OPINION> OP-ED CONTRIBUTORS
How to profit from the leading industry of the 21st century
By Charles Lockwood (chinadaily.com.cn)
Updated: 2009-08-10 17:05

Chinais emerging from the worldwide recession more quickly than other nations, including theU.S. and European Union.

WhileChina should take pride in this rebound, its companies should use the current difficulties of their international competitors to gain greater economic advantage for the future. How?

Chinese companies should aim to become leaders in today’s No.1 new business opportunity:“green” products and technologies.

Of course, the potential profits of green products and technologies are hardly a secret. Three years ago, famedSilicon Valley venture capitalist Bill Joy declared: “I think the greatest legal creation of wealth today is in the green area.”

Joy is a famed investor. He is a partner inSilicon Valley’s Kleiner Perkins venture capitalist firm which invested in “start-ups” like Amazon, Genentech, and Google.

Chinese companies already recognize the markets for green products and technologies. Last year, BYDCo started selling its F3DM car, the world’s first electric vehicle for the mass market, leaping ahead ofToyota and Nissan, which are still only talking about their electric cars.

How can Chinese companies gain competitive advantage in the 21stcentury’s hugely profitable green business arena?

First, companies should find under-served opportunities within proven business markets. Today, companies and entrepreneurs are trying to invent new ways to gain greater energy efficiency in cars, jets, and industry. Many companies, however, overlook the huge potential market for greater energy efficiency in our buildings.

InChina, buildings account for 20% of total energy use, but they consume 2.5 times more energy than comparable buildings in similar climates.China’s buildings are inadequately insulated with inefficient or infrequently maintained heating and air conditioning systems.

Other nations’ buildings share these faults. In theU.S., buildings consume 38% of the nation’s energy. In theU.K., homes (all by themselves) guzzle 25% of the nation’s energy.

Millions of buildings around the world should be upgraded for greater energy efficiency and better insulation to reduce their operating costs and CO-2 emissions. To meet this demand, Chinese companies should invent high-performance heating and air conditioning systems, more efficient lighting, and easy-to-install insulation for these building upgrades.

Such products will find an immediate market, because they quickly save money for owners and users. At high-rise office and apartment buildings, those investments often have a payback of only a few years – sometimes one –year. Recently, the pay back numbers have become are even more compelling, because many nations’ economic stimulus programs include energy efficiency incentives for buildings. Such measures create even greater opportunities for Chinese companies to sell the right energy efficiency products at the right price.

Second, Chinese companies should invent and sell the green products and technologies that will be needed in the next five to 10 years. Many regions in the world, includingChina andIndia, have shortages of pure water because of their growing populations and reduced rainfall due to climate change. Some villagers in these countries pay one-quarter of their income on safe-to-drink water. Is it any wonder that pure water is sometimes called the “new oil” due to its growing scarcity and rising price?

Farsighted Chinese companies should invest in moderate-cost water purification systems and desalination facilities that can be sold around the world. They should find new methods to irrigate crops with less water. They should invent more effective water-capture measures such as the infrastructure to direct storm water directly into the underground aquifers, so that it doesn’t flow into storm drains, into rivers, and then out to sea.

Rechsand Science & Technology Group, headquartered inBeijing, has already perfected one rain-saving solution: a hard-surface water-permeable paving that allows rain water to percolate into the aquifer, not run off into storm sewers. The leading ingredient, sand, comes fromInner Mongolia. Company president Qin Shengyi says, “We can turn sand into gold.”

Third, Chinese companies should focus on practical products and technologies and avoid high-cost and unproven new inventions. A fewU.S. entrepreneurs are proposing 100-meter-tall towers that will supposedly suck CO2 out of the air. How much will these enormous machines cost? Where will the CO2 be stored? Will the technology even work?

A better strategy is investment in proven moderate-cost green products and technologies that can be sold throughout the world, not just in more mature economies like theU.S., Europe, andJapan.

Developing nations need vast quantities of cement, glass, and steel for their new buildings and infrastructure. Yet, the manufacture of these products requires large quantities of costly energy, and it generates harmful CO-2 emissions. The production of cement, for example, represents 5 to 8 percent of worldwide CO-2 emissions. Enormous worldwide sales and profits await the companies that invent new ways to manufacture these products with less energy and CO-2 emissions.

Finally, Chinese universities should include practical green business studies in their programs, so thatChina has the management talent to guide and increase its companies’ green business activities and meet future demand. Last fall, the Lingnan College of Management atSunYat-senUniversity inGuangdong started offering an 11-course program on green business at its newly founded Environment, Health, andSafetyAcademy. Other universities must offer similar programs to meet future demand.

History proves that periods of economic turmoil, like today, offer opportunities for well-managed and forward-looking companies to launch new businesses and secure long-term profits. Tomorrow’s Google and Microsoft will rise from new green products and technologies, and nations and companies that support green industry will gain the untold benefits and profits.

 

The author is a corporate sustainability strategist and green real estate authority.