China Thinks Green

The adverse environmental impact of China’s rapid industrialization is there for all to see. Water resources are dwindling, air quality is a major issue in most parts of the country and the future availability of adequate energy resources is a very real concern.

China has set a goal of reducing by 20 percent the amount of energy required to produce one unit of gross domestic product by 2010. In response, people and organizations around the country are rising to the challenge, and it is refreshing to see the evidence of “green” thinking that is now cropping up in business and the daily lives of Chinese citizens. This is a big change. In 1992 when I first stepped foot into China, no one gave the environment a second thought.

It all starts at the top, and my experience suggests that all levels of the Chinese government are taking the environmental issue seriously. As I travel around the country and speak with local officials, it’s clear that environmental improvement is now part of the “scorecard” by which their performance is measured. In the past, it was all about the amount of investment they attracted; the amount of exports they generated; and whether they succeeded in maintaining stability.

The central government is also using tax policies and other incentives to drive energy efficiency. The fairly hefty one yuan per liter consumption tax it placed on gasoline purchases as of the first of the year demonstrates a desire to limit the country’s dependence on oil. Similarly, a reduction of taxes paid on purchases of small cars indicates its intention to drive sales towards higher mileage vehicles. And the fact that China will allocate 10 billion yuan ($1.46 billion) to boost technology innovation in the domestic automobile industry shows a commitment to lead the way with electric cars.

Other examples of green thinking abound in state-owned and private companies alike.

The China Institute of Building Standard Design & Research, formerly a part of the country’s Construction Ministry, has established a “Department of Energy Efficiency and Renewable Energy” and is working with architects to design green buildings.

Zhang Hue, a Chinese tycoon, has built Broad Air Conditioning into an industrial powerhouse in China by developing and promoting a form of air conditioning that uses less energy than conventional means. Broad did not invent the technology, but took the risk of investing heavily in an approach that companies in Japan, Korea, Europe and North America had looked at and neglected.

Tang Jinquan, a Chinese engineer, spent twenty years to make the fast-growing cement industry less environmentally destructive. Tang’s solution: capture the enormous amount of heat normally wasted in cement making and use it to run turbines that generate electricity, cutting power needed to produce cement by 30 percent.

To understand how green thinking is taking hold in China, consider the following stories that appeared recently in China Daily.

Burning willows to stop desertification

This is a story about a Shanxi entrepreneur who is trying to turn a profit and help to make Inner Mongolia green at the same time. Li Jinglu, a former real estate developer, is paying 5,000 local herders to plant willow trees on their often-barren grazing grounds to feed a willow-fueled power plant that he has built as an alternative to coal-fired electrical plants. The trees will help control desertification and conserve water supplies, and burning them instead of coal saves 260,000 tons of CO2 emissions each year.

Film star plants trees to decrease carbon footprints

Film star Zhou Xun is encouraging individuals to save the money from a cup of coffee, and spend it on planting trees to offset their carbon footprints. Leading by example, Zhou has purchased 238 trees to offset the 19.5 tons of carbon dioxide (CO2) emissions generated by her air travel in 2008. As she explained, “It is not that expensive. Only about 20 to 30 yuan per tree. That’s about a cup of coffee or a bowl of noodles.”

In the run up to the Beijing Olympic Games, Zhou was actively involved in encouraging people to use public transportation to improve Beijing’s air quality. Now, she is bringing the idea of green commuting to Shanghai.

The concept of green commuting was introduced to China more than three years ago by the Environmental Defense Fund (EDF), a US-based not-for-profit organization, and the China Association for NGO Cooperation (CANGO). Zhang Quan, director of Shanghai’s environmental protection bureau, said that promoting green commuting is in line with Shanghai’s goal to construct an ecologically sound city.

Retailers adopt ‘green’ plans

Foreign companies, anxious to be good corporate citizens in China, are also thinking green. Studies show that energy consumption in large department stores and supermarkets in China is two to three times more than in developed countries. Lights, non-stop refrigeration facilities and large air conditioners make for a nice shopping environment, but they are also very energy-consuming. As a result, “eco-friendly,” “sustainable” and “low carbon dioxide” are not just buzz words for companies like Carrefour and Wal-Mart. Energy savings and environmental protection will be a focus and an important part of their plans for the future.

Among other steps being taken, stores will be renovated to make them more energy efficient. Office areas will be installed with inductive switches, lights and air conditioners that will automatically shut down when the room is empty. Fluorescent lights at fresh food areas will be removed to eliminate the heat they generate, and all air conditioners in the store will be installed with frequency converters, so that the cooling process and power usage automatically adjusts to room temperature.

Without a doubt, China is facing an enormous environmental challenge in the years ahead. The encouraging sign is that the government, companies and individuals are all now at least thinking green.

3 Responses to “China Thinks Green”

  1. Hi Jack,

    Extremely apt post with 16 of the world’s 20 most chemically gummed-up cities located in the PRC (a 10% surge compared to when Ted C. Fishman summarized these infamous statistics way back in 2005!)

    However, my colleagues and I harbor deep concerns about introducing green techs and much needed enviro-innovations to China for the same reasons SME players to the country have traditionally feared penetrating the Chinese market, even on the smallest level possible — local, municipal, and perhaps even smaller…

    For example, I was recently down in Switzerland on a business trip and landed myself in a spirited discussion with a Bern-based associate who began describing to me several rather clever environmental services presently in use by the inhabitants his suburban village several kilometers outside of the capital (I fear mentioning them here, see below).

    I’ve been seriously contemplating examining a handful of these in greater depth, but after reading of your JV woes in MTD — not to mention all of the trouble Tim Clissold faced in his semi-autobiographical “MR. CHINA” — I’m always a “rabbit in the headlights” about the ultimate best approaches in cases like these.

    With many of the needed PRC patents for these green technologies likely already registered in China’s “first to file” patent system, how to ensure not blowing through an SME-sized development budget (read: limited) without chucking away most of it on due diligence and legal fees? ::: I’ve already conducted some preliminary legal inquiries from here in EU, and the sums quoted for investigative work are positively astronomical! :::

    I’m sure there’s a convenient answer to all of this and it likely includes something along the lines of the thrill of the Chinese “hunt” and the taste of the chase and the smell of napalm in the morning kind of thing, as it were — but I thought I’d float it for you and your readers, curious for your and their feedback(s).

    Gratefully as always from Prague,
    ADM

  2. ADM,

    You should not be sacred off by the horror stories. There are plenty of them out there, but you can’t stop progress. Don’t be too influenced by the “glass is half empty” crowd. If you have green technology that works, bring it to JFP Holdings and we’ll help you figure out China.

  3. Hi again Jack,

    Grateful for the reply…

    Here’s an apt entry, however, that I’ve been poring over recently at CHINA LAW BLOG: http://www.chinalawblog.com/2009/05/when_not_to_and_when_to_file_y.html

    I believe your readers might enjoy Dan’s viewpoint on this. Summarized well, even if it’s not necessarily the most novel thing to come out of the local investment/JV/WFOE scene.

    In any event, for all the newbies this might be just what the doctor ordered, as it were.