China questions Canadian cleantech companies should consider

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What does China want from Cleantech? 
In a word, China wants “everything” – enough energy and resources, cleaner air and water and food, more livable cities and higher-value industry.China wants cleantech that capably addresses problems targeted in national policy goals. Local governments are increasingly tasked with meeting environmental targets, making their cities more sustainable and building cleaner industries. China policy not only strives to rollout such solutions at home, but also to acquire or co-develop the know-how to own and build up leadership in these technologies to take abroad and compete globally.China wants demonstrated successful technologies and solutions that are available now (or soon). More often than not, you must have something tangible and proven (either through pilot projects in China, or by bringing the Chinese to working installations abroad). China is a recent arrival to globally competitive industries. The country does not have 50 years of knowhow through R&D and continuous strings of tech development iterations, nor do they have the inclination to develop these capabilities themselves. It is cheaper and faster to buy and license western technologies, and if possible continue developing them.China wants cost-effective cleantech. China’s world-class supply-chain and manufacturing infrastructure developed largely based on low-costs (e.g. abundant labor, low-margin/high-volume economies of scale, weeding out non-essential functions and logistic costs) and this is a competitive advantage western firms can trip over by fighting it, or benefit from by embracing it. China’s current industrial infrastructure largely remains far more wasteful, energy guzzling, and polluting than in advanced economies like Canada. Therefore, China seldom pursues the latest, highest priced solution. For example, a 3rd-generation process say—that delivers 50% functionality compared to the latest 5th-generation process, but at just 1/2 the price—can still provide acceptable performance benefits at an acceptable margin. As China rolls out that solution at home, and later abroad, lower-cost will be a main competitive differentiator.

Simon Littlewood, CEO of China-based New Climate Group, points out that when a western solution clearly meets the above criteria, “the local project owners will be proactive in a number of ways, such as helping getting relevant approvals, working with both government and private funds to quickly create a comprehensive funding package.” Littlewood, who has been investing in and developing sustainable solutions for markets in Asia and China for nearly 20 years, relates that the most successful projects start with his Chinese partners clearly identifying specific, pressing market need. With that information, his teams then find and work directly with the investors, governments and cleantech executives that are laser focused on the specific solutions and applications the Chinese projects require.

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