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Cleantech Forum Shanghai in pictures
December 5, 2008 - by Dallas Kachan, Cleantech Group
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Fueled partially by the promise of a massive 4 trillion RMB investment by China's central government to address environmental concerns over the next few years, power players are taking their seats in China to stake out clean technology market claims.
It was clear at Cleantech Forum XX Shanghai, which concluded this week, that the cleantech gold rush is on.
More than 250 attendees from China and elsewhere around the world attended the Cleantech Group's twentieth Cleantech Forum since 2002, and fifth this year, to network with industry influencers and forge new alliances.
Attendees to Cleantech Forum XX Shanghai intent on capitalizing on opportunities in China (photo) »
The time is now for cleantech in China, speakers underscored time and again—especially given how the sector seemed to be defying gravity in the face of global economic hardship (see China embraces cleantech, dodges downturn).
Recent policy changes were clearly a big driver.
"China is no longer guided by crude economic growth," said Zhao Hualin, Director of the Pollution and Waste Total Emission Control Department in China's Ministry of Environmental Protection.
Zhao recognized China now leads the world in CO2 and SOx emissions, so the country is now pursuing a 30 percent reduction compared to 2005 levels. And with regulation greatly improved and monitoring enhanced, there will be both sticks and carrots, he suggested.
Critics in the past had questioned the stability of China as a reason for not investing. But fluctuations in current policy were not expected by experts.
"I’d bet on China government policy being more stable in the next 5 years than U.S. policy. I think the U.S. will go down the path of political compromise. China will be relatively more predictable than many of the developed countries," said Gary Rieschel, Founding Partner, Qiming Venture Partners, a Shanghai-based venture firm that manages $2.5 billion globally.
Getting capital into China to fuel the growth of clean technology isn't the problem any more, speakers said. If anything, the problem was capital retention, some suggested.
Sixteen Chinese clean technology companies seeking capital presented at the Forum. And the quality of their investment opportunities impressed attendees.
"I’m seeing in the last two days a major improvement in the level of entrepreneurs. And there's a much higher level of sophistication in how to communicate with the international community," said Nicholas Parker, Executive Chairman of the Cleantech Group.
Most Promising Technology award of the Forum, judged by attendees from 16 presenting companies, was bestowed to Western Shell Cryogenic Equipment—a company which, as executives noted, was not in the business of freezing bodies. Western's equipment makes supplies of methane available to small markets/areas.
Cleantech Leader of the Year was awarded to Patrick Tam of Beijing Tsing Capital, a company that has invested more in Chinese clean technology companies than any other firm.
Deal quality aside, there are differences to be aware of when it comes to Chinese clean technology companies, presenters noted.
"If you look at the U.S. cleantech market, there’s much more focus on risky technologies that just might take years. We’re invested in one company that is taking 7 years and $300 million just to see if they’re going to succeed. You couldn’t do that deal in China," said Qiming's Gary Rieschel.
Chinese entrepreneurs are very smart. They ask, 'do I want to spend 7 years of my life on something that might not work in the end?' In this market, there’s less tolerance for that up-front risk," said Rieschel.
"Here, it’s much more about building a viable business, and maybe going a lot farther down the path to commercialization before looking for funding. I wish I could get U.S. companies to do more of that," said Pierre DuPont of Two Sigma Investments.
Other speakers warned of important cultural considerations.
"Officially, there’s a language problem. That comes up. There’s a gap between the culture and language on the surface. But fundamentally it’s a trust issue. Over here, everything is about the relationship," said Kelvin Yu of storied Silicon Valley-based VC firm Sequoia Capital.
"While the U.S. is just straight to the point, 'don’t waste my time,' in China, we’re afraid of being cheated, so we want to build up the trust and relationship first ... the entrepreneur doesn't want to reveal his true story the first time he meets you."
Others encouraged everyone to be up-front.
"Don’t try to be smart. You’ll be screwed by your partners, government, contractors, everybody. Try to leave something on the table so that every gets their fair share," advised Ka Keung Chan, Managing Director and head of investments for Greater China for Climate Change Capital.
At the conference, it seemed China was being officially welcomed to the clean technology world community.
"When it comes to the environment, we’re all Chinese, every one of us. Why do I say that? Because if you solve your problems, we solve global problems. If you create jobs and wealth here, that’s good for all of us. So today I claim Chinese citizenship for the next 2-3 days," said Parker.
The Cleantech Group's next Cleantech Forum is in San Francisco in February (details).
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