In China, there is no lack of analysis that will predict where it is headed, and the bumps that it will find in the road forward. Traditionally, these trends were tied to exports (containers shipped) and energy intensity, but as China “greens” there are some who are looking to find trends… and predict the future for China’s green trajectory.
The most recent, and well thought through, is CLownfish’s 15 trends for businesses in China 2009/2010 that they feel are:
are changing the business landscape. We’re keeping our eyes on these…
They are all in many ways trends that have long roots, but some of the more interesting ones are those that are new, and I have listed them all below (my comments in italics)
1. From economic collapse to a green economic recovery
Interest in all things ‘green’ continues to grow as the economy sinks. 34% of Americans are now more likely to buy environmentally responsible products and 44% of Americans indicate their environmental shopping habits have not changed as a result of the economy (Cone Consumer Survey 2009).
Sustainability is coming into its own as a force to drive competitiveness; this development is substantiated by increased investment and the creation of green jobs. Siemens financial report (1st quarter 2009) showed drastic declines, yet it has still announced a plan to invest 11.3 billion RMB in green technologies in China by 2010. It has an ambition to generate 40% of its business activities through sustainable development.
Businesses are increasingly realising the opportunities available in sustainability and are actively capitalizing on its rewards.
I would agree that the research is showing a marked progress in awareness, but many here on the factory floor have yet to see this translate. Firms are still in early days, looking at a single product (of a larger portfolio) or are looking for was to become leaner through manageable adjustments. No doubt, the trend is toward the poisitve, but what I would liek to see is more active thought into the full life cycle of a product, not just a reduction in one area
2. From carbon offset doubt to market development
More companies will continue to offset carbon emissions. Point Carbon’s Market Outlook expects the global carbon offset market to grow 20% in terms of volume in 2009. They forecast that 5.9 gigatons (Gt) of carbon dioxide equivalent (CO2e) will trade this year, compared to 4.9 Gt in 2008. China is recognised as the biggest potential seller, with an ability to sell more than half of the greenhouse gases in the global market, reaching a turnover of US$10 billion (gmw.cn 2009).
Despite this prediction, Clownfish hope that there will be a stronger trend for direct reductions rather than offsetting, as the old saying goes, ‘prevention is better than cure.’
I am not a fan of offsets or trading either.. and I am not sure that prevention is better than a cure as it allows firms to use these credits to difuse/ dispell the market
3. From high-energy use to energy efficient light bulbs
Many members of the Chinese public are now familiar with energy saving light bulbs; from T2 and T12 to LEDs. It is expected that the demand for energy saving lighting systems will grow by 15% in 2009 (gtob.ningbo.gov.cn 2009). Despite the higher cost of energy-efficient lights (100 RMB for an LED), their long life and the long-term financial reward will spur people’s interest.
Businesses are increasingly realising the ability to minimise costs through these environmentally conscious products. Clownfish expects more companies to be adopting energy saving techniques this year, particularly as companies tighten their purse strings in the recession.
Big market in these is at the city level. Suzhou and Tianjin both have installed LEDs at the public works level, and Shanghai has done a lot on subsidizing the costs for consumers.
4. From landfill waste to lack of space
Landfill sites in China, such as those in Beijing, are likely to be full in 4-5 years time (Nanfangdaily.com 2009). As a result, there has been an increase in waste incineration, leading to many serious issues. As many as 135 environmental and heath incidents were dealt with by the Ministry of Environmental Protection last year, with 46 cases threatening people’s access to clean water (China News 2009).
Landfill and incineration sites are also getting closer and closer to people’s living spaces – drastic action needs to be taken to reduce the waste being produced. Hopefully, companies will play their part and implement waste reduction strategies. Or even better, consider the end-use of products at the design stage.
Big problem – see my post last week
5. From energy excess to energy efficiency
Energy efficiency is set to become even bigger business this year; The July 2008 edition of The McKinsey Quarterly estimated that US$170 billion a year will be invested in energy efficiency between now and 2020, which could halve forecasted growth in global energy demand. That effort could also deliver up to half of the carbon dioxide emissions abatement needed to cap atmospheric greenhouse gases at 450ppm.
More and more Chinese companies are realising the importance of addressing energy efficiency – just look at Lenovo or China Mobile.
Again, keeping this in context. YEs, firms are learning to turn off lights and install energy saving equipment within their commerical spaces, but how about through their products? Has Lenovo developed a laptop that requires 20% less energy? Have they created closed loop manufacturing process that reduce their systemic/ latent energy?
6. From energy efficiency standards to legal requirements
New energy laws are likely to be just around the corner. Since 2007, the Chinese government has suspended businesses with poor energy efficiency records. At the moment, these companies are restricted to the electrical and raw materials industry, but many districts have been given carbon emission reduction goals for 2010 through this strategy. To those districts not meeting the target, punishments such as cuts on investment and budget re-allocation will be carried out, and funding rewards will be given to those with good performance. So get your business up to speed, meet those emissions targets and reap the rewards.
New energy laws are likely to be just around the corner. Since 2007, the Chinese government has suspended businesses with poor energy efficiency records. At the moment, these companies are restricted to the electrical and raw materials industry, but many districts have been given carbon emission reduction goals for 2010 through this strategy. To those districts not meeting the target, punishments such as cuts on investment and budget re-allocation will be carried out, and funding rewards will be given to those with good performance. So get your business up to speed, meet those emissions targets and reap the rewards.
laws are only as good as their enforcement. OF the 15, this is the one that needs the most work
7. From fossil fuels to renewables
Currently only 5% of China’s energy is generated from renewables but this figure is expected to grow to 25% in 20 years (gxi.gov.cn 2009). According to Morgan Stanley’s Green Market Penetration forecast (2007), the renewables trend is going to continue developing; revenue from alternative energies could top US$500 billion in 2020 and world-wide sales from alternative energy sources could reach US$1 trillion by 2030. So start thinking about making the switch to renewable energy in your company.
Going forward this is an area I am hopeful we will see changes through the introduction of feed tariffs, and the installation of equipment. Right now, putting solar panels on a factory, or buying power from a “green” source is almost impossible…
8. From printed papers to digital development
Digital marketing has provided new tools for brands to reach their audiences; the development of online videos, social networks, podcasts and games, highlights that the digital marketing space will continue to expand. A consumer’s online experience can significantly affect future behaviour; 81% of consumers are more likely to return to the website if they had a good experience (Cosmetic Design 2008).
Brands will increasingly use online spaces to communicate with consumers in 2009. Digital means that today the brands that will win, will be those whose consumers and other stakeholders tell the best stories. It’s no longer a one-way narrative, it’s about a two-way conversation.
9. From greenwashing to green identification
Chinese consumers may soon become aware of the concept of greenwash – the deceptive use of green marketing. In Taiwan, 23% of the public already believe that claims about sustainability are just a new marketing technique (cyberone.tw 2008).
Some Chinese furniture companies have made ‘green’ claims and plastered unverified green labels all over their packaging. Yet officials have revealed that many items are actually a health hazard – far from the environmentally and socially responsible image that their advertisements would have you believe.
One way or another, companies that turn themselves ‘green’ overnight or simply use ‘green’ iconography will soon have to face the consequences. Consumers expect companies’ sustainability to be real and transparent, not a manipulative tool. At Clownfish, we believe that it is about creating compelling communications, underpinned by fact, with a clear call to action for consumers.
This is an area that I agree is becoming harder and harder to fudge. but the problem now is that many are tuning out of green because everyone is “green”… and while I am concerned about “Green” becoming the new “CSR”, I think it is important to recognize that firms who are able to move past the PR terms and press conferences into programming and products will find they don’t need the terms, awards, or definitions.
10. From offline to online
Brands can no longer hide behind their TV ads or billboard posters because of the power of online search. Consumers can find information about anything, anytime, and they are actively seeking information about the brands with which they interact. In 2009, it is going to be increasingly important for brand image to match company behaviour. Blogs such as Tianya and Sohu, where people have open discussions about anything, anytime, often have more influence on consumers buying habits than a company’s advertising.
The recent claims made about harmful substances in Jonhson’s baby products have escalated, with some people even claiming adverse effects after using the products. Although the Chinese government has cleared Johnson’s name after careful investigations in March, the active bloggers of the world have spread the incident across the internet, damaging the brand’s reputation considerably.
So brands must use clear, genuine, and authentic messages that promote transparency. As this research hows there is a positive correlation between transparency and trust – It’s about being tangible.
I agree.. .see my post from last week
11. From external claims to internal change
The health and safety standards of products have always been a concern for the Chinese public and this concern is not going away anytime soon. In reaction to this, many companies have adopted marketing strategies to emphasise that their products are ‘natural’.
Clownfish predicts that this emphasis on nature will soon become intertwined with greater environmental and social impacts, that go beyond health and safety, such as carbon emissions, waste production or water usage. As the awareness around these issues grows, business models will start to change – not only for the good of the world, but also because they offer real business opportunities. Clownfish suggests that those companies that get ahead of the game and address their environmental and social impacts now will be the successful companies of the future.
The most successful firms I know grow scale and word of mouth internally, yet it is an area that most firms fail to address properly
12. From company claims to external verification
Consumers no longer passively accept news and product information thrown at them by marketers, ads, or their peers. 64% of consumers want third-party verification of green claims according to the GfK-Roper’s 2007 report. Some partnerships are already developing between NGO’s and large organisations, for example Lenovo and five Chinese NGOs, McDonald’s and Greenpeace, and Coca-Cola and WWF. As this trend continues in 2009, there needs to be a balance between credibility and values for both the company and the NGO. This will help to retain the trust of consumers
Will be a hit and miss poposition going forward as certain issues resonant, and others do not. Looking at the recent lead contamination, or milk adulteration, yes the media was active…. but no substantive program or 3rd party organization came about to systematically address the issues
13. From one renewable success to another
China has unleashed potential in terms of renewable energy; hydropower continues to grow in power according to the Clean Tech Group LLC (2009), and The China Three Gorges Project Corp (CTGPC) has signed agreements with three local governments in East China’s Zhejiang Province to develop wind farms, and other provinces (GuangDong and Hainan) are also preparing proposals to be the first sustainable province in China.
China plans to be the leading nation for wind power in 5 years time, develop biofuels from microalgae and build government support around electric and hybrid cars. In 2009, it will be interesting to see which of these many developments get off to a flying start.
A bit of context… that yes, the investments are being made, but the connections to the grid are still spotty. Reports of poor efficiencies, broken equipment, and inability to store on the grid are reducing the green sheen on the projects.. and this will need to change before we can say that China has successfully pulled itself to 20% of renewable energy by the designated timeline.
14. From bins to bucks
More and more consumers are consciously avoiding simply throwing things in bins – Instead, people are now opting to reuse, resell or donate old goods
With tightening waste restrictions and legislations, we hope we will begin to see end-use considered at the design stage of products. In 2011, new legislation will demand manufacturers, retailers and other service-based companies to recycle electronic products. Many manufacturers will soon be reusing parts of returned products, essentially accomplishing two things: repurposing the materials and holistically extending the life of the product. This is an environmentalists’ dream that will hopefully spread across the business world in near future.
Are they calling Chinese people cheap ? Seriously, this is an area where China largely does well, and culturally has long roots, but more importantly there are economic roots as well (recycling of metals and cardboard).
15. From NGO criticisms to active involvement
GOs are now driving China’s environmental agenda forwards; WWF is developing a Low Carbon Manufacturing Programme to encourage the reduction of corporate greenhouse gas emissions. While The Carbon Trust has recently signed an alliance with the China Energy Conservation Investment Corporation (CECIC) to introduce embedded carbon footprint labels to products manufactured in China. These initiatives are already going beyond the actions of many Western countries, and may allow China to leapfrog other nations in the environmental agenda. So get involved with credible NGOs and engage the world in the positive contribution your company is making.
Still touch and go. Improvements for sure, but I would not pop the cork just yet. We are still missing NGO regulations and tax codes, and at the local level, there are plenty of cases to show where progress still needs to be made.
