New Markets: Too Late For Green Technology?

In a quest to grow revenues, marketers are often charged with discovering and branching into new markets. And while the "green economy" sure looks promising, Western companies are discovering that state and privately owned Chinese enterprises are establishing strong footholds. In a race to develop green technologies and dominate green markets, does China have an insurmountable lead?

Paul Volcker, chairman of U.S President Barack Obama's Economic Advisory Board recently said, "(The United States) needs to do a better job at the new industries coming along, the so called green economy." However, an article from the New Yorker titled "Green Giant" suggests that China has invested in green technologies for decades and already has a significant head start.

Why China and green technologies? Call it a matter of survival. As factory to the world, China is now responsible for a larger carbon footprint than even the United States. And while links between carbon emissions and global warming are debatable, Chinese leaders haven't taken any chances investing in technologies that are more environmentally friendly such as wind and solar. Moreover, its export heavy led economy needs energy to sustain itself, so renewable energy is definitely a national security imperative.

Strategic planning is often about seeing significant trends on the horizon, making big (and wise) bets and laying the foundation for future dominance. To this point, according to the New Yorker article, as far back as 1986 Chinese leaders saw the beginnings of a "new technological revolution" and started building green capabilities and setting targets for heat and wind turbines, solar panels and hydro-electric dams.

Indeed years of heavy investment have paid off in that China now manufactures "more solar cells than any other country" and has doubled its wind capacity for three years running (2006-2008).

It's tempting to dismiss the prowess?and progress of China with a vision of cheap goods, backwards factories, inefficient processes and thousands of workers in assembly lines producing with ancient technologies. Yet, in many cases Chinese factories are just as productive, clean, and advanced as Western enterprises, and in some instances the only place a product can be made cost effectively is in China!

There is a sliver of good news, however for Western companies. While the New Yorker article cites China's ability to scale and mass produce green technologies, much of the innovation and science behind the scenes still comes from the West.

One can only wonder, however, how long this lead in innovation will hold, especially as R&D expenditures, "have grown faster in China than other big country?climbing about 20% per year for two decades to $70B last year."

Perhaps there's a future in collaboration between Western countries and China. "Chinese manufacturing and American innovation is powerful," says Kevin Czinger, a former Goldman Sachs executive. Mr. Czinger calls it the "Apple model" where innovation and know-how is born in the West and execution resides in Asia.

On the other hand, with a just small portion of the overall "value" of a product staying in China, it seems unlikely that China will be content as simply the muscular strength powering the world economy.
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