Sustainable Urban Development to China
Trends and opportunities
China’s urban population is estimated to reach 100 million by 2020, when urban dwellers will account for approximately 60 per cent of China's 1.35 billion population (Source: China New Urbanisation Development Promotion at UN July 2014). With increasing awareness of the environmental cost of the rapid economic growth, services and technologies related to greener buildings, water and energy efficiency, waste disposal, renewable energy and cleaner vehicles are all key elements to China’s sustainable urban development.
The 12th Five-Year Plan (2011-15) set targets for improved energy and water efficiency, low carbon production and uptake of ‘green’ or more sustainable development practices. However, sustainability is still a relatively new concept in China. Policy settings have influenced improved business practice, but in many cases penalties for non-compliance are not severe enough to drive change and consumers are not willing to pay a premium for sustainable products and brands. (Source: China Greentech Initiative: Vision and Roadmap to realise China’s environmental sustainability goals, 2013)
The longer term challenge is to educate consumers and businesses about the broader economic and social benefits of sustainable development, so as to influence the whole supply chain to adopt sustainable products, materials and practices. The pace of progress will not be consistent across the country. But as social awareness increases, demand for the integration of new or more advanced technologies, building practices and materials into the building and construction sector and the need for improved energy and water efficiency will deliver significant opportunity.
‘Green building’ (referencing sustainable development) has been a buzz word in China since it was highlighted as a priority sector in the 12th Five-Year plan. In most first tier cities, energy saving guidelines are in place for all new buildings at the design stage and many local governments have set-up green building regulations in line with national policies. The Shanghai Green Building Council (SGBC), a peak body for the industry, has developed a “Green Building Three-Year Action Plan (2014-2016)” (in Chinese) to manage continuing urban development, in the face of limited resources and environmental challenges. The key messages from the Three Year Plan are:
- Stipulation of a basic star rating for all new buildings in Shanghai, minimum one up to three star. This star rating applies to residential, public and commercial buildings.
- Promotion of its ‘industrialised housing program’ (known as modular housing). This ambitious program sets a target of 25 per cent of total new buildings by 2014 and 50 per cent by 2015.
- Promotion of energy efficiency and new technologies through redevelopment or retrofit projects in government and public buildings, with an aim of achieving seven million square meters by 2017.
- Green building subsidies e.g. RMB 60 per square meter of floor space up to a maximum of RMB six million per project. This applies in particular to government and public buildings.
The China Building Material 12th Five-Year Plan has also set targets to prompt greater adoption of and investment in green products and technologies.
Aside from the challenges of uptake, opportunities will emerge alongside the development of a local ‘green industry’. Specifically, opportunities exist for companies offering a range of services and products including:
- design theory and green building practices
- operation and supervision of energy conservation in large public buildings and energy conservation service market
- architecture and design
- interior design
- urban and regional planning
- landscape design
- engineering consultancy
- water and wastewater management
- energy efficient consultancy and smart grid management.
- building integrated renewable energy systems
- energy efficient lighting
- heating, ventilation and air-conditioning
- intelligent building management systems
- water saving and proofing systems
- insulation materials
- high quality architectural paint and finishes
- innovative building products
- Australian style natural building materials (e.g. sandstone, clay bricks)
- technology related to pre-fabrication
- special eco-technologies for green building (e.g. Geothermal heat pump)
- advanced building equipment (e.g. maglev chiller) and advanced energy-efficient building materials
- systems to enable application of recyclable and reproducible building materials
- optimisation and monitoring technologies to manage energy-conservation in buildings
- renewable energy sources e.g. solar energy, geothermal energy and methane.
For more areas of opportunity in environmental management, please read the Environment and water management to China industry profile.
Domestic innovation and an increasing international involvement in the development of building materials and technologies for the market, means companies face intense competition. Local companies in some sectors have been quick to innovate or improve on existing available technologies. Chinese companies are actively developing and building integrated solar systems for export around the world.
Having a strong and consistent presence in market may deliver some advantages over direct exporters not based in market or with local representation).
Tariffs, regulations and customs
China employs a seven standard, three star rating system that could be considered a hybrid of the British LEED and US BREAM rating systems for ‘green building’. Legislation relevant to green building includes:
- regulations on energy-saving for civil buildings – includes standards and guidelines relating to HVAC (heating, ventilation and air-conditioning), building aspect, land use and conservation, energy use and efficiency, water use and conservation, building materials, management and recycling, indoor environment quality, maintenance and operational management of buildings
- building standards for residential buildings
- standards for technical evaluations of residential buildings
- assessment system for green buildings
- law on energy saving
- law on architecture.
International standards are not often recognised in the market and suppliers are required to adhere to Chinese standards, e.g. safety and fire proofing standards must be certified by the relevant Chinese authorities. It is useful to understand what standards are in place for your relevant product to ensure compliance or to understand any necessary modifications. This may include modifications to packaging as well as the product itself.
The Australian Green Building Council has enjoyed a close relationship with its Chinese counterpart and is a good source of information on the industry.
Marketing your products and services
Subject to products and services, market entry strategies may include:
- establishing long-term relationships with local companies who can recommend your products to end users
- appointing distributors or agents
- establishing joint-ventures with a local company
- acquiring local companies who are in the same industry and have a track record and customer base
- linking up with local or international companies in the market to co-bid for projects
- approaching customers and selling products directly
- setting up a representative office or company in China
- setting up a manufacturing base in China
- technology transfer or IP licensing.
Austrade has worked closely with Chinese authorities and industry to promote Australian sustainable building expertise. When considering entering the market, it is definitely worth consulting with Austrade about your plans and how the Austrade network can assist you.
China is a large country with very diverse markets. It is recommended to consider a regional distributorship arrangement instead of a sole or exclusive distribution contract.
Links and industry contacts
National Development and Reform Commission (NDRC)
Ministry of Housing and Urban-Rural Development (MOHURD)
China Center for Urban Development
China Green Building Council (China GBC)
Architectural Society of China
China Building Materials Federation
China Greentech Report 2014
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