Energiatehokkuudesta liiketoimintaa seminaari 22.5.2012 Väläys Kiinasta Kari Hiltunen Head of Tekes Beijing Councelor Science and Technology

The year when the Chinese economy will truly eclipse America’s is in sight

Pros and Cons

Vast, rapidly growing Market

Predictability

• FYP, long term strategies, Foreign

Investment Catalogue

Technological advantage

• International cooperation wanted

Subsidies

• Go west policy, high-tech status

Still low cost structure

Lack of transparency

Severe competition

• Sometimes unfair treatment for

foreign enterprises

Unpredictability

• Implementation of legislation

Public purchasing practices

• China hasn’t approved WTO’s public

purchasing agreement

Protectionism

Country risk?

IPR

Need to scale up production fast

• Capital?

Real Estate and construction sector

Mapping & Investment

Up to February 2011, there are 259 cities at

prefecture level or above proposed to adopt

ecological city development model, and

90.2% are promoting ‘eco-city’ and ‘low

carbon city’ as slogans.

At the trend of 80% urbanization population, China's

cities will need to build 46 billion

square meters of new floor space in residential and

commercial buildings by 2030.

Construction investment for floor space would be a

cumulative 39 trillion RMB by 2030.

For the next two decades, China would need to spend

€150 billion to €200 billion a year

—on top of currently planned spending on energy

efficiency—to realize the full potential

of the technologies.

China's government is pushing for the expansion of

urban mass-transit systems, and

spending on transport infrastructure will remain robust.

Investment in urban transit will

increase between three and five times to 2030 (around

9,399 billion RMB).

Source: McKinsey

Real Estate Bubble?

Pessimist: China’s housing market is a playground for nouveau

riche who buy multiple fancy homes they don’t need. Prices are too

high and speculation is rampant.

=> Clearly, the trend is unsustainable.

Optimist: China is transitioning from a rural to an urban society. New

construction is driven by rising incomes and urbanization, and

reflects genuine demand for better housing.

=> Clearly, the boom has a long way to run.

Dragonomics: Both views are correct.

Future?

Suisse Group AG: sharp fall in property investment growth

Demand is being artificially constrained: prices and sales will drop

• Nationwide housing sales fell -15% in Q1/12 after a -8% drop in Q4/11

• Foreign investment in the development of land, the construction and operation of

high-end hotels, villas, high-class office buildings and international exhibition

centers, as well as foreign investment in secondary real estate markets

(e.g.realestate and brokerage firms) are listed as ‘restricted’.

The Economist: end of 2011 the residential land bank is expected to be

140.000 hectares => will take 5 to 10 years to profitably digest.

Dragonomics: China’s urbanization drive still has at least 20 years to run.

2030: Beijing and Shanghai have more than 50 M people

Chinese contractors are targeting to developed market

• Slowing domestic market and political turmoil in Middle East and North Africa

• M&A, especially infrastructure projects, 2011 1-10: 76.1billion USD revenues

from international contracts

Incentive Policies towards low-carbon cities

- Solar Energy Roof Plan

Providing the project with subsidization.

- Renewable energy demonstration city

50-80 million RMB subsidization for each selected city.

- More than 50 Eco City project labeled by NDRC

Set criterias, monitored annually

- More than 100 Smart City projects under development

- Heat Metering and Reconstructions for Energy

Conservation of Established Buildings

- Water-saving city creation

Vice Minister of MOHURD : problems in eco-city projects

Wrong location

• Often in fragile ecological areas, Chongming Island was mentioned as an example

Bad traffic solutions

• Lack of density, doubling the density of an area can reduce driving by more that 30

percent

Not really eco or smart cities

• In the end of the day basic developing business

No understanding of local culture and requirements

• South Railway Station in Shanghai was mentioned as an example

Lack of recycling

Too expensive technologies and solutions

• garbage collection system was mentioned as an example: expensive and consumes lot of

energy

Bad general planning

• Housing diversity, Occupational integration,Transportation diversity

Lack of use of local resources

The eco-city concept is taking off in China, but with mixed results

Eco-Valley in Mentougou, Beijing Design Phase • Main technology/ Specific technology related to building energy efficiency

• Recycling and reuse of urban waste water and garbage

• Using clean energy on vehicles

• Wind power generation

• Self-sufficiency on food, and adopting energy ecological cycles in all the grain fields, orchards and

vegetable gardens.

Eco-Valley in Mentougou, Beijing Construction Phase Villas for super rich

Selling prices starting

from 10 M USD

Living area > 1000 sm

Very little or nothing

to do with ecological ideas

But we have hope?

Li Kegian:

“ 75% of China’s building stock should be demolished or

renovated ”

Beijing Government Working Report 2012:

the project of reconstruction & renovation simple & old buildings in Beijing

will start from the first phase of reconstruction 882 buildings with total area

of 15 million square meters and more than 1 million families being

involved. The government will finance 15 billion RMB to the project.

The first demo renovation project has been carried out at Xinyuanli

community in Chaoyang district in April 2012.

"Nothing is easy but

everything is possible in China"