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Mar. 10, 2015 - Updated 04:16 UTC



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Green Opportunities

Apr. 9, 2015

People in some Chinese cities are used to seeing the world through a wall of smog. Rapid development has brought serious pollution. Now the government has acted. New anti-pollution laws have been drafted. The Environmental Protection Minister says companies will spend a trillion US dollars to comply. What do the new rules entail? We look at the challenges -- and also the opportunities -- of China's shift to green technologies.

A factory in Shanghai powers its machinery via on-site boilers. Like many such systems in China, it is coal-fired. But now it faces tighter regulation, because it contributes to air pollution caused by the micro particles known as PM2.5.

Inspectors found the factory's boiler emissions exceeded not only the new regulations that will start from October, but the current limits as well. The same situation affects plants across China. Their managers are being pressed to find alternative power sources.

Last year, a Japanese manufacturer sold a new type of boiler to a pharmaceutical company in Shanghai. The model is a high-efficiency type, powered by natural gas. It produces far less air pollution than a coal-fired boiler.

The drawback is that it costs about twice as much. Company managers said they had no choice in the purchase, considering the tougher regulations.

The Japanese manufacturer, Miura Industries in Suzhou, is seeing increased demand. Sales last year were up 20 percent. An executive says that from this year, the firm will strengthen its efforts in China.

"It's not only Shanghai," says director Koji Yamamoto. "Beijing's current nitrogen oxide regulations are even stricter. This is a major opportunity for us, and we plan to make the most of it."

Japanese companies are confident of their technology, but they face challenges in selling to Chinese businesses.

Take for example the case of STECO, a Japanese consulting firm that offers technical advice to help factories reduce electricity consumption. Its clients in China are mostly branches of Japanese corporations.

STECO wants to work more with local Chinese businesses. But it lacks the necessary contacts. And it's hard for a single operation to offer what most Chinese companies want -- an all-round solution to their environmental concerns.

"We're just one company; we can only do so much, as we only have certain machines," says COO Toshimasa Egashira. "There's such a wide range of issues in this field. What we need are comprehensive solutions."

As they try to get a foothold in China, some Japanese firms are pooling resources. In one arrangement, more than 10 businesses with broad capabilities exchange business information.

The companies want to strengthen their collective marketability. To this end, they have enlisted the help of a Chinese academic who specializes in environmental issues. Tan Hongwei, a professor at Tongji University, has a wide network of personal contacts. The group hopes to use his ideas as a way to build sales.

"Japan's green industries have superior technology and experience," says Tan. "But it's hard to break into the Chinese market. I want to help Japanese companies find ways to sell their technologies."

As tightening regulations push Chinese firms to clean up their operations, Japanese businesses see opportunities in an expanding green-technology market.

NHK WORLD reporter Eiji Hamanishi spoke with Newsroom Tokyo about environmental issues in China.

Beppu: Pollution has been a problem in China for a long time. Why have the leaders tightened the rules now?

Hamanishi: They've taken measures before, but they've usually been temporary responses to specific events. I was in Beijing last autumn for the International Marathon. Images of smog-filled air were broadcast around the world. It wasn't good for China's reputation. World leaders were about to fly in to Beijing for an APEC summit. So, authorities carried out an aggressive campaign to clean the air.

They temporarily limited the number of vehicles on the roads, and suspended almost all construction projects and factory operations.

Beppu: The new regulations went into effect in January. How much tougher are they?

Hamanishi: The biggest change is the penalties for companies that pollute. Company executives used to think it was cheaper to pay fines than install green technology. But not any longer. If they can't comply with targets for the quality of waste gas and water, they have to pay a fine every day until the problem is resolved.

China's leaders have promised to be strict about enforcing the new rules. They used to put development first. Now they're trying to strike more of a balance. Chen Jining, the Environmental Protection Minister, described it as an "unprecedented clash of interests between development and environmental protection."

Shibuya: As we mentioned, the Environmental Protection Minister says this is a trillion-dollar opportunity for companies that can help cut pollution. That's an extraordinary number. Is it realistic?

Hamanishi: It could be. China's leaders have given the new regulations teeth. Companies have no choice but to implement changes. Many will have to bring in big changes. That's a lot of business for people with the right knowhow. And as we saw, Japanese companies are pitching their technology to try to take a slice of the pie.