24 Dec 2013
Guangdong “goes out” (company case studies 1): Sourcing technology partners to develop the Chinese and overseas markets
According to Dongjiang Environmental Co Ltd (DJE), mainland enterprises are increasingly “going out” to seek foreign partners and “bringing in” overseas technologies to help them raise their capabilities and tap into the buoyant mainland “green” market. They also work with foreign companies to open up overseas markets with their proprietary core technology.
Tapping into the robust green market in China
In view of its serious pollution problems, China is keen to step up environmental protection efforts and has tightened environmental rules and regulations, leading to an increasing demand for various kinds of green services. However, most mainland enterprises lack the relevant front-end technologies and thus have a great demand for imported environmental technologies and equipment, as well as scientific research and technology talents.
Based in Shenzhen, DJE has been actively looking for green opportunities on the mainland since it was founded in 1999. The company provides a wide range of environmental services, including turning wastes into resources, renewable products and energy, and the disposal of hazardous wastes. With operations in the Pearl River Delta (PRD), Yangtze River Delta and Southwest China, the company handles more than one million tons of waste annually. DJE is now one of the leading environmental service providers in China.
|Landfill operated by DJE (photograph provided by DJE)|
“Going out” to seek business partners
To solve such problems as technological barriers and lack of talent, DJE actively implements the “going out” strategy. Examples include setting up a joint venture with the Heritage Environmental Group from the US, the largest environmental protection company in North America. Utilising its partner’s advanced waste copper liquid treatment and re-utilisation technology, DJE started to extract TBCC (Tri-basic Chloride Copper), a new type of feed additive, from waste electronics circuit board liquid. The product is now available on the mainland and overseas. DJE signed a deal with the French Veolia Group to build and operate the technologically advanced Guangdong Province Hazardous Waste Comprehensive Treatment Demonstration Centre, providing volume reduction and detoxifying treatment services for hazardous municipal wastes generated in the PRD and Eastern Guangdong regions.
|Guangdong Province Hazardous Waste Comprehensive Treatment Demonstration Centre|
(photograph provided by DJE)
DJE told HKTDC that its status as a listed company in Hong Kong has greatly helped in creating a favourable brand image and promoting co-operation between the company, its mainland and overseas partners and its clients. On the operational level, DJE uses Hong Kong as a gateway to contact green enterprises from Hong Kong and developed countries. DJE believes that Hong Kong excels in many aspects, such as having free flow of information and a wide range of professional services, all of which can help DJE reach technological co-operation arrangements with its foreign partners.
“Bringing in” technology is usually just the beginning of business co-operation. With its technological edge and understanding of market needs, DJE still has to carry out the second round of research and development, so as to adapt the imported technologies and related management systems and equipment to the actual requirements of the local market. According to DJE, while foreign companies may have an edge over their Chinese counterparts in terms of technology, they are not familiar with the mainland market and its actual conditions, not to say the way to maintain good relations with government authorities and relevant agencies.
Given its strengths in back-end technology application and mainland market expertise, DJE engages the services of technology project managers in Hong Kong to leverage on the core technologies of its foreign partners. This enables the company to overcome technology bottlenecks, fully utilise the strengths of both parties and open up the domestic market more effectively.
Venturing into overseas markets
With enhanced technological capabilities, DJE has also started to seek business partners via Hong Kong’s market networks, while bringing in foreign technologies at the same time. By exporting its core technology, the company ventures into overseas markets. Today, DJE possesses the relevant technology and experience in reducing and detoxifying industrial waste fluids containing heavy metals, waste slags, sludge, waste organic solvents, waste grease and waste mineral oil, as well as utilising the resources derived from such wastes. The company also possesses patent technologies in related scopes, such as the integrated treatment and utilisation of waste circuit board liquid, the integrated utilisation and industrialisation of electroplating sludge, the treatment of wastewater with high ammonia-nitrogen concentrations, waste incineration and bio-mass energy utilisation.
In partnerships involving overseas companies, DJE needs the support of related professional services such as the legal services pertinent to project finance and contract negotiation, and expertise in technology project management. In the course of developing the mainland and overseas markets, both DJE and its partners focus on establishing long-term partnerships, rather than one-off technology transaction deals. The company believes that only through exchanges and collaboration with its partners can they establish a long-term, sustainable business model and effectively provide green services to the users. They are able to leverage on their respective strengths, complement each other and achieve win-win situations. Therefore, DJE also expects its external service suppliers to provide comprehensive professional advice and services in such aspects as law, tax and corporate finance as they embark on long-term co-operation with their business partners.
China has been actively building platforms to encourage enterprises to “go out”. In the third and fourth quarters of 2013, HKTDC Research conducted in-depth interviews with some Guangdong enterprises (including the abovementioned company), which have used or intend to use Hong Kong services, focusing on their services requirements when they are “going out”.
|(2)||For more information about China’s “Going Out” policy and Guangdong “Goes Out”, please refer to the research article Guangdong: Hong Kong service opportunities amid China’s “going out” strategy and the research report China's "Going Out" policy: Guangdong's demand for professional services of the HKTDC Research|