Can Renewable Companies in the U.S Benefit from the Chinese Market?
At the “Making the ‘China Opportunity’ Real for Your CleantechBusiness” seminar being held by Dorsey & Whitney LLP today (May 24)in Menlo Park, Calif., panelists will discuss how U.S. renewable energycompanies can survive and thrive in the Chinese green energy market. The opportunities are significant, with the Chinese clean energy andrelated technologies market expecting growth of up to $1 trillion—by2013.
Speakers at the seminar will discuss the pitfalls, which are many for improperly prepared companies, and the benefits of doing business inChina. Panelists at the forum will include Peter Corne, a managingpartner at Dorsey & Whitney’s Shanghai Office, Fred Chang, managingdirector at Chrysalix Asia Venture Capital and Chris McCabe, managingdirector at Piper Jaffray.
The China Greentech Report 2011, by the China Greentech Initiative,estimated that China’s addressable green tech market could be US$ 500billion to US$ 1 trillion by 2013. A lot of that will come from newenergy investments like solar, wind and cleaning up existing polluters like oil and gas refineries,said Corne. The report laid out China’s commitments to clean energy over the next five years, and it has a history of meeting such commitments.
“Targets from China’s previous five-year plan were either achieved or exceeded,” Corne said.
The country can drive the growth because of how it’s structured, Corne said.
“China is a command economy. It can drive the economy through administrative direction,” he said.
The majority of opportunities in the country are in the technology sector, according to Corne.
“You can tell what the opportunities are by looking at the five-yearplan. That’s really instrumental in showing where the opportunitiesare,” he said.
Among the primary focuses, according to the report, are renewableenergy—primarily wind and solar—and electric power infrastructure,including transmission, storage, demand management and more. The country plans to have more than 200 gigawatts of renewable energy online by2020, and the report said that may be a conservative estimate.
One of the biggest barriers is export control on the U.S. side.
“A lot of different companies are subject to that. There areobstacles on the Chinese side depending on the type of industry,” Cornesaid.
Companies have to be analytical and strategic when considering entering the Chinese market.
He related a story about one client trying to market a clean-coalsolution. The client’s solution replicated cheaper methods alreadyavailable in China, a consultant told the client. The client was told to emphasize the solution’s ability to produce algae as well as capturecarbon.
“Now they’ve got a lot of opportunities rising. It’s about how opportunities are marketed,” Corne said.
Another important aspect for doing business in China is deciding howmuch of a company’s technology Chinese counterparts have access to.
“You don’t have the same rigorous regulation that you do in theU.S.,” Corne said. “The first thing [companies] need to do is properlystrategize in regard to patents and which elements of the technologythey are going to keep confidential. It’s all about keeping differentlines of defense. They can use those tools in China. They can’t take the attitude that it’s no use, or take the attitude that it’s tooexpensive.”
It’s also about which firms decide to partner, according to Corne.
“You don’t want to link with a potential competitor. There are a lotof things you can do that American companies aren’t doing. You reallyneed to take the IP [i.e., intellectual property] planning seriously,”he said.
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