Entrepreneur Black Hole: environmental protection and energy conservation depends on technology or relationship?

Why is a hot industry in business and politics so right that it is constantly "hitting the south wall" in the real market?

Energy saving and environmental protection, new fashion in the 2010.

At the end of 2009, not only did the Copenhagen conference not cool the red-hot clean technology in China, but after the new energy, energy conservation and Environmental Protection 2010 became the new hot spot in the upstart industry family.

At the beginning of this year, in the layout of the Central Committee to accelerate the transformation of economic growth pattern, "accelerate the promotion of energy conservation and emission reduction, speeding up pollution prevention" was promoted to "a new round of the world Scientific and technological revolution" of the high, energy conservation and environmental protection has the national strategic industry as a

For a time, energy conservation and environmental protection has become one of the most frequently-seen words in the investment population, and the heat is big and "Big Brother" new energy. But the voice of discord began to appear around the entrepreneur. "The environmental industry is the government's policy compulsion to push down, it looks like the market is up, but from a technical perspective and a product perspective, this is not true." "said a foreign investment and clean technology professional who asked to be anonymous. More investors bluntly told the entrepreneur: "This is a bad currency to expel the abnormal bubble of good currency." ”

In the industry entrepreneurs, after nearly two months of interviews with professional investors and foreign investment banking managers, the entrepreneur deeply felt that there was a thick wall standing in the face of China's energy-saving and environmental protection industry, blocking its benign advance and shaping the different ecological walls outside the walls.

Wall outsider Wu Coffee

Wu Xuxiang to withdraw from China.

"This is my last resort." Although I started my business in Canada, my technology was also developed in Canada, but as a Chinese, I would like to take my new technology first to China to achieve. But three years, I am more and more confused, we hold a good thing, we pay, we out of technology, why is the resistance so big? ”

Three years ago, Wu Xuxiang from Canada to set up a iadept environment, he hopes his new municipal garbage disposal technology can help China not to go to waste incineration power generation This has been abandoned by the industrialized countries of the road.

Today, garbage incineration is not a strange concept for us ordinary Chinese. In recent years, it has also become a focus of Chinese society because of its notorious two-UK emissions pollution problem. In Beijing, Nanjing, Shenzhen, Panyu, Wujiang, Xiangfan and other cities, there has been a collective boycott of the construction of garbage incineration power plant incidents.

Although the "very burning faction" that with the maturity of the technology, the waste incineration process of two British production has been greatly reduced, but as a highly toxic carcinogen, trace two British long-term accumulation may also pose a fatal threat to human health. Western scholars have studied this deeply. On the basis of these studies, the industrialized countries began to limit the waste incineration power generation technology in the 80 's, such as Japan, by 2000 had shut down 4600 garbage incineration facilities, accounted for its total of 70%. Canada has even legislated for the destruction of existing waste incineration facilities. Now, 15 countries around the world have legislated to limit waste incineration technology, with 70% of the industrialized seven countries introducing restrictive policies.

In the face of a technology that has almost been sentenced to death, a dead end of the industry, Wu Xuxiang confidently embarked on the road home.

Iadept environment provides a kind of environmentally-friendly garbage disposal technology based on source classification. After sorting out recyclable and biodegradable waste, Wu Xuxiang can landfill biodegradable waste and use its own unique fermentation process to accelerate the degradation process of landfill leachate. And iadept the most unique technology is that the landfill gas can be processed into industrial raw materials methanol. Since landfill gas is mainly composed of greenhouse gas carbon dioxide and methane, Wu Xuxiang technology can not only realize the resource utilization of leachate and landfill gas, but also sell the CDM emission reduction targets for reducing greenhouse gas emissions.

Long before returning home, Wu Xuxiang's new technology has won the US and Canada two investment banks, as well as the European Carbon Foundation's favor. He came back to China with the help of foreigners ' investment.

"The cost of building waste incineration plants is $ hundreds of millions of, which is several times the capacity of landfills." Our construction costs and landfills are equivalent, but we are with the money, we give the city promised to invest 100 million dollars in China. "The process of environmental protection, safety, but also with huge sums of money, Wu Xuxiang returned almost no thought of failure two words."

But three years, he ran more than 10 cities, the only harvest in Shanxi Jincheng did a day to deal with garbage capacity of only 500 tons of demonstration projects. "That amount of processing is not economical for us at all, but I have no choice but to find this opportunity." "Wu Xuxiang said.

"I am facing a powerful interest group that supports garbage incineration," he said. Wu Xuxiang summed up the experience of the past three years, "most of the cities we passed are contended garbage incineration, no rubbish can be dealt with us." "In a capital city of central China, the director of the local merchants ' bureau rebuffed him with the same reason, but he soon learned from the local technicians that there was still a lot of room," just don't want to give it to you. " ”

Wu Xuxiang's rivals are giants, many of them deep in the background, and the reason these companies are pouring into the trash is because of the benefits. "The first is the state subsidy tariff, up to 2 cents per degree 5." This price definitely has a very high profit margin. There is municipal waste disposal fees, such as Taiyuan, landfill can get the processing fee is more than 20 yuan per ton, but the burning figure is more than 120 dollars. The disposal fee of Shanghai incineration is as high as 240 yuan. It's a lucrative business. ”

And the cost of building a hundreds of millions of-dollar infrastructure for each incineration plant is also full of imagination. "There must be a PR component, so they don't have an objective assessment of technology," he said. "Wu Xuxiang said. He told "entrepreneur" a story of his own experience.

In a provincial capital city of central China, people in charge of the department once said to him privately: "The burning of such a large project is mentioned above, and we have no way to do it." ”

In three years of running, finding leadership is a skill of Wu society. Just returned home, he took it for granted that he should find the sanitation department in charge of municipal waste. Later, he found that these department leaders can not do the Lord, because there are too many departments involved, must find the city's head, even the "big mayor." This is not an easy thing, Wu finally found the trick, to the high level of the exhibition or government investment will go up to plug people. "It is possible to find leaders at the mayor's level." "Iadept recently has a good news, Nanjing has been basically determined to iadept open, Wu Xuxiang will soon start siting." "After listening to the mayor's approval of our project, we finally covered 18 chapters," he said. ”

But finding the mayor is just the first step towards a possible one. In a city in the Yangtze River delta, Wu Xuxiang even won the instructions of the party committee secretary, the deputy mayor has also done the deployment, but to the following units of authority is dragged not down to implement. Later Wu heard the other side of the saying: "Burning is the mayor's own project, so big decision if overturned, then this decision wrong responsibility who to bear?" "In this city, two burning power plants have been built, because the process is not clearance, two power plants can only operate at a low load, the first power plant for less than 6 years has been decided to scrap, while the third incineration plant will be launched."

"I'm ready to give up the Chinese market now," Wu Xuxiang said, "and do it, no more." After all, I have a lot of investors behind me to make money. The profit margins in Europe, America and Japan are much richer than in China, and many companies are now showing interest in our technology. I think I will have less time to go back home. ”

A Wei Wei.

Wei Wei nowhere to run. Sticking to the company of his dead father, he struggled in the energy-saving field.

Nearly 10 years ago, Wei Wei's father resigned from the Institute of Work, with his research and development of constant flow control valve to create a production solution to the winter municipal heating imbalance equipment company.

In the north of the traditional heating system will often appear a problem, from the boiler room or heat exchange station near the building temperature is very high, and far from the building heating effect is likely to be very unsatisfactory. In order to allow all residents to live a warm winter, the boiler room is often to burn more coal, the water temperature increased, but the result is that the boiler room near the building room temperature is too high, even need to open a window. This creates a double waste of coal and energy. Wei Wei Father's technology is to achieve a balanced heating by evenly distributing the water flow in the heating pipe and saving energy. According to Wei Wei, only Beijing now has more than 700 million square meters of municipal heating area, and they have done a sample survey, at least 20% of the users still have the problem of poor heating effect. If you consider the whole of North China, this is undoubtedly a market full of opportunities.

"We have our own patented technology. Our products are the best quality in the market and the best effect. "Wei Wei said. A few years ago, his father died, and he took over the company of his father. What determines the fate of this company is its client structure. Wei Wei's main customers are all over the heating companies, the vast majority of state-owned enterprises. "In the state-owned enterprises, how many people really take the energy-saving thing seriously?" Burning coal is not to burn his own, they are concerned about their own interests. ”

Let Wei Wei is proud of his product quality, in the early days of the company, had a larger community in Beijing to do a project, by 10 this year, the equipment is still operating normally. "Good quality is my advantage, but also my disadvantage." Wei Wei a face helplessly say. For some heating company executives, each change of equipment, is a chance to earn kickbacks, so they have a natural resistance to high-quality products. Many people made it clear to Wei Wei, "What are you doing with quality?" 5 years, 10 years is not bad. We don't have to be so good, we changed it in two or three years. ”

"The country is not setting standards, so the industry is completely unconstrained by quality," he said. Regardless of energy efficiency, the key to see whether the product is cheap, PR is not in place. "Wei Wei products because of the use of stainless steel material, so the market than the mainstream of plastic core products more than one or more of the price, which is his disadvantage." But these disadvantages are not insurmountable, as long as PR in place, everything is possible, but unfortunately, this is not Wei Wei's expertise. "I'm a bit of a man of ideas, and I really don't want to make money by that means," he said. We only do things when we have to. ”

A few years to do, Wei Wei experience is to find a relationship must find the heat company's leader, so that the work will be more smooth. But the leader to fill do not say, to the bottom or difficult. In a company in Xinjiang, the boss put him in charge of Vice president, vice president directly open mouth will be money, the first 50,000, the whole project finished, a total of 200,000. An automatic control company that worked with him has not yet received the payment because it has given only a hundred thousand of.

Because PR is not in place, Wei Wei to lose half of the customers every year. "That's no way to do it." We live in such an environment. "is to do down the customer does not mean to earn money, Wei Wei said, now the company has millions of of the accounts receivable, a large part of it will certainly not be back." "There is no standard in this industry, no authority, we fight the public relations ability, product quality does not matter." So customer loyalty is also very low, customer churn is very normal. "Wei Wei said. In the industry, the company that does big is tens sales for a year, and he has remained at millions of for several years, with little growth.

But he is not completely pessimistic. "I also see the hope that this industry is more and more private enterprises." "Private enterprise entry makes the rules of the game in the Local has been changed, the bosses are real to save energy, so they also become Wei Wei the most stable customer source," in the private enterprise market, our competitive advantage has a very good embodiment. But the reality is that these private enterprises are mostly small, and "as long as there is a state-owned enterprises in the city, the private enterprises must be suppressed." So Wei Wei's hope is still a spark.

"No one in our industry will dream big, how could such a messy market be bigger?" Wei Wei said gloomily.

Outside the wall

"Energy-saving and environmental protection industries face a wall that is difficult for technology innovation companies to enter the government or state-owned procurement system, which is precisely a government is the main consumer market." "Kuming to" entrepreneur "said. He worked in the investment banking division of a well-known foreign bank and contacted a number of China's energy-saving and environmental-friendly companies. "From our point of view, we do not believe that the Chinese executive level officials have this awareness, really want to push China's environmental protection and energy-saving industry, we see most of the shouting slogans." and involved in specific procurement, mainly to consider the relationship with the good. ”

Similar to the Wu Xuxiang, qiming Venture Investment clean technology partner Zhang Yong told the "entrepreneur", he had seen a sewage treatment company, technology is very unique, very innovative, but because it is not willing to do the gray things, resulting in a large number of business can not get, investors are afraid to enter. "We are in fact very ambivalent about investing in China," he said. Kuming said, "We often hope that the company can have a strong backer, so many things can be done." But at the same time, we do not want them to, because so many things are not so commercial, the future of uncertainty is also strong. ”

This does not seem to constitute China's energy conservation and environmental protection industry marginal technology innovation company reasons. But in Wu Xuxiang's view, this logic is through. The reason is simple, because it is a market dominated by officials or associate officials, such as state-owned enterprises, and officials generally lack the ability to judge new technologies, the first is to be safe, not to take too big a risk, so they tend to choose more traditional technology, such an environment in which the relationship is more critical than innovation.

"It's really depressing for us to make this investment in China and it's hard to find a good company." "Kuming said," including the usual and some investment circle of friends to communicate, the common feeling is that although now it seems that the industry is very hot, but most of China's so-called unique technology companies, you a survey, are all nonsense. ”

A high wall separates two world, the world outside the wall, the soil is barren, what is the world in the wall?

Some investors in the "entrepreneur" said that a well-known Shenzhen environmental monitoring equipment Company's boss has publicly declared: "We do not care about technology, we are relying on relations."

Kuming happened to have done a due diligence on the company. In Kuming's impression, they were initially full of anticipation of the company: its business in several provinces, it has its own patented technology, its sales and profit levels are considerable, it has won a media selection of "500 of emerging enterprises." "At that time the industry position is very cow!" "Kuming said. But as due diligence deepened, they found that the company's patented technology was to buy parts from around the world and assemble it in a box of its own making, and finally make a little fine-tuning to make it look different from someone else's patented device. "There is no technical threshold at all. "Its business model is to sell the equipment to a couple of good environmental protection bureaus, or the EPA assigns purchases to local companies."

As for how the equipment works, another investor has heard a story. The company's monitoring equipment consists of a collection of data-gathering sensing terminals and a central control system that the EPA examines as long as the numbers displayed on the control system screen are visible. But if all the sensors in the system are removed, the central control system will work. "Frankly speaking, is actually a computer software, and monitoring is not related." ”

This is an extreme case, but it also shows us the ecological environment in this high wall. "Sewage treatment is the same, recently listed on the gem of a water company, hundreds of multiples, but you go to the industry to inquire about, you know how bad the reputation of it, how bad technology." is by relationship. "said the investor.

So do the companies that depend on relationships really live as they look? While doing due diligence on the "very bull company", Kuming said, they found the company's book profit was 200 million yuan, but the accounts receivable had 150 million yuan. "The company's boss took me to a city guest visit, met an Environmental protection bureau director." I asked him how much he owed the company, and he said millions of. When I asked him when to pay, he was a leng, and then smiled at the company boss said: ' When he is short of money, I will give him a little bai. ’”

Last year, a beijing-based company called Standard Water, which announced a high-profile listing in Hong Kong, was on the eve of an IPO, with its CPA firm and its sponsor JPMorgan Chase withdrawing. "If it is not a major financial problem, how can accountants resign first?" "In Kuming's view, the higher financial risk, which is to do business-to-business, especially business-to-government (government) business of the company almost inevitable to face the reality."

"The end of the bill is the government, which is doomed to a difficult business." The ultimate consumer is simply not concerned about how strong your technical skills are, but what it can do for him. Sometimes it doesn't work, does it? An investor asked me half a solemn question.

Future

But a phenomenon that can not be neglected is that in the capital market, those "inside the wall" companies are being sought after, high stock prices, high P/E, high popularity, people envy.

"In the context of excess liquidity, speculators have a temporary advantage in capital markets, and some show entrepreneurs take advantage." In the field of clean technology, the phenomenon of bad currency expulsion of good currency is particularly obvious. Zhang Yong said.

In his view, there are three main reasons for this situation: first, environmental protection and energy-saving concept of heat, there is speculation; second, the industry relative to the traditional weak, capital easy to manipulate; third, the field is very professional, the general investors can not understand, entrepreneurs, investors to cooperate with experts as long as the story of the circle, you will be able to sell a good

"We see very clearly that behind this is a group of irresponsible people in the hot spot." "Kuming said," What fire, they fry what, a few years ago is fry solar energy, then fry wind Energy, now is water treatment, next do not know what to fry, I think it is solid waste these things, a wave of waves come. ”

For the hype, speculation "bad currency" instead of "good money" more valuable. One, because good entrepreneurs tend to stick to the value of the company, generally not to the hype to open equity. Both, the price of "bad currency" is lower and profit-making space is bigger. "The situation has put a lot of pressure on our valuable investors," he said. "Our LP has made a lot of money from other bad ventures, but they didn't make that much," said one investor. They're not professionals, and it's a lot of energy to explain my investment philosophy. ”

And in the Kuming contact of the circle of friends, some well-known foreign venture investment in clean technology investors also began to ask him if he is suitable for "on the Gem project." "They have fallen, too. Kuming said with a wry smile.

In a cloudy, China's environmental protection and energy-saving industry in the end? "I'm not so pessimistic. Kuming said, "Any industry, after the chaos will have the opportunity to integrate." "In his view, there will always be intelligent, discerning people in the future, and these are likely to be in listed companies," he said. "There will always be aspiring people, with capital in hand, to wash themselves and integrate industry." ”

At the same time he thinks there are three points worth reminding practitioners: first, the bubble is not broken, the integrator will not debut, because the purchase of assets is too high price. Second, if the next two or three years can not be washed up in the capital market, then the environmental protection and energy-saving enterprises will be very difficult to rise in China, because the Chinese market channel is limited, the first will be "crowding out the channel", the latter may be only mergers and acquisitions, no matter how strong your technology. Third, because of China's environmental protection and energy-saving market structure, the integration process may be much slower than the market-oriented industry.

By contrast, Zhang Yong gives a multiple-choice question. "I think there are two paths in the future," said Zhang Yong, "one is the last collapse of the bubble, speculators to make a vote to leave, the good currency was driven away, the industry is finished." Another possibility is that conscientious people will push the government to correct the error, such as responsible media, rigorous investors can hold on to the strong temptation, and eventually promote the industry back to a benign development. The