Is China a market? A partner? A competitor? Yes. Yes. And yes.

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‘Brand Canada’ is a good start

Canada is focused on growing exports partly by ‘touting its own horn’ more effectively. Canadian cleantech is gaining recognition forpunching above its weight in research and innovation investment into technologies with global applications, and for creating jobs in high-value segments. Marc McArthur, who heads Ottawa-based cleantech advisory Crosstaff Solutions, believes that effectively promoting these trends empowers cleantech providers with a compelling sales message to take abroad. McArthur stresses that “not surprisingly Canadian sustainable technology strengths relate very much to Canadian strengths overall—bioenergy, biomaterials and other bio-sectors, as biomass and our boreal forest link one end of Canada to the other in one continuous narrative of industry, history and expertise, as well as water, and oil & gas—again for reasons that are obvious when you look at Canada’s make-up as a country.”

Canada‘s main limiting factors for cleantech deployment are a relatively small size as a marketplace and inadequate access to growth funding. McArthur advocates building capacity within Canada’s SME’s to step up to the challenge of addressing global markets because “the problems that sustainable technology companies solve are felt the most in other parts of the world that are not blessed with as many resources per capita.”

China’s impressive sustainability goals, host of markets, and growing resolve for cleaner and more efficient growth make the country well worth a look, be it to grow exports, license technology, or find investors or manufacturing and channel partners. If you have something special that impressively solves efficiency and waste problems, Chinese parties will want to learn about you. To get noticed above the crowd—the growing line-up of organizations (both foreign and domestic) that are also knocking on the same doors in China—Canadians will benefit by delivering a more impressive ‘Canadian knowhow’ message and also by understanding and effectively navigating the interplay of markets-partnerships-competitors.

China markets are many, but not for everyone

The world’s largest user of energy and of major commodities from coal to copper and rice to soybeans, the largest producer of cement, steel, rare earth elements, pork, and history’s largest urbanization build-out is guzzling energy and water, and polluting too much. China has heaps of market opportunities right across the cleantech spectrum, including energy, air, resource use, water, industrial efficiencies, more livable cities, waste, and safer food.

Consumption and emissions in China

Consumption and emissions challenges in China. Source: BP Energy Outlook 2035;
China Water Risk, McKinsey Global Institute

China is increasingly addressing these challenges with more detailed rules, impressive spending goals and incentives to apply and develop technologies that allow cities to produce and consume more responsibly. Opportunities for Canadian cleantech are in top-notch technologies and services that directly help these local markets achieve their goals.

As inviting, mysterious and excitingly “huge” as China’s potential is, executives are cautioned to make sure that their smart business sense—the thinking that has led them to their current level of success—does not get left at the border when entering the country.Broad strategic questions need to be supplemented with objective consideration of basic market-entry factors to consider: Is foreign participation restricted in your target sector? Do local market licensing hurdles for your product favor domestic companies? What is your IP risk appetite? Are you flexible in equity structures or payment terms criteria? Do potential local partners have competing interests? Will you be able to cost-effectively deliver after-sales support?

If your answers to these early questions point to pursuing China, great! Gather more information, get your visa, book your flights, and start prioritizing and acting on your options. One strategic option to keep in mind (and one that is not considered often enough by many western cleantech executives) is ‘not’ pursuing China. For certain clients, Kachan has recommended objectively comparing the risks and costs of China with similar opportunities in other emerging markets which are have similar goals for energy security, healthier citizens and more competitive industries. While taxing even more valuable management time and attention up front, an evenhanded analysis pointing to a “no go” on China (at least for now) helps companies allocate resources more effectively on markets or projects judged to have quicker approvals, clearer procedures, or less risk.

Too often, western firms that end-up walking (or running) away from China shell-shocked, frustrated or just plain exhausted, report in hindsight that they did not allot enough focus to early strategic questions. They also frequently did not engage in, or manage well enough, necessary partner relationships to gather and assess accurate information for market entry and expansion decisions.

Next page: China partnerships are essential

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