More than 30 years of breakneck economic growth has left China’s environment on the ropes. Two vivid examples: Beijing air pollution so thick that the U.S. Embassy can only rate it as beyond its index, and disease-stricken industrial towns known as cancer villages.
To combat the crisis, the Chinese government budgeted $650 billion for environmental cleanup in its current five-year plan, which runs through 2015. Money is just part of the solution, says Henry Yin, a former commissioner of the California Commission for Economic Development who believes that without leading-edge technology China will face an uphill battle. Yin has a strategy that officials in Beijing are finding hard to turn down: a cleantech alliance with Silicon Valley.
Since last year he and some 30 local partners have been marketing the California Green Tech Park in Fremont, between San Francisco and San Jose. Yin recently joined forces with the Beijing-based China Venture Capital and Private Equity Association to recruit investors from among the CVCA’s 1,000-plus members and convince their affiliated companies to set up research and development centers in the park, which is ready for tenants. So far, about a dozen unnamed Chinese businesses have pledged to invest in the 25-square-mile property, a public-private partnership with the City of Fremont. Part of the Fremont Innovation District, its first phase will cost at least $50 million.
“The park can offer many Chinese enterprises opportunities to invest, conduct research and development and advanced manufacturing, and even conduct mergers and acquisitions in the U.S.,” says Yin, who immigrated to the U.S. from Taiwan in 1974 to study industrial and systems engineering at San Jose State University and founded a computer component business in Fremont. “It also helps Chinese enterprises to sell into the U.S. or back into China.”
The Chinese government encourages domestic companies to seek global acquisitions of innovative technologies, says Laurence Brahm, a Beijing-based U.S. lawyer and entrepreneur who serves as an adviser to the Ministry of Environmental Protection. Having trained a generation of manufacturers, the country is outsourcing its R&D, Brahm adds. “With California in such bad financial shape, it needs Chinese capital,” he says. “China can buy U.S. capability and put it to work in the green sector back home.”
Suffering from oversupply, Chinese producers of solar panels and other green technologies will gain access to the American market and the right to label their goods as made in the U.S., Yin explains. Li Zhiyong, deputy secretary general of the CVCA, agrees that the California Green Tech Park could play a dual role as a cleantech incubator and a gateway for Chinese M&A. “California was where solar technology was born and is also the biggest market for green technology in the U.S.,” Li says. “Chinese enterprises have a lot to gain by investing in Silicon Valley.”
With its large Asian-American population, Fremont has strong ties to China, notes city Councilmember Raj Salwan. “Our real estate is a bargain compared to other parts of Silicon Valley,” he says. Another plus: Although the U.S. government has restricted Chinese investment in some domestic technologies, particularly telecommunications and anything defense-related, cleantech can gain easier approval from the Committee on Foreign Investment in the United States.
The CVCA’s Li says it’s too early to tell how many of his group’s members will invest in the park or how much they’ll commit in total. But he thinks many will want to pony up because of the Immigrant Investor Program, which gives foreigners a shot at U.S. citizenship in exchange for investing a minimum of $1 million in a business that creates at least ten jobs. “Having permanent residency status in the U.S. is attractive to many Chinese entrepreneurs,” he says. They can breathe easier — literally.
Follow Allen Cheng on Twitter at @acheng87.
