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China’s Green Energy Market: Business Opportunities for EU SMEs

By EU SME Centre | Article      06.01.2016     Tags: Renewable energy

China’s ongoing transition of its energy structure towards a greener, safer and more efficient model means that investment continues to flow into this sector, from both Chinese and foreign enterprises. The EU SME Centre say the companies that can offer high-tech solutions and know-how combined with enhanced performance and competitive pricing will be the ones to prevail.
China’s Energy Development Strategy Action Plan (2014–2020)
China uses more energy and emits more greenhouse gases than any other country in the world today. The country’s huge industrial sector, together with rapid urbanisation and development, has created a hunger for energy that is unsurpassed anywhere else. Faced with the task of balancing the need for perpetual economic growth with ever-dwindling reserves of fossil fuels, the Chinese Government is pushing hard for a gradual transition towards producing cleaner energy and more efficient energy consumption.
In November 2015, the State Council released the Energy Development Strategy Action Plan (2014-2020), which aims to promote more efficient, self-sufficient, green and innovative energy production and consumption in China.
The targets include a cap on annual primary energy consumption set at 4.8 billion tonnes of the standard coal equivalent until 2020, with a need to limit the annual growth rate of primary energy consumption to 3.5 per cent for the next six years.
The share of non-fossil fuels in the total primary energy mix will rise to 15 per cent by 2020, from 9.8 per cent in 2013, according to the plan. Meanwhile, the share of natural gas will be raised to above 10 per cent and that of coal will be reduced to less than 62 per cent.
Business opportunities for European SMEs
Progress on the ground has been impressive so far, but much more remains to be done if China wants to meet its ambitious targets. 
For European SMEs, the main market opportunities will be found in areas where large SOEs or multinationals have not yet invested and where they can leverage their know-how and technologies such as water, renewable energy, waste management and industrial pollution control. Below is a list of business opportunities in these areas:
Water Sector 
Water saving technologies
Special sealing products, dynamic and static seals
Water extraction 
Well-drilling and high pressure pumps
Water distribution 
Network leakage detection and repair technologies
High efficiency pumps
Advanced water measurement technologies
Integrated monitoring systems
Water treatment 
Biological denitrification and phosphorus removal technologies 
Membrane manufacturing technologies
Sludge treatment technologies
Disposal equipment and automatic control equipment
Immobilised microbe technologies
Renewable Energy 
Wind sector 
Wind to heat technologies
Inverter/converter technology, generators and gearboxes
Cooling and filtration systems
Pitch control systems
Solar sector 
Effective solutions for the management of distributed generation networks
High quality solar roof top solutions
Concentrated solar power
Thin film technology 
Bio-energy sector
Steam turbines for biomass combustion
Auxiliary equipment such as generators, condenser systems, monitoring and control systems
Process control technologies such as totally integrated automation, totally integrated power solutions, modular distributed control system (DCS), supervisory control and data acquisition (SCADA) and manufacturing execution system (MES) solutions
Solutions to ensure effective plant management and operations
Waste Management 
Municipal solid waste management and collection
Equipment for sorting and washing mineral substances, and magnetic pulleys
Combustion process technologies where the waste is not sorted, or refuse-derived fuel (RDF) combustion
Boiler and gasifiers
Co-firing pulverised coal boilers and fluidised bed boilers
Circulating fluidised bed boilers and vertical boilers
Biomass boiler systems, biomass boiler parts and services
Gasification processes
Anaerobic digestion
Syngas solution
Solid waste disposal equipment manufacturing
Landfill leakage-proof geo-membrane
Hazardous waste treatment equipment
Landfill gas power equipment and large-scale livestock farm waste
Industrial pollution control
The Chinese industrial market is looking for technologies that directly minimise emissions or indirectly reduce them. Such sectors include iron and steel manufacturing, foundry operations, metals finishing, cement manufacturing, paper and pulp, glass manufacturing, food processing, tanning and chemical industries. These industries are looking for methods to control pollution better, such as:
Treatment techniques and disposal methods for hazardous waste;
Direct steelmaking processes that reduce pollution;
Modified glass making furnace;
Non-chlorine pulp bleaching sequences to control toxic substances as dioxin;
Environmental equipment – oil skimmers;
Soil investigation and remediation technologies;
Volatile organic compounds (VOC) control technologies;
Catalytic materials and catalytic combustion; and
Industrial organic exhaust gas purification.
Market challenges
The vast size of the Chinese green tech market does not necessarily translate directly into opportunities for European SMEs, though. Missing or insufficient regulations and investment incentives, the importance of strong relationships with local governments and SOEs, and increasing competition from Chinese companies are among the main factors inhibiting more extensive involvement by non-Chinese companies. Other factors such as intellectual property rights and technology localisation also strongly come into play.
Advice for SMEs
Analyse your business within the Chinese environment
Understand if the local market is ready for your solution
Be flexible to local market needs
Prepare the necessary documentation
Brochures and technology descriptions need to be adapted to and customised for the Chinese market
Select the right people for your business
Learn how to build an effective local team and work with Chinese business partners
Develop an effective budget control
Be open to cooperate with other European SMEs  
Develop detailed market and customer research
Define with who and how to develop your business
Prepare a specific negotiation strategy
Become familiar with how Chinese companies negotiate and adapt your strategies accordingly
To learn more about the recent trends and business opportunities in China’s green energy market, check out our webinar Energy & the Environment in China: Development, Trends & Opportunities for SMEs and sector report The Green Tech Market in China.
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