In their report Prepared to ride the Green Dragon?, authors argue that firms with cleaner greener solutions are missing China’s market potential by sitting on the sideline.
According to the report:
companies with environment friendly solutions are looking at market possibilities ranging from between USD$1.5 (€1.1) and USD$1.9 (€1.4) trillion to be invested in China in the period up to 2020.
and while other countries (including my own) cut back on their investments:
investments in China are expected to increase this quarter to US$3.5 billion and further strengthening China’s wind sector.
So, what keeps firms from pulling the trigger and moving into China?
Simply put, what we are seeing is a natural extension of the last 15 years of firms fearful of entering China.
For investors, it is really a lack of knowledge and an abundance of war stories that create a psychological barrier to the deals in China. those that come to China join the standard tour group that includes a trip to the Bund for cocktails, a trip to Wuxi to see Suntech, perhaps join one of a half dozen cleantech conferences, and then off to the next destination. They fail to make it to Xinjiang to see the wind farms in action, to Qingdao to learn about the algae blooms that impacted the coastline this summer, to the fields of Jiangsu to learn about China’s agricultural practices, onto the sites of any one of a thousand residential construction sites to learn about the market for building materials, or to the industrial centers of Guangdong to learn about the potential market for industrial equipments.
For those looking to sell into China, or manufacture in China, the fear/ knowledge base is different. The fear is primarily related to the lose of IP, and a lack of knowledge of how to take the first steps. this barriers are perhaps easier to overcome with good advisers, but the hurdles are still real, and the first step to overcoming those hurdles is to gain access to information on China (may I suggest All Roads Lead to China), the market for cleantech, and the relevant regulations.
Either way, as the report suggest, the barriers for investment/ manufacturing in China can be overcome and should be overcome. Firms should make sure to structure themselves properly, and to invest full in their platform when entering through a full tech and service team in country as well.
Download the full report here
Greener Products cleantech, investment
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