Get ready to do business with greener China

Get ready to do business with greener China

Tue, 13/02/2018 - 15:56
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electric bikes

Electric bikes are popular among China’s environmentally conscious younger generation. Photo: Shutterstock

China is getting ready for the Lunar New Year holiday – a time of family gatherings, renewal, and considerable household spending.

As the Year of the Dog approaches, companies keen to cater to the world’s second largest economy need to be aware of a trend gradually taking hold among its 1.39 billion inhabitants: they are becoming more sensitive to climate change and environmental issues, and open to new ways of combating it.

Decades of explosive growth, while lifting huge sections of the population out of poverty, have turned the most populous country into the top emitter of greenhouse gases.

News about polluting by China’s heavy industries, and images of its smog-filled mega-cities hit the headlines at regular intervals.

So, some might cast doubt at the very idea of green-conscious Chinese consumers.

But there are signs the very pervasiveness of China's environmental issues has caused its residents to increasingly care not just about the price and convenience of the products and services they buy, but also about their environmental impact.

Whether a business is an Australian wine grower, a German carmaker, a chain of American restaurants, a French sportswear manufacturer or a Chinese company selling appliances, food products or hotel accommodation in its home market, it needs to factor in this shift in sentiment.

A survey conducted by Ipsos in November 2017, for example, showed China with the most respondents worried about climate change in their country – 24 per cent named it as among their top three concerns.

That compares with 20 per cent in Canada, the second-highest of 26 countries polled. The global average was just 9 per cent.

Overall, Chinese respondents feared threats to their environment the most, with 43 per cent naming it as among their three biggest fears.

At the same time, China’s fast-growing middle class is becoming ever more demanding about their health and quality of life.

Many are also tech-savvy and adventurous – and their willingness to try out new products and services is supported by an innovative private sector tuned in to their tastes and needs.

A prominent example is the bike-sharing boom that has swept the country over the past 18 months.

On street corners and at subway exits of many Chinese cities today, residents can now pull out their mobile phones to scan and unlock rental bicycles as they complete the final legs of their daily commutes or head to the supermarket.

While some may complain about the mess the scattered bicycles create, the convenience and low cost of these schemes has convinced millions of Chinese to rekindle their love for a mode of transport that is healthier, easier on the pockets, and also better for the environment.

According to Mobike, a bike-sharing start-up whose investors include China’s Tencent and Silicon Valley’s Sequoia Capital, its 100 million users have more than doubled their use of bicycles within a year, while cutting car trips by half.

Mobike, which surveyed 100,000 of its customers, estimated that in the year following its scheme’s launch in mid-2016, its riders may have reduced their aggregate carbon emissions by 540,000 tonnes.

That is equivalent to taking 170,000 cars off the road for a year.

For those who still prefer sitting in a vehicle, China is also becoming a test-bed for car-sharing projects. Munich-based consultancy Roland Berger predicts China’s car-sharing fleet will grow 45 per cent per year until 2025, prompted in part by government efforts to curb air pollution.

The popularity of ride-hailing apps such as that from Didi Chuxing further reduces the need to buy cars.

China’s electric vehicle market is also booming.

In 2016, 257,000 battery-powered electric cars were registered in the country, accounting for 55 per cent of the world’s total. That’s three times more than in the United States.

While there’s some debate about the environmental impact of electric vehicles – how to deal with waste from old batteries, for example – more work is being done to find the best solutions.

For now, consumers are benefiting from China’s efforts to build up a world-class electric-vehicles industry, with generous government support boosting the market.

Existing tax incentives on electric vehicles have just been extended for another three years, through 2020, and China signalled in September last year it was mulling a ban on fossil-fuel cars, echoing announcements in France and the UK.

Green ideas are also being embedded into the daily routines of Chinese lives.

In August 2016, the ubiquitous AliPay mobile payment app introduced Ant Forest, a mini-app that allows users to convert activities such as walking and paying their bills online into “green energy” points.

Collect enough points and users can exchange them for an actual tree to be planted in desert areas such as in Inner Mongolia.

Ant Financial, which conducted the experiment in association with the United Nations Environment Program, reported that 200 million users took part in the six months after the app was launched, with behaviour changes over the period resulting in an estimated 150,000 tonnes of avoided carbon emissions and more than 1 million trees planted.

These may seem like small steps.

But coupled with the Chinese government’s determined push to cap energy consumption, reduce emissions and boost renewable energy generation, such developments have global relevance – and they matter to anyone doing business in China in the Year of the Dog, and beyond.

David Liao is President and CEO of HSBC China.