Pollution in Beijing.

Assessing environmental opportunities in the Chinese market

A recent visit to the UK by a delegation from the Chinese Society for Environmental Sciences highlighted the scale of the opportunities and challenges for UK businesses in China, writes Matthew Farrow.

Ministerial soundbites about a post-Brexit Britain rediscovering its global trading heritage are two-a-penny these days (and in Liam Fox’s case comes with a free insult for business thrown in). But someone has to do the hard work to enable businesses opportunities to materialise and here at the Environmental Industries Commission we are trying to do our bit in a modest way.

We have supported our members in various overseas markets in recent years but have devoted most effort to the Chinese market given the combination of almost unimaginable scale and demand (the Chinese leadership are clearly anxious about how long the growing middle classes will put up with filthy air and polluted lakes).  

In 2013, we signed an MoU with the Chinese Society for Environmental Sciences (a body which combines a large business membership with very close links with the Chinese Environment Ministry – the CSES chairman is also a junior environment minister in the Chinese government), and we have helped several of our members access Chinese opportunities and hosted Chinese visits here. 

Last month, we hosted a 40-strong CSES delegation for a week, including a one day conference and business-to-business networking day, plus a range of site visits to UK environmental firms so our guests could see British expertise in practice.

Having now caught my breath after what was a pretty hectic week, some reflections.

First, it’s become a cliché, but the scale of both the challenge, and the business opportunity, is hard to grasp. For example the Chinese government has recently identified no less than 2,000 heavily polluted urban water bodies and while at our conference, the translator, a fluent Chinese speaker, struggled with the size of some of the numbers for Chinese public sector spend on the environment being thrown out by the CSES chief executive.

Second, I was struck by the emphasis the Chinese government has put on setting planning milestones in parallel both for economic growth and environmental progress. These have been published for 2020, 2030 and 2050, and tie in both with the commitments made by China at the Paris climate change summit and with its goals on environmental protection. Of course we must be mindful of the drawbacks of such a centralised top-down approach, but it would be nice to see our own government act similarly once in a while – e.g. by thinking about the 25 year Environment Plan in conjunction with the BEIS plans for industrial strategies.

Third, there are signs that the Chinese environment ministry is recognising what UK has only got its head round in last 10 years – the need to treat and protect the environment as a series of holistic and interconnected eco-systems.  

The recently published 13th Five Year Plan says “We should consider the various elements of the natural ecology, including up and down the mountain, above and below ground, land and sea, and basin upstream and downstream, and protect them as a whole, repair the system, enhance the capacity of ecosystem’s self-healing and circulation system, and maintain the ecological balance”. Of course, this is easier to say than do, and has not yet percolated down to specific purchasing decisions, but is still a welcome sign.   

Fourth, another cliché, but the Chinese do want to build relationships before they do business.  The logic for our Chinese guests working with us as a trade body is that we can vouch for the history and reputation of our member companies - this avoids them working with companies they know little about. 

Fifth, a major stumbling block is that while the Chinese are keen to purchase UK environmental technology, they often fail to value the ‘know-how’ around it. So they are reluctant to pay for the consultancy or technical expertise that ensures that technology is applied and maintained appropriately, that the context for implementation is understood, and the technology then performs as expected. The result too often is frustration on both sides – the Chinese feel they have bought technology which does not perform, whereas British companies feel the Chinese are not willing to pay for essential expertise.  

Overall though, I’m convinced that the Chinese market will be a profitable one for the UK environmental one in years to come.

Matthew Farrow is executive director of the Environmental Industries Commission. This article was first published on the Business Green website