Clean Technology Industry in China - Opportunities in Tier 2 Cities

As China bids to become a sustained world presence it's clear that at the top of the agenda lays clean technology. Clean technology investment in the country reached $34 billion US dollars in 2009, that's twice the investment that the United States had made in the same time frame, and far outstrips the spend in the rest of the world.

The rumours from local news sources are that as the next 5 year plan becomes clear, there will be a total investment in clean energy of $738 billion over the next 10 years in clean energy technologies by the Chinese government. Much of this money is expected to be focused on Tier 2 cities.

For those looking to take advantage of these opportunities it's worth making it clear that there's no official definition as to what exactly a "Tier 2" city is (unlike in India where this is defined by government) but it is likely to include most of the provincial capitals and up to another 200 large sized cities throughout the country. Most of these will be in close proximity to state capitals and deal with "overspill" from these more expensive (from a residential standpoint) locations.

Chinese cities tend to specialise around specific economic areas rather than applying an "across the board" approach as more commonly seen in the West. Though there are exceptions to this rule, such as Qingdao (home of Tsing Tao beer, one of China's more famous international exports) which is building a broad base of industries and thus is outperforming other cities (Qingdao and the local province was third fastest growing regional economy in China in 2010).

So given this it's sensible to focus on those cities where clean technology is an emerging industry in its own right, but keep in mind that where one city leads in China many others will follow. Zhongshan is already trying to capitalise on the success of Shenzhen, Guangzhou and Dongguan where there's been substantial progress in clean technologies and in particular LED/OLED production.

Wholly owned foreign enterprises don't usually qualify for Chinese state support so to take advantage of government investment in this area you'll be expected to partner with a local company which can come with a fair share of cultural headaches to overcome. Commonly these include both sets of employees (both local and expat) having stronger loyalties to their own parent company than the venture itself, and of course the "face culture" clashing with a more open Western one.

However with an expected 1 trillion RMB output in 2011 from these industries and clear and obvious massive growth potential those companies that overcome these hurdles will be well placed to join the world leaders of clean technology.