For the past two years John Giliberto, the Chief Executive of Melbourne-based water purification business, Silverwater Technology, has been looking for a way to break into the Chinese water purification sector.

 

Silverwater Technology purifies water using a process of electrolysis using silver colloids introduced to the water. The process is 100 percent chemical free, separating Silverwater Technology from its competitors and more cost-effective than regular purification systems such as ozone and UV.

 

The business’s biggest successes have been in securing contracts with dental hospitals in Australia. It has the largest dental distributor in Australia and NZ under contract as distributor for Silverwater Technology.

 

Other clients in Australia include Steggles Chickens, the Melbourne Zoo, a government dental hospital, a major public hospital and numerous large nurseries and hydroponic farms.

 

Silverwater Technology has also had successes in a number of Asian countries including securing contracts for dental hospitals in Thailand and domestic installations for water purification and commercial coolers in Hong Kong. There has been interest from the Philippines, Vietnam and Malaysia.

 

But it’s the Chinese market that Mr Giliberto considers to be the most promising. Getting a foothold in this supposed lucrative market however, is proving elusive.

 

He says breaking into the Chinese market is hard, especially in establishing direct contact with Chinese companies.

 

Instead, the business has relied upon an established relationship with a Chinese associate, on the ground in China, who has opened doors to government contacts in Shanghai and Beijing.

 

Interest in the company from China so far, has included government departments interested in Silverwater’s Technology for the cleaning and purification of factory water, purification for water sourced from provincial rivers used for drinking water and interest from four hospitals.

 

Mr Giliberto is not alone in anticipating that the success of his Australian business lies with China.

 

Jane Caforio, who oversees the Australian Trade Commission’s China Clean Energy and Environment team in Beijing says the environmental, water and energy issues facing China are well known and demand for clean technology services is high.

 

“Of course, that does not mean this market is for everyone. With opportunities also comes challenges and this is particularly the case in the CEE sector,” Ms Caforio says.

 

She says the market is challenging, characterized by a lack of predictability around projects, often conducted in provinces that are culturally very different from Australia, long lead times, a lack of information and slow feedback.

 

“Project owners are also often linked to Government, so Australian companies should also be cognisant of their different motivations,” she says.

 

Some estimates put the environmental damage costs for China at up to 8 percent of its gross domestic product.

 

The Chinese government remains committed to improving its environmental challenges – investing RMB 354 billion in 2010 alone into the sector, making China the world’s leading investor of clean energy.

 

The country’s environmental protection priorities, laid out in the National 12th Five-year Plan on Environmental Protection to cover the 2011-2015 period, include a shift away from investment focus on infrastructure to encourage the development of environment-friendly projects.

 

The plan estimates there will be RMB3.4 trillion of investment demand in the China environment protection area from 2011 to 2015. RMB1.5 trillion of investment will be required in eight major prioritised projects.

 

So where does that leave Australian companies, and how can they capitalise on this environmental boon?

 

In China the industry tends to produce the majority of its own goods and services for pollution control and environmental protection, however technology levels in some areas are low and can be below international standards. As a result, China continues to experience some of the fastest growth in demand for environmental products and services in the world.

 

Ms Caforio offers the following tips to clean energy and environment businesses looking at China.

 

Firstly, to have an office or base in China.

 

She says relationships in China are built up over time and it’s not uncommon to have many meetings with the same people.

“Due to the need to build these relationships, and form the foundation of trust, winning projects in the CEE space in China incurs significant time and resources.”

 

In addition, finding the right staff is fundamental. With global and domestic competition in this sector, it is important to have local staff with good connections and knowledge of the market.

 

It is also common in the clean tech sector in China for companies not to break even in the first or even second year. And head offices in Australia need to be aware of this.

 

Australian energy efficient solutions company Total Energy Solutions, which has offices in Melbourne, Sydney, Brisbane and Shanghai, has been in China for the past five years. By implementing efficient energy systems, TES can help clients reduce their electricity expenses by as much as 50 percent.

 

The company offers three stages of service: solutions, technology and its “journey” programme package to reduce energy consumption.

 

In Australia, the majority of TES clients are hospitals and other government buildings but is has also worked on community buildings and lighting upgrades for schools in NSW.

 

Laurie Shaw, TES Director, says the company’s edge is in its ability to cover all aspects in-house.

 

“We provide a journey from consulting all the way to implementation,” says Mr Shaw.

“Many companies can do one or the other.”

 

He concedes that China has been a tough market.

 

“It’s an emerging market in terms of energy services but the market is evolving, and we are adapting to the market.”

 

TES has recently installed its CHP system at the New Ruijin Hospital in Shanghai. A project it is hoped will lead to future ones in China.

 

“The Ruijin Hospital is something you can see and feel – not just a concept,” says Mr Shaw.

 

Being able to demonstrate the final product beyond conceptualisation is important for securing deals in China.

 

“In our first two years [in China] people didn’t really value our IP,” says Robin King, TES Deputy General Manager, Shanghai. “Clients would look at our proposal and think, ‘that’s good, and now we’ll do it ourselves.’”

 

Mr Shaw credits TES’s China success to establishing good local government relationships. Other key tips are establishing networks, offering a service based on quality and doing things well. He hopes that as the Shanghai Municipal government continues to establish at least five new top-end hospitals in the city that TES’s work on the New Ruijin Hospital will stand for itself and help the company garner more business in China.

 

“After five years of hard work in China, everything is aligning for us,” says Mr Shaw. “In China, this is just the start.” ■

Where the future opportunities lie:

 

Over the next five years, RMB1.5 trillion of investment will be required in eight major prioritised projects including:

 

• Major pollutants reduction, such as sewage treatment, sludge treatment, desulfurisation and de-nitrification
• Living environment improvement, such as water/air/soil quality improvement
• Environmental protection in rural areas, such as non-point source pollution control from agriculture
• Ecological preservation, such as nature reserve development and biodiversity conservation
• Environment risk prevention, such as prevention and control of heavy metal/hazardous chemicals pollution and persistent organic pollutants
• Nuclear safety, such as nuclear safety systems/technology development and radiation monitoring
• Environmental infrastructure, such as waste treatment facilities development and projects on water supply security
• Environmental monitoring, such as environmental monitoring capability development and talent training

In R&D, China will increase science and technology research investment in the area of environment and resources protection. Five important focal areas for these increased efforts are:

 

• Advanced environment monitoring
• Technology for pollution emergencies
• Regional clean air key technology
• Contaminated soil/site remediation
• Risk control technology for chemicals

 

Increasing investment in environmental protection is providing a range of opportunities for Australian companies:

 

Advanced sewerage treatment processes and biotechnology treatment technologies

 

Nitrogen oxide and ammonia nitrogen reduction and removal technologies

 

Heavy metal reduction and treatment technologies

 

Special waste, eg. electronic, magnetic, lead battery etc.) management, recycling and disposal

 

Soil and water remediation (including heavy metal pollutant emission)

 

Domestic and industrial waste recycling and industrial waste stabilisation

 

Desulphurisation technologies

 

Air pollution control equipment

 

Noise control materials and equipment

 

Environmental monitoring instruments and automation control systems

 

Radioactive and electromagnetic wave pollution control

 

Industry energy conservation technologies

 

Green-building energy efficiency solutions

 

Renewable energy – IP transfer, management and maintenance

 

Carbon capture and treatment

 

Environmental emergency response systems

 

Consulting services, eg. water resource management planning, risk assessment, green and energy-saving design, eco-city planning etc.)

 

*Source: The Australian Trade Commission (http://www.austrade.gov.au/Environmental-technologies-to-China/default.aspx)