Opportunities in Chinese market beckon Western high-tech firms
Updated: 2011-11-25 10:20
By Cecily Liu (China Daily)
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PARIS - High-tech companies will see opportunities in the Chinese market amid the West's sluggish economic recovery.
Experts at the International Capital Conference in Paris also pointed out on Wednesday that those in the renewable energy and environmental protection sectors will probably see the most opportunity in China because the country sees the urgency for green growth.
Hu Rongqiang, chairman of the United World Chinese Association, said that the economic downturn in the West could mean that high-tech Western businesses will further invest in China through partnerships with Chinese companies.
"Innovation can be achieved through cooperation between different countries. Working together with Western businesses, we can promote Chinese strength, but we can't do it alone," Hu said, adding that many commercial opportunities exist in China's renewable energy and creative industry sectors.
But for existing investors in the Chinese market, there are not just opportunities, but also challenges.
"Sometimes, from the initial plan to the full-scale innovation, it can take a year in China, but in Europe it would be many years. If you innovate in China with your Western process, the timing will be wrong," said Olivier Delabroy, group vice-president of Air Liquide SA, a global gas supplier.
The French company has had a presence in China since 1916, but its investments have increased dramatically in recent years. In 2004, it had eight mid-sized and large plants in China, and today there are 59.
This week, Air Liquide secured a new contract to supply gaseous oxygen and nitrogen to the Maoming branch of Sinopec Corp, China's largest oil refiner. This contract will result in new investments at Air Liquide Hangzhou, the company's engineering center in China.
Air Liquide also formed a partnership with Zhejiang University to develop new solutions for cleaner and more efficient coal combustion using oxygen, which started this March.
According to Delabroy, business risks are particularly prominent in high-tech industries because the fast-changing technology makes it impossible to accurately calculate the profitability of projects with existing business models. In addition, market demand does not materialize quickly enough to make initial investments profitable.
"We want to make long-term investments, but it is important for Western companies to know that their intellectual property (IP) is fully protected in China," Delabroy added.
Although IP protection has historically been a concern for Western businesses in China, the situation has improved in recent years.
According to the World Intellectual Property Office, 12,337 patent applications were filed from China in 2010, an increase of 56.2 percent over 2009. This makes China the fourth-largest patent applying country after the United States, Japan and Germany.
"Apart from IP protection, it is also important to ensure that a Western company's technological know-how is not transferred to a third party outside the collaboration between the Western company and Chinese partner," said Delabroy.
Delabroy said that the transfer of know-how is difficult to restrict by regulations and relies on the establishment of mutual trust in the partnership.
"I have no problem transferring the know-how to the partner," he said.
China's 12th Five-Year Plan (2011-2015), released in February, outlined the country's intent to upgrade its manufacturing sector, accelerate the growth of the service sector, and build a modern energy industry, all of which could benefit from collaboration with private-sector Western businesses.
Technological innovation is "badly needed to help Chinese businesses implement environmental protection measures", said Liu Xiaoguang, chairman of Beijing Capital Land Ltd.
"Energy consumption is very high in China, and some of the green technologies currently used in the West would be very helpful if brought to China," Liu said.
Zhang Haizhou contributed to this story.