Business

Private investors, beware! China’s green sector still faces challenges

Ray Cheung, senior associate at the World Resources Institute, recently wrote about the challenges and opportunities facing China’s environmental and renewable energy sectors.

His article, featured in the book, “Sustainable Investing: The Art of Long-term Performance,” offers a word to the wise for China’s “greentech entrepreneurs” who want to make profits by helping the environment: Capitalize on growth but beware of challenges ahead!

The three key obstacles for the country’s green sector include the following:

• increased manufacturing costs, particularly of raw materials
• lack of human capital, since “the brightest minds are entering more lucrative industries, such as finance and information technology,” which can turn profits quickly, compared to environmental companies that require longer term development
• a fragmented market because of undeveloped regulatory infrastructure, i.e. lack of enforcement of environmental laws and weak environmental agencies

In conclusion, Cheung says, “Investors seeking to profit from China’s environmental cleanup drive should look for firms that have the right combination of human capital, business skills, and strategy.”

Read the full article here.

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