Made in China

How can developers enter the booming Chinese biomass market?
By Lisa Gibson | November 23, 2010

Biomass development in China seems to be growing exponentially with no end in sight. News reports are constantly highlighting new plant proposals and incentives, beckoning developers to join the markets and reap the benefits. The question is how to do it.

“China development is explosive,” says Simon Parker, CEO of DP CleanTech, a China-based biomass power provider. “It’s hard to exaggerate what is happening.” It is difficult to enter the burgeoning Chinese biomass market, Parker admits, but if it weren’t, profits wouldn’t be as good as they are.

Washington D.C.-based D4 Energy Group saw its window of opportunity in a partnership with Global Partners United Ltd., offering local marketing of its gasification technology in China. GPU already has a marketing presence in East Asia, but also has engineering and integration experience. “We found it critical to find a strategic alliance partner that not only brought relationships and marketing to the table, but also brought integration and engineering capabilities with it,” says Don Rosacker, CEO of D4 Energy. GPU has also demonstrated its expertise in protecting technologies in new and foreign markets, he adds.

Perhaps most important, GPU will represent a local presence for D4 Energy’s customers. Customer service and on-site support are critical with energy projects, Rosacker says, and customers can’t wait a week for someone to fly to China from the U.S. “GPU will provide what we call Tier 1 support and we’ll provide Tier 2 support to GPU,” he says.

As China represents such a substantial market for all products, a domestic infrastructure tends to develop very quickly, Parker says, even in new products. “This requires that companies who wish to tap that market have to work out quickly how to make themselves relevant locally very quickly,” he adds. “So a partnership, whilst not essential, can accomplish this goal.”

But every situation is different and a partner won’t always be the right route to take, Parker says. “It can be, or it can backfire,” he says. “The right partner with clarity upfront does help significantly. Getting the balance right here is the essential first step where each party can contribute and deliver the right solution.”

Rosacker says everything develops more quickly in China than in the U.S., as China has embraced clean energy and waste to energy. “That goes without saying,” he laughs. The government in China is supportive of such renewable energy industries and eliminates obstacles to efficient development. “We have put obstacles on the local, state and federal levels,” he says of the U.S.

But China’s quick development does come with its drawbacks. “With such speed of development, sometimes capital is not allocated as efficiently as perhaps it could be in some instances,” Parker points out.

“The market is maturing rapidly and the government initiatives and focus to ensure balanced development of the industry is something deserving of respect,” he adds.