Opportunities in China's Green Technology Sector

Robert Hsu, September 22, 2009

In this Issue:

A Closer Look at China's Green Technology Sector
Helping Solve China's Water Pollution Problems
China's Organic Agriculture Revolution
Two Bets on China's Green Fertilizer Industry
Cleaning Up China's Pollution Problems

A Closer Look at China's Green Technology Sector

Pollution, global warming and lack of clean water resources are growing problems that many corners of the world face. As a result, countries' policymakers have taken more initiative in recent years to combat their own problems in order to clean up the world as well.

China has been one such nation that has truly stepped up and taken action to not only clean up its air and water pollution but also to prevent further pollution in the country. In preparation for the Beijing Summer Olympics last year, the government shutdown more than 300 factories in the city and limited travel in order to improve air quality.

While this was a short-term solution, Chinese policymakers now understand the importance of improving the country's air quality and water resources. So it's now placing stricter regulations on its factories and is looking into more alternative energy options. The government is strongly committed to reducing the country's air pollution problems and cleaning up its natural water resources.

To discuss green technology options in China, more than 80 technology companies, policy advisers and non-governmental organizations met this month. The group, the China Greentech Initiative, ended up compiling a report for the Chinese government that states China's green technology market could be between $500 billion and $1 trillion a year.

It also laid out around 300 green technology opportunities that ranged from alternative energy, water, infrastructure, industry and transportation. The group focused on green technologies, services and products that will not only benefit Chinese citizens but also minimize the impact on China's environment.

Considering China's rapid urbanization and massive infrastructure build out, the country definitely needs to be looking into green technologies. And as the Chinese government focuses on more of these green technology initiatives, many Chinese companies stand to benefit directly.

Because of this, one of the top questions that I receive regularly is how can China

investors take advantage of this trend. Well, despite the Chinese government looking into alternative energy options, I still think that there are limited investment opportunities in China's green technology industry.

First, even though China is set to become the world's largest wind-power, it is still too expensive of an industry to invest in. And solar power -- one of the sectors I'm asked about most often -- is experiencing excess capacity, so prices are dropping. So it's not really an investable sector right now.

With that said, don't get discouraged -- there are still some very profitable opportunities in China's green technology industry. You just need to know where to look. And right now, that's in water treatment companies.

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