Risks of China's Clean Tech Revolution
Fung, Danny, Risk Management
China is quickly emerging as one of the top centers for the clean technology industry, attracting both global venture capital as well as multinational businesses in search of a low-cost manufacturing base. Venture capital investment in Asia increased sharply in 2010, up 18% to $771 million, according to industry market research firm Cleantech Group LLC, a clean technology research firm. China received the most clean tech venture capital investing in the region, the second highest amount globally behind only the United States.
Clean technology is a broad term that covers a wide range. It encompasses technologies, products and processes that are renewable, seek to minimize pollution, reduce energy use and conserve natural resources. Solar panels and wind turbines are the most familiar, but clean tech products and services are used in industries including power generation, energy storage, transportation, agriculture, wastewater treatment and manufacturing.
Clean tech demand has increased sharply around the world over the last decade, driven by a combination of regulatory mandates, government incentives and private financing. The Chinese government, for instance, has committed around 10% of its stimulus funds to clean tech and has promoted the use of renewable energy through various laws and mandates, according to Cleantech. In the United States, the American Recovery and Reinvestment Act of 2009 included more than $100 billion for the clean tech industry to be spent over several years.
These opportunities do not come without risks, however. Chief among these are construction and land use practices. Businesses need to understand that construction standards in China are generally far below the requirements in the United States.
Furthermore, manufacturing facilities for clean tech businesses also often have to meet higher standards than other general types of construction. …