1. 1 China – The Challenge of Growth and Green Vince Cunningham 11 November 2010 www.cbbc.org

2. 2 Agenda Introduction to CBBC Chinas development – growth vs green China - the situation now Realising the opportunity – UK companies Case study – selling green to China Conclusions

3. 3 Who are CBBC? Over 50 year history 130 staff, 11 locations in China, 7 offices in UK Deliver UK government services Independent Organisation providing support and services to members Over 800 corporate members

4. 4 Who are CBBC?

5. 5 Advice, research Company formation, recruitment Company registration check Launchpad incubator Information network office access & hot desking All sectors, all businesses/organisations

6. 6 Chinas Development

7. 7 Milestones 1978 – opening up policy 1989 – Tiananmen Square Mid 1990s – opening up and FDI accelerates 2001 – China joins WTO 2008 – Recession – fiscal stimulus policy

8. 8 China Today

9. 9 Urbanisation Development / rural balance Energy Water Atmosphere Solid Waste Sustainability China Today

10. 10

11. 11 Its easier for the UK:

12. 12 Its easier for the UK: Smaller Offshored a lot of manufacturing

13. 13 Its easier for the UK: Smaller Offshored a lot of manufacturing But: Combination of legislation & industry response One step at a time There is a cost – but also a cost if we dont

14. 14 Energy / low carbon Water Atmosphere Solid waste management This all means………… China - The Situation Now

15. 15 Energy / Low Carbon Current Situation: China passes US in CO 2 production Worlds largest emitter of SO 2 Issue has been keeping up with growth – brownouts and blackouts Priority has been growth Increasing affluence drives consumption Heavy dependence on coal (75%)

16. 16 Energy / Low Carbon But: China = 20% of US per capita energy consumption

17. 17 Energy – 11 th 5 year Plan Reduce CO 2 output by 20% Invest in power station optimisation Improve energy efficiency of heavy industry Improved building and equipment design Increased investment and development of renewables

18. 18 Energy – 11 th 5 year Plan Result – patchy at best

19. 19 Energy – 2020 Outlook Objective – cut greenhouse gas by 40-45% per unit of GDP compared to 2005

20. 20 Energy – 2020 Outlook 2005 2020 Coal 75) Oil 13) 75-80 Natural Gas 3) Renewable 8 15-20 (solar, hydro, wind) Nuclear 5 100%

21. 21 Coal Will continue to be the major source of energy Gasification & Carbon sequestration – various initiatives – UK/China £10M JV Power station optimisation – several projects – some UK involvement Most obvious area for substantial gains

22. 22 Nuclear Nuclear power stations to increase from 11 – 35 by 2020. Output up by a factor of 6 Chinese / French / Russian technology

23. 23 Wind 2 GW to 135 GW (2005- 2020) Onshore advanced, offshore lagging Several UK companies involved

24. 24 Hydro-electric 117 GW to 300 GW (2005 to 2020) Principally Western China Largest project 3 Gorges Dam

25. 25 Energy - Other Active solar / photovoltaic programmes Biofuels – limited Programmes for geothermal, biomass, hybrid / electric transport etc etc

26. 26 Electric transport New Maglev trains in Chengdu will approach 500 km/hr – with less energy consumption than a family car 10,000 electric buses lead to 500 new jobs in UK North East

27. 27 Energy - Other Energy efficiency an issue – eg 2004 building codes require 50% increase in energy efficiency - but 95% of new build does not comply. 40M hectares of new forest by 2020 = 3 X

28. 28 Water 90% of fresh water polluted 75% of Chinese cites experience water shortages 32% of hazardous waste water treated

29. 29 Water Major projects – largest - N-S water diversion – 45B M 3 pa – cost $62B US Waste water treatment plants for 300 cities – cost $20B US

30. 30 Atmospheric Pollution Under 1% of city dwellers breathe air that meets EU standards Linked to economic output and affluence (2010 worse than 2009) Increasing rigour in enforcing environmental standards on new investment Periodic restrictions

31. 31 Solid Waste Management Situation very variable – cities can be efficient – rural very little control Priority is recycling Hazardous waste can be an issue

32. 32 This all means…. China has huge issues in all environmental areas Environment has not been a priority – until recently Policy makers recognise this – China at large catching up Leads to a need for foreign technology in almost all environmental fields

33. 33 This all means…. Growing concept of sustainability eg UK/China initiative in Wuhan, Chongqing and Changsha Opportunities for foreign companies with expertise in all sectors

34. 34 Realising the Opportunity – Foreign companies Needs market research and clarity of USP (Unique Sales Proposition) May need development of contacts at multiple levels Contract likely to be technology transfer Recognise the probable need to localise

35. 35 Maglev Trains - Mini case study (technology transfer in action) Technology from Germany First commercial application in Shanghai Much of equipment imported Second commercial application in Chengdu 10% speed increase, 30% reduction in train cost through local manufacture

36. 36 Realising the Opportunity – Foreign companies Contracts can be complex Process – relative positions change with time IP – adaptation / erosion Renegotiation

37. 37 Realising the Opportunity – Foreign companies Shy bairns get nowt!

38. 38 Realising the Opportunity – Foreign companies Shy bairns get nowt! (in large families children who were shy got nothing to eat!)

39. 39 Selling Green to China Case Study – Compak Systems

40. 40 Selling Green to China Case Study – Compak Systems Produces panel boards Uses waste agricultural fibre Non-carcinogenic resin Local factory scale - 12,000 te/a

41. 41 Selling Green to China Case Study – Compak Systems

42. 42 Selling Green to China Case Study – Compak Systems Time to first sale – 11 years from first contact (Note!!! This is an extreme!!!) Sale was technology transfer – limited equipment Project required extensive support IP- Localisation had an effect - Divide and protect policy

43. 43 Selling Green to China Case Study – Compak Systems Core technologies – press, resin mixing Core technologies High IP risk Use several suppliers from outside of the industry Standard technologies – sawing, sanding, dust extraction Standard technologies – Low IP risk Buy from local specialist suppliers Protecting the intellectual property

44. 44 Selling Green to China Case Study – Compak Systems Contract involved royalties, management fees, equipment, eventually a JV Contract was renegotiated after first sale UK involvement was vital in obtaining further sales (4 plants in China)

45. 45 Conclusions Growth has taken priority over environment in China – until recently Changing government policy, commercial and individual awareness Opportunities in every sector Opportunity is likely to come in technology and know-how transfer Need USP, patience, staying power to enter and stay in market vince.cunningham@cbbc.org vince.cunningham@cbbc.org www.cbbc.orgwww.cbbc.org