Marketing German Environmental Technologies in the Peoples' Republic of China

By Beschorner, Dieter; Lesko, Michael et al. | Management International Review, Annual 1995 | Go to article overview

Marketing German Environmental Technologies in the Peoples' Republic of China


Beschorner, Dieter, Lesko, Michael, Schweinbenz, Andreas, Management International Review


Introduction

Recently, more and more reports have illustrated the fatal consequences of the dynamic economic growth in China and South-East Asia for the environment. The World Bank report "The East Asian Miracle" (World Bank 1993) revealed how severely the environment has been devastated. Industrialisation has its influence on the regional and global environment everywhere. In China, the presumable consequences of staggering energy demand, in connection with the industrial growth are tremendous (FiW/ISA 1993).

Characteristics of Environmental Technologies

Markets for environmental technologies are anything but typical. This is mainly due to the fact that they are not free markets but "state-guaranteed markets" (Schreyer/Sprenger 1989). Basically, three major market forces can be identified which vary in significance from country to country (Schweinbenz 1994):

* legislation,

* public environmental awareness,

* foreign support.

For a long time, industries in most industrial areas have recognised that environmental compliance is a necessary part of doing business, largely to ensure the sustainability of their activities. Now it is increasingly apparent that caring for the environment is also combined with business opportunities. The production of goods and services for pollution abatement and environmental protection is a growing industrial sector with markets now estimated at U.S. $ 200 billion worldwide (OECD 1992).

Although the environment industry is not easily defined, it may be described as including firms which produce pollution abatement equipment and a range of goods and services for environmental protection and management. The environmental technologies discussed in this paper are viewed as industrial goods.

Backhaus (1990) suggests distinguishing between three different types of industrial goods' business which show verifiable differences in their marketing processes and hence require different marketing measures:

* product business,

* system business,

* plant business.

A study which investigated the German environmental technology industry discovered that it often requires comprehensive solutions (Schertler 1993). This is even more true for the export of technology to the Asian-Pacific Region due to the specific type of problems involved. Basically, one can regard environmental technologies under discussion here as such belonging to the plant business category.

International Competitiveness of German Environmental Technologies

4,000 (BDI 1992) to 8,500 (Kaiser 1994) companies belong to the German environmental technology industry. The main emphasis is on water purification (29 percent) and air quality control (22 percent). Further focus is on soil and waste treatment (17 percent) and monitoring, instrumention and control technology.

Small companies predominate on the supplier side. More than half of the firms have less than 50 employees, 31 percent even less than 20. The average company has between 20 and 49 employees. These figures emphasize the important share of middle-class firms in the environmental technology industry (Schertler 1993, Wackerbauer 1992).

Many suppliers of energy technology are large companies, whereas small businesses are mainly committed to water purification and waste treatment. Obviously, it is much harder for small firms to enter the Chinese environment market than for large multinational companies, which often diversify into environment markets.

Germany has set considerable store in its environmental technology in international competition. However, there is some effort necessary to save this industry from the fate of other high-tech branches where Germany slipped into second place. Japan has already announced its claim to take over the world leadership in environmental technology by the end of the century (Servatius 1993).

The position of German products and companies on the world market can be assessed by different criteria.

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