With juicy government subsidies in the pipeline, skyrocketing demand for electricity, an influx of first-time car buyers among its 1.3-billion-person population, and an expected lead in the global market for installations of charge points for electric vehicles (among other factors we’ve detailed in a new report on GigaOM Pro, subscription required), the Chinese market has attracted the interest of U.S. greentech ventures like bees to honey.
China’s economy showed signs of cooling in June after a seeing 11.9 percent growth in the first quarter of this year over the same period a year ago, Reuters reports. Nonetheless, Melissa Guzy, VantagePoint Venture Partners’ Managing Director and Group Leader for Emerging Markets-Asia, told us in an interview recently that when it comes to greentech, “if there’s one country that’s commercializing these technologies, it’s China.”
But as Google’s ongoing standoff with Chinese authorities has demonstrated, doing business in China can be a labyrinthine task. Guzy’s top recommendation for young greentech ventures hoping to break into the Chinese market is deceptively simple: “Don’t come here and think you’re going to do it by yourself.” So who do you need to know to start doing green business in China, and how can you start making those connections?
We’ve taken a deep dive on this topic over on GigaOM Pro. But some of the basic steps include starting with an existing relationship (with venture capital investors who have operations in China or affiliate relationships with Chinese firms, for example) to build a network and local team, and to identify potential partners in China.
At a high level, Guzy said the road to business in China for U.S. greentech firms will run through three main gates, all connected by the central government: research institutions, companies and local governments, especially those in Wuxi, Tianjin and Shanghai. For any projects or ventures related to electricity, said Guzy, companies will also need to broker a relationship with the government-owned State Grid Corp.
For automotive ventures, Ford Motor’s Director of Sustainable Business Strategies John Viera pointed to the university system, and specifically Tsinghua University in Beijing (which houses the China Automotive Energy Research Center, founded last year with funding from General Motors and Shanghai Automotive Industry Corporation), as key entry points for U.S. companies.
For early stage ventures eying an eventual entry into China, a host of new alliances between U.S. greentech companies and Chinese partners will be worth watching for lessons in the coming months and years. In the energy storage and electric vehicle space, China’s Lishen Battery Power has partnered with stealthy battery pack management systems developer Atieva as well as electric car startup Coda Automotive, and Wanxiang, one of the largest auto parts suppliers in China, has formed a joint venture with Ener1 subsidiary EnerDel. Shenzhen Goch Investment and ECOtality have paired up for electric vehicle charging infrastructure. And Zongshen Power Machinery has entered talks for potential collaboration with and investment in electric motorcycle startup Mission Motors.
Of course, some best practices apply not just to greentech, but also more broadly across the spectrum of technology providers seeking a piece of the Chinese market. As Bill Bishop noted in a recent GigaOM Pro piece, lining up venture investors, lawyers, accountants, in some cases market-entry firms, and other advisors who have experience in China and can provide critical understanding of the “competitive, regulatory, and legal topography of any given industry and sector” should be a top priority for “anyone serious about expanding into China.”
For more on this topic, check out Carving a Path to Greentech in China.
Photo courtesy of Flickr user gribbly