On Friday, November 14, I was able to catch the last section of the two-day green tech summit held in Shanghai. This summit is the companion event to the US-China Green Energy Conference, which Crossroads will be covering this week. Check out: http://ucgef.org/en/activities/beijing08/overview to look at the list of speakers. Crossroads will be taking notes on each of the presentations and offering side interviews as well.

Getting back to the Shanghai summit, I was able to catch panel 10 on “New Business and Financing Models” and a breakout session titled, “Competition & Regulation: What you need to know about China’s Green Technology Market.” Below are my notes for each the panel and breakout session.

Panel 10:
•    Government incentives are crucial in order to finance a greener economy.  Government must take the lead to help with start-up costs and the government’s policy innovation is the precursor to establishing a green market. A case in point would be San Francisco with their Solar Task Force, which cuts the cost of solar installation at different rates for residents, commercial buildings and nonprofits. If you look at the cost for solar, the only states in the US that are going for it are California and New Jersey because they have these government incentives.
•    When it comes to financing technology companies, inherent conflicts exist between: the cost of technology and the profitability of the firm and the growth of a region and meeting pollution reduction goals. There needs to be a good working relationship between government, technology businesses and investment banks in order to mitigate these conflicts.
•    There were a couple comments on the effects the financial crisis has brought to the financial sector for green tech. As a result of the crisis there is now higher equity and lower returns. In addition, it used to be all about collateral, but now it’s about the ability to re-pay: equity is not what it used to be.
•    China is showing a move away from the institutionalized banking system since they can now establish small loan companies. These small loan companies give money to SMEs (Small and Medium Enterprise).

Breakout Session:
•    Moderator David Gossack from the US Consulate General Shanghai highly recommends “Clean Energy: An Exporter’s Guide to China.” Check out www.export.gov or contact him directly to receive a copy.
•    Benjamin Pinney, from the Boston Consulting Group gave a refreshing overview of discussions at the two-day summit. He said he heard people talking about “solar collaboration” and “grid-parity.” He finds solar collaboration to be flat wrong because solar is about competition not collaboration. In addition, we are a long way off from even coming close to talking about grid-parity.
•    Mr. Pinney also had an excellent point about China’s consumer attitude about environmental protection that I think was dead-on. He said that we have to remember that alternative energies are a security issue and, thus, it is heavily financed by the defense bureau of government. Therefore, since consumers aren’t the one financing it, they only become aware of environmental protection and its importance because its being told to them from on-high. This type of “education” does not make them feel empowered because there is no role to play.
•    Regulations to achieve national goals: Renewable Energy Law (2006), Top-1000 Enterprise Energy Efficiency Action Plan (2007), Middle and Long-term Development Plan for renewable Energy (2007), tax incentives for renewables, and subsidies for renewables.
•    It is important that all sectors (wind, solar, hydro, etc.) do not have equal access to the market, government incentives, etc.
•    Charles McElwee gave a great presentation answering the often asked question: Can I do business legally in China?
1)    There is a catalog for foreign investment that is encouraged, restricted, prohibited, and other. See where you fall under these categories.
2)    What form of business? Contracting (easiest), establish a representative office (difficult), joint-venture (ok), WFOEs (ok).
3)    What about my IP (intellectual property)? Chinese businessmen do not use long contracts and the civil law system is not well developed. Also not a lot of case law to figure out ambiguous legal clauses. For dispute resolution don’t go to a Chinese court, arbitration is best. Arbitrary bodies include CIETAC, SAC and internationally Hong Kong’s HKIAC (preferred by the PRC).
4)    Major laws: Renewable Energy 2001, Conservation laws (April 2008), and be mindful of the Foreign Corrupt Practices Act (i.e. do not pay for guanxi)
“Slow, steady and wary wins the race in China”
•    According to Robert Theleen, Chairman of Chinavest, 90% of China’s bank loans go to State-owned enterprises and 10% to SME’s/private sector. Access to capital and bank funding has slowed in China, thereby changing the landscape of due diligence with commercial liability. Now, China finds the cost of capital as the most important, which is a sign of sophisticated banking.
•    An innovative technology came from the Solar Environment Technology Corporation case study. CENICOM is soon to be on the market. There technology can store solar energy for 5-10 days as opposed to the common 5-6 hours for existing solar thermal systems. There are no emissions and can be used with both local and regional grids.
•    The session closed with a recommendation to look for locally-sourced capital since it is your best bet for panicked-driven capital.
One interesting magazine distributed at the conference was called innocomm, published by the Knowledge & Innovation Community. Check the bilingual site out at: www.kic.net.cn
More to come this week from Beijing!

(h/t Danwei) for highlighting a new site that is tracking officials who have taken bribes, abused their power, or otherwise gone beyond the call of duty.

Like Ma Jun’s website that locates, documents, and pubilcy identifies air and water polluters, this is a resource that 5 years ago would not be viewable in China (assuming the information could have been gathered), and it is a sign in the right direction that these sites are now not only visible in China… but hosted here.

Shanggui

Last week when I wrote, Get Them When They Are Young, over at Cleaner Greener China I was not planning a follow up post.

However, this morning while walking to work I was reminded of just how important environmental education is, how important it is to teach environmental education, and just how far China has to go. Perhaps one of the most interesting cultural/ fashion statements there is in china, many infants (up to age of 3) will don a set of pants that are split down the middle.  the purpose is simple.. to make doing to the bathroom easier.  No matter where one happens to be.

• Middle of the sidewalk.  Ok
• Middle of the subway platform.  Ok
• Middle of the road.  Ok
• Public park.  Ok
• Apartment Lobby.  Ok
• In front of car.  Ok
• Side of car.  Ok
• From back of bike.  Ok
• While mom holds your legs.  Preferable
• While Grandma holds your legs. Sure
• Dad holds your legs.  odd??

Initially, it was one of those things that you look on with a mix of curiousity and a mix of repulsion.  I once even asked a teacher about this practice, and was given a look that made me think I was asking the dumbest question ever.  Of course babies are allowed to poo and pee on the street… “their poos are special!” However, what I think is important to point out here is that while it may be quick, easy, and convenient for mom, these children are actually learning their first lesson in environmental protection… and I am not talking about compost. As my flatmate in Beijing so appropriatly said “If you teach a kid that they can crap on the street, you have taught them they can do anything they want”. If you think about it, the lesson learned is the ultimate lesson in selfishness.. that it is ok to expect people to walk through my wii (and more).  That one does not need to hold it until the next public toiley… that anywhere it is physically possible to squat IS A TOILET. With that as a foundation, China’s children are supposed to learn not to litter, not to dump chemicals in rivers, to conserve energy, and to think of the impact that one has on the environment… and how that will impact others.

Another behind the scenes video detailing the accounts of labor practices in China’s factories has been released on youtube, and this time the target of the film is Disney.  An ongoing battle for Disney, they have had some high profile issues in China and have begun working to address the issues in a public manner.

The film itself is compelling, and highlights some of the issues that Perig’s note highlighted a couple weeks back.

Part 1:

Part II:

Located within its 2007 CSR Report, OKI has a 2 page section on their China based CSR activities.  Concise, within the 2 pages we can see that the firm is investing in its people, looking to meet environmental standards, and has a small (but growing) community program where they are building schools, playing baseball, and donating blood.

Not overloaded with data, but a nice way to make sure to cover China as part of the overall report when many others have yet to take that step.

To read more about their CSR practices you can click here, or read their special section on meeting their CSR commitments

A few days ago, I received the below from friend Pierig Vezin of WethicA.  The founder of this company, Pierig is someone I have come to refer friends to who are in needed of ethical supplier audits, and his letter below shows why.  It is an excellent piece that I encourage everyone to read.

During the past month, we broke our yearly “record” of weekly working hours in one factory. The record number was 106 hours in a single week for these workers. Breaking it down, these workers labored more than 15 hours a day for a straight 7 days a week. But placed in the context of an average week consisting more than 80 or 85 hours a week (12 hours a day, 7 days a week), the severity of their working hours become all the more clear. Even worse, these workers have not been given a day off in more than 2 months.

Fortunately, if only marginally better, not every factory keep workers laboring those hours, but the majority of factories work more than 70-75 hours a week with one to two days off a month. When owners are asked for explanation for these labor-intensive hours, the common one is still: “They are migrant workers, they want to work. If we don’t let them make enough overtime, they will quit.”

This statement seems reasonable enough to most people because it is partly true. The legal cap on working hours is at 40 hours a week. But as the workers are far from their home, they are often willing to work those intensive hours in hopes of earning as much as possible in the shortest period. There is however a very important difference to note. Workers prioritize wages over working time, but believing workers want to work more than 40 hours a week of their own volition is hardy true at all. Looking carefully at factory policies, we often find hefty penalties for workers for not working each hour expected, or even those asking for a day of leave. As most of the workers are paid on a piece rate, not working already means losing the potential wages of that day, but with the factory polices, it serves to double penalize the workers ensuring they lose twice the wages they would have earned working that day.

From a different angle, if workers would have been happy with the working hours, factory penalties to limit absenteeism and leave request would not be necessary. Often complaints from workers in interviews confirmed about being forced to work long, excruciating hours.

Whenever you hear that common justification for imposing long working hours on workers, know that the incentive to earn more is not the sole motivator for overtime; often times, the penalties keep these workers glued to their stations.

Over at Yale 360, Christina Larson has written an article entitled China’s New Environmental Advocates that highlights the Centre for Legal Assistance to Pollution Victims and some of the core issues that exist in enforcing China’s environmental laws.

The challenge of coordinating environmental enforcement across multiple levels of government — with central authorities often looking at the long-term picture, while regional officials remain more concerned about quick economic gains and local protectionism — is not unique to China.

Founded in 1998, and based in Beijing, Xu and a colleague brought together Centre for Legal Assistance to Pollution Victims as a means to correct what they felt they needed to put their academic knowledge of China’s environmental laws to use

to date, Xu says:

The center’s staff has taken up more than 80 cases: They’ve won a third, lost a third, and a third are still pending.

One of those pending cases involves a case of where industrial pollution has contaminated the water of villagers.  It is a case where villagers felt the effects immediately:

from vomiting and migraine headaches, to diminished rice yields and dead cattle. They came to believe the factory’s sooty emissions and waste water dumped into the local water supply, the Xiang River, were the source of these problems.

The villagers first appealed to the factory owner to install more stringent pollution-control equipment. Then they brought their concerns to the local environmental authorities. But by the summer of 2004, little had changed. So the villagers turned to force to shut the factory down — twice storming the grounds to rip its power-supply unit off the wall. Each time, plant operations halted temporarily, while repairs were made, but the factory was back online within a week.

Today Xu is preparing a lawsuit against the local environmental protection bureau, which green-lighted the factory’s faulty environmental impact statement. If successful, the lawsuit will force the factory to shut down until it meets environmental standards

In the west we have a long range of jokes about the role of lawyers, and their role within our society, however through this example it is clear that going forward the role of lawyers will become more important as China’s civil society develops.

China, as we covered in the recent post Pattern of HIV Changes in China, has had its fair share of problems when it comes blood collection, monitoring, and distribution.

It was an issue that Kaiser Family Blog post China’s Blood Supply Not Being Monitored Properly address, but more recently we saw this first hand during the earthquae relief when cities were not initially allowed to send blood from their banks to the affected regions.  It was in part a logistics problem (lack of cold chain), but it was primarily a system by which prevented regional contaminatoins.

a process that the new system will hopefully prevent:

All eight umbrella branches of the Shanghai Blood Center had been linked with a sophisticated information system, said officials from the Shanghai Health Bureau.

The clinics will store the blood while samples are being screened, before distributing it to hospitals that need it.

Dr. Esslinger is the designer behind the sleek sophistication we see with Sony’s television series by Wagas and Apple’s “Snow White” design language. During the 1970s, early on in Esslinger’s career, designers did not have a prominent role when it came to producing a good. Now, however, they have become more important players with new responsibilities. Dr. Esslinger shares his views on how a designer can incorporate sustainability concepts within a capitalist system of production and what he has done so far in his own company frog design (not capitalized for the Bauhaus concept of nonhierarchical relationships) and at the University of Applied Arts in Vienna with his students.

Below is an outline of two separate talks given by Professor Esslinger on Friday September 19th, 2008.

The Next Apple and Sony
There was a panel of three people talking about design using the case studies of Sony and Apple while trying to answer the question of what it takes to become the next heavy weight brand today. The two supporting speakers were Mr. Sydney Chun from Kohler Kitchens and Lorraine Justice, Head of the School of Design at The Hong Kong Polytechnic University. The main speaker was Dr. Hartmut Essliger, founder of frog design and Professor for convergent industrial design at the University of Applied Arts in Vienna, Austria. Sydney presented on what made Sony and Apple successful in terms of using design as a tool for solving business problems and achieving leadership. Lori, on the other hand, was interested in exploring design differences between East and West. She made an interesting argument about how Sony’s layout corresponds with the East’s visual pattern in terms of being more holistic and viewing objects in a relational manner while Apple represented the West in terms of being punctual with focused detail areas. Stemming from these presentations, Professor Hertmut got into the meat of the discussion on Sony and Apple, remarking that Sony was and is a very undisciplined company, while Apple is on track now that Steve came back to lead the company in the right direction. The reliance on the charisma of a leader makes the industry unsustainable in terms of pushing the envelope for environmental sustainability.

Dr. Esslinger then got onto the topic of his role as the “leader” of frog design. He doesn’t see himself as the main guy; the company operates on a democratic principle and he said, “They don’t have to listen to me. I have to shut up sometime.” This makes the work at the office incredibly dynamic and creative. He also went on to upcoming designers in China. He thinks that there is a huge potential for Chinese designers to bring product back to the center. He cited the example that, in Western countries, designers work on software, the “virtual” design components. Since the factories are in China, they can do more work with the actual material. His example was the iPhone. He thinks the iPhone has great software but crap for telephone design because you are still using a telephone pad to access texts. It’s also awkward to carry and handle. This could be where Chinese designers could really step in a make a difference.

GIGA v5: Green Creative Leaps

Part I The Designer’s Role in Sustainability

Dr. Esslinger opens the GIGA hosted event with global warming and the role designers play in its creation. The proper role of a designer is to “create objects which are useful art, inspirational and use as few atoms and materials as possible.” He criticizes the role of capitalism and its relationship to the designer by saying, “Today’s business mania about ‘shareholder value’ and ‘pleasing Wall Street’ results in more and more incorporate[d] behaviors that promote ‘financially safe’ and ‘politically correct’ conformity [and] stifles creative thinking….” He goes on to say, “As of today, we designers are systemic players in a financially aggressive, economic model which depends on multiplying products into thousands and millions.” In the end, design-like marketing is still about driving mass consumption and that is something a designer needs to acknowledge and address.

So how does a designer begin to address this paradoxical relationship between design and consumption? Esslinger goes through the production process of a good:
1.    Product Genesis (strategy and design)
2.    Production and Operations (applying materials, consuming energy, emitting pollutants)
3.    Usage and Consumption (consuming materials, consuming energy, emitting pollutants)
4.    Recycling (re-using materials, management of disposal waste)

He then goes through how to improve each step starting with 4 (recycling) and working his way up to product genesis. This clip plays cuts off after step 3.

Part II ELF and Open Source Design

for electronic brands and retailers around the world, there should be few issues more important than e-waste and supply chain management in a CSR report, and the recent Best Buy CSR report is no exception.

In the forward to the report itself, they begin by laying out their three aspirations:
1. A global champion for human ingenuity and opportunity — our employees providing leadership for our industry, our customers, and our communities worldwide
2. A global advocate for consumers in the world of technology — delivering consumer
electronics products and services to more people than any other company in the world
3. Environmentally and socially accountable for our brands and business operations
worldwide

according to the author:

This report is one of our first steps on the journey toward our aspirations.

Through this 30 page report, the main issues for me were related to eWaste, packaging, and product life cycles, and they have clearly addressed those issues. however, I think there is still a long way to go before I would feel comfortable saying Best Buy is truly dedicated to sustainability.

Some areas that I am encouraged by:
1) all of their 196 offshore “exclusive brand” suppliers have been audited! Few companies could say they same.

2) they are providing training to staff on energy star, and how to sell it. there is of course a benefit to this financially, but none the less it is a basic first step that has been covered and will create more awareness among its employees who are looking to upsell the more environmentally friendly products.

3) their 150,000 have logged 151,000 hours of volunteer service in the community. While only 1 hour per year on average is low, this number is 250% higher than last year, and that itself is commendable

providing a bit of constructive criticism, here are a few areas/ issues that I feel they should have addressed more fully, and/or should look to in the future as they take their next steps.
1) their recylcing events are limited to about 10% of their overall stores, and this should be expanded significantly in the future

2) The report does not mention transportation at all, and as a firm with 1000 stroes, stcked with goods that come in containers, on pallets, in master crates, and wrapped in bubble wrap, I would hope that they focus on increasing efficiency in this area - and tell us about ti

3) they are working with paper mills to identify more environmentally friendly weekly inserts, but getting 100% recycled paper and using soy based inks for a firm like this could be easily accomplished.

4) I would suggest more coordination on specific issues - i.e. create an environmentally friendly paper coalition between themselves and Dell - i.e. work with Music houses on media packaging design, materials, and logistics

going forward, Best Buy is going to need to really work on their supply chain issues, and I am happy to see that they understand that and seem to be prepared to invest in it.

In an ideal world, they would be part of cradle to cradle discussions with designers, consumers, OEMs, and transportation firm to really ramp up their platform in terms of sustainability, however in the real world this report is a good first step - an encouraging sign that another large retail firm has taken on a higher level of responsibility- and I am looking forward to reading their next report in the summer of 2009.