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A French Water Company's Cautionary Tale in China

Suez Group, a global player in water treatment projects, is shying away from China's impoverished northeast after a joint venture in Siping turned bad

Paris-based Suez Group (SZE) is a global player in the business of water treatment plants—those elaborate systems built to purify water and deliver it to a local utility or directly to customers. Suez has targeted China for a major drive. That makes sense: 312 million Chinese, or a quarter of the population, do not have clean water to drink.

By and large the venture has been successful. But in Siping, an urban area of 3 million in China's impoverished northeast, Suez can't get paid despite years of trying. Its project in Siping, though small (Suez invested $1.6 million), has turned into a cautionary tale not just for investors interested in China's water treatment industry but also for all foreigners doing business in China—even in a surefire business like water.