China has emerged as both the world’s largest producer and consumer of clean technologies, while the country’s investment in clean technology and renewable energy has exceeded the combined total invested by Europe and the US. With a commitment to overcome pollution problems and peak carbon emissions, China will continue to invest in the next five years (RMB 17 trillion ~estimated €2.3trillion) generating market opportunities across a wide range of clean-tech sectors.
This demand has been recently validated in the EU Gateway to China CleanTech Mission, which took place on March 20th to 24th in Beijing in 2017. Over 260 Chinese companies registered, and more than 800 one on one business meetings arranged during the mission week. The programme covers wider topics such as healthcare is funded by the European Commission with the goal to help European companies enter China. The PwC Luxemburg and China firms jointly operate it.
It is a right timing for foreign companies with advanced solutions in cleantech to come to China. First of all, green growth comes across strongly as Chinese Government’s top priority. The 13th Five-Year-Plan set goals and plans for emissions reductions, ecological conservation including targets to reduce carbon and energy, and regulations to tackle air, water and soil problems. Secondly, the developed economies are growing relatively slow for example in waste management and air pollution as urban and industry development stabilized, whereas Chinese market demand is growing and has technology gap in many subsectors such as water, air monitor and control, new energy vehicle and waste management.
Soil treatment is another growth area in China with technology gap. Since 2010, serious pollution accidents caused by heavy metal pollution, including arsenic, cadmium and lead, led to great loss of people’s health. Defining pollutants is the key to soil restoration. Currently, the monitoring system still lags behind, especially equipment for determination of new type pollutants such as phthalates and phytohormne. However, there were very few European companies specialized in this sector. Europe has started cleaning up the land 30 years ago. Unlike China, the focus has moved to pollution prevention through law and regulations rather than remediation.
Barriers are specific industrial standards and regulations, huge financial needs for setup and market access challenges.
To materialize a successful business cooperation in China, foreign companies are advised to examine the market and regulations prior to the commitment to the market. Finding business partners for distribution, licensing, trading, M&A etc., will facilitate the process of market entry. Registering trade mark in China as early as possible will protect your intellectual property and make sure a fair value assessment for technology transfer.
For Chinese clean-tech companies, domestic market opportunities are enormous as well. Identifying and applying suitable advanced technologies and equipment is key. Building joint business or partnership with foreign companies can help develop solutions and offerings quickly and scale up the business. This process will help you understand conditions of overseas markets and foster strategies when “going abroad.
China Financial Services Consulting Leader
Tel: + (10) 6533 2755
Tel: + 2289 1820
Tel: + (10) 6533 7987