Importing Environmental Technologies to China

An Expert's View about Business Environment in China

Posted on: 29 Jun 2010

The article discusses the enormous environmental problems China faces and how US environmental companies have an excellent opportunity to export their advanced technologies to China.

Importing Environmental Technologies to China US environmental companies are helping SOEs clean up their operations By Anthony Goh and tory, with a gross annual income of more In late 2007, US-Pacific Rim Interna- Matthew Sullivan than US $1 billion and 12,000 employees, tional, Inc.(USPRI), a US consulting com- was emitting high levels of heavy met- pany that assists US companies market y mid-2007, the Shuikoushan als into the local water supply. This pol- and sell their products and technologies Non-Ferrous Metal factory luted water was flowing directly into the in China, began to promote the electro- in Hunan Province faced a Xiang River and affecting the drinking coagulation (EC) water treatment system th crisis. As part of its 11 Five- supply for millions of people within the of one of its client companies, Kaselco, to B Year Plan (2005-2010), the nearby city of Changsha. Despite several the factory. USPRI highlighted the EC sys- Chinese government was closing down attempts to remove the heavy metals by tem?s unique electrochemical process to high-polluting factories?and the Shui- using conventional chemical treatment remove heavy metals from water. Faced koushan factory was among those at methods, the factory continued to emit with the risk of closure, the Shuikoushan risk. The 110 year-old state-owned fac- dangerous levels of pollution. factory decided to try the product. 1 0 | c h i n a b r i e f | m a r c h 2 0 1 0 Zhang hui During a pilot test of the EC system plan, approximately 37 percent is dedicat- products. Further, companies should con- in late 2007, the factory found it could ed to greentech-related projects. China?s sider becoming original equipment man- th almost completely eliminate the heavy upcoming 12 Five-Year Plan (2011-2016) ufacturers in China for all or part of their th metals that the factory was emitting. After is also expected to build on the 11 Five- products in order to drive down costs. three months of further tests and negotia- Year Plan?s significant focus on the envi- As with any company that wishes to tions, the Shuikoushan factory decided to ronment. export its technology to China, US green- purchase and install the EC system. US-Chinese government cooperation tech companies should be particularly The EC system began operating in May on environmental issues has also been concerned about IPR. Even as IPR enforce- 2008, and the results were dramatic. The growing. During President Obama?s vis- ment has improved in recent years, and factory was able to reduce the amount of it in November 2009, the US and China even if appropriate safeguards are taken, heavy metals it discharged by almost 99 committed to spending at least US $150 it is almost certain that companies will percent, meet the highest national water million of public and private funding on have some of their technology copied in pollution emission standard and treat 4,100 a US-China Clean Energy Research Cen- China. Recognizing this reality, and treat- tons of water a day. Deputy Director of the ter, as well as agreeing to a host of other ing it as part of a business strategy rather Hunan Provincial Environmental Protec- initiatives related to energy, coal and than a legal issue, is a necessity for any tion Bureau Xie Lishuai inspected the EC shale gas. US environmental company looking to system and praised the project as a model The complexity of many environ- export to China. To stay ahead of IPR vio- for wastewater treatment. In the space of mental problems will also require col- lations, companies must ensure that their several months, the Shuikoushan factory laboration between US environmental products remain leaders in their field. had gone from being a dangerous polluter companies. Multiple companies may be The lack of transparency in the bid- to a socially responsible enterprise. needed to complete just one environmen- ding process for environmental projects Even as China faces enormous envi- tal project. For example, a lake clean-up can also prove a challenge for US compa- ronmental challenges, success stories like project could require different compa- nies. In order to address this issue, com- Shuikoushan?s EC system reveal an excel- nies to provide industrial pre-treatment, panies should hire Chinese staff or en- lent opportunity for US environmental pipes for dredging and adequate infra- gage local sales agents to represent them companies to export their advanced tech- structure. Such collaboration is especially in the bidding process. Local knowledge nologies to China. American companies important for small and medium-sized of Chinese culture and business practices can play a role in helping China address enterprises, when they approach Chi- will enable Chinese staff to illuminate the its environmental problems. nese municipalities and companies they complex and opaque bidding process for A review of some of China?s envi- can offer comprehensive environmental American companies. ronmental statistics demonstrates that as solutions. Public-private initiatives such Significant public and private sector China continues its rapid growth, it also as the American Water Working Group, investments in China?s green industry faces significant environmental challeng- sponsored by the Foreign Commercial means US environmental companies will es. Currently, 70 percent of the country?s Service, and the US-China Energy Coop- face growing competition from local Chi- rivers, lakes and reservoirs are not safe for eration Program, based out of AmCham- nese companies. Nonetheless, American human use, 70 percent of its energy comes China, are promising examples of such companies can continue to offer unique from high-polluting coal and 5,800 square collaboration. technologies in China. In order to offer the miles of its grasslands are lost to desertifi- Even while there are bright pros- greatest value, US environmental compa- cation every year. pects for US environmental companies in nies exporting to China should conduct As these environmental problems China, the challenges of cost, intellectual thorough market research, determining grow, the market for environmental prod- property rights (IPR), lack of transparency where the country lacks advanced and in- ucts and technologies is expected to ex- in project bidding and domestic competi- tegrated technology to meet their greatest pand as well. The China Greentech Report tion must be recognized by any greentech environmental challenges. 2009 estimates that by 2013 the market for business that wants to export to the Chi- Exporting environmental technologies environmental technologies will be be- nese market. to China holds enormous potential for tween US $500 billion and US $1 trillion. The advanced nature of some US tech- small and large US companies. While sell- According to the US Foreign Commercial nologies means their prices can be rela- ing greentech products also presents some Service, the greatest opportunities for US tively high in China, but still find a place challenges, these issues can be addressed environmental companies lie in munici- in the market. While the higher costs of by taking a realistic approach to the Chi- pal and industry wastewater treatment certain US technologies will price them nese business environment. By increas- technology, hazardous waste and medi- out of some markets here, it should not ing US environmental exports to China, cal waste treatment technology, waste-to- lead US environmental companies to US companies will not only expand their energy technologies, de-SOx and de-NOx give up on the country completely. Many market, but will also help raise China?s technologies, as well as air and water Chinese companies respect, and are will- living standards. monitoring equipment. ing to pay a higher price for, high-quality Investments by the Chinese and US US technologies. In addition, while costs Anthony Goh is president and Mat- governments on a variety of environ- may be too high in some regions of Chi- thew Sullivan serves as the firm?s director mental initiatives in China also offer op- na, in more developed parts of the coun- of business development and communi- portunities for US greentech companies. try, Chinese companies and state-owned cations of US-Pacific Rim International, Of China?s US $586 billion 2008 stimulus enterprises will pay for exceptional US Inc. m a r c h | 2 0 1 0 | c h i n a b r i e f 1 1
Posted: 29 June 2010

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