaledevelopment constraints than think about the effective ways to develop the scale ofwater companies and put forward suggestions workable. So this research can eitherdeepen the understanding of the relevant theoretical issues, while also helping to solvepractical problems, with a strong practical significance.The main works of this paper are as follows:First, Present situation of the size development and the market competitionsituation of Chinese water companies. Analysis the present situation of the sizedevelopment of Chinese water companies in the current policy context, further discussthe market competition and the trend of merger and expansion. The size and distribution of the water business is not conducive to the rapid development of thewater supply industry. In recent years, China has to promote the water industryMarket-oriented reform, at the same time support the tap water industry merger andreorganizationSecond, Do the empirical research about the relations between the firm scale and.the operational efficiency. Use of data from Chinese industrial enterprises databaseand Urban water supply Yearbook, Empirical research of the relations between firmScale and the operational efficiency, research the scale efficiency of Watercompanies.Empirical results further demonstrate the enterprise-scale promote formanagement efficiency.Third, Analysis the factors impact on China’s water enterprise scale and thelimiting factors of merger expansion of companies. In this paper, I Analysis of thereason why the scale of the tap water enterprises is generally small in our country, whyit is difficult to restructure the size and cross-regional merger.Fourth, Put forward the policy design to promote the merger of tap waterenterprises. Based on the research of the policy environment and current situation onthe size of the water companies, put forward some suggestions such as establish themain body status of state-owned enterprises in the tap water market,form large watercompanies of mixed ownership, strengthen the water management integration, removeobstacles in cross-regional mergers etc.Compared to the existing research results, the paper made a major contributionand innovation may include:First, From the perspective of enterprise, quantitative analysis the economies ofscale. Second, Study of the main causes of small-scale water companies more deeply.Third, Put forward the policy design to promote the merger of tap water enterprises.