Innovating out of recession
13 March 2009
The election of President Barack Obama and the implementation of his administration’s $800 billion federal economic stimulus package is being tipped by many industry observers to raise technology’s profile and grow the number of tech jobs in the US.
With an agenda of clean energy and ‘innovating our way out of recession’ becoming fully intertwined with his economic recovery plans the industry has been given some much needed ‘reasons to be cheerful’.
China’s high-tech sector is also expected to be a big recipient of its own government’s $586 billion plan, with the government identifying enhancing innovation and the development of high-tech industries as key elements in its own stimulus package.
Well before the announcement of either of these packages or Obama’s election, the convergence of government policy, consumer awareness, capital, land, engineers and entrepreneurs had already led to a number of clean technology investments in China.
Venture capitalists and international industry insiders at the recent Cleantech Forum in Shanghai were quick to realise China’s leadership and potential in the areas of clean technologies, suggesting that, owing to a combination of factors, the country is poised to become the world's leading laboratory, market for, and exporter of these new technologies.
Solar, wind and biomass energies are already widely used in the country. China Daily reported last year that the nation has ploughed nearly $3 billion into wind power, $8.1 billion in solar thermal energy, $1.7 billion in solar PV (China is the second largest producer of solar photovoltaic cells), $3.1 billion in ethanol, and $1.3 billion in biodiesel.
According to The Cleantech Group (formerly the Cleantech Venture Network), industry leaders at The Cleantech Forum held in Shanghai in December 2008 were bullish on industry developments in China. The Cleantech Group pioneered clean technology as an investment category and has played an influential role its development; it is also credited with originating the term ‘cleantech’.
Investors and speakers at the forum said they hadn't yet seen a significant economic slowdown in cleantech investments in China.
Tom Preststulen, General Manager for Asia of environment-friendly metals and materials company Elkem, suggested: “The whole world is, of course, concerned about climate change. But we’re all sitting on different continents and doing things ourselves.” Preststulen continued: “I can’t understand why we can't get together. I think we should converge in China. The Chinese have a track record of getting things done. Instead of doing it in eight years elsewhere, we can do it in two years in China. And in a world financial meltdown, it will also be cheaper to do it here."
Citing China's manufacturing savvy as key to scaling clean technologies like solar and biofuels so that they become cost competitive with fossil fuel equivalents, Todd Glass of law firm Wilson Sonsini Goodrich Rosati added: "We need the expertise that’s found here in China to figure out how to manufacture these technologies faster and cheaper and get them deployed."
The battery supplier and upstart automaker, BYD Auto Company, kicked off sales of its plug-in electric hybrid car in China at least a year ahead of competitors in the US and Japan, and has announced plans to begin selling its vehicles in the US in 2011. The Wall Street Journal recently noted that: "no start-up has grown into a major automaker in at least half a century," and added that: "it's still a bumpy road to a full-blown era of battery cars." But: "with electric vehicles, we're all at the same starting line,” Wang Chuanfu, Chairman and President of BYD told the Journal. At the North American International Auto Show in Detroit, in January, Wang announced BYD’s plans to build an all-electric hatchback, dubbed e6, with a 250 mile range calling it: "the first vehicle of its kind in the world."
The suggestions of collaboration between Western and Chinese companies to help speed-up developments and to create efficiencies of scale have merit, but remains unlikely to occur as companies strive for competitive advantage over competitors, wherever they may be. This is unfortunate, as collaboration would deliver benefits that would help us to address global challenges such as climate change.
In the meantime, we can be encouraged that the Obama administration’s climate change agenda and the ongoing development of China’s cleantech industries will offer new opportunities for the electronics industry, globally.
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