FASE PLANIFICACIÓN TERRITORIAL

The number of macro-level bilateral energy and climate cooperation programmes between foreign governments and the Chinese government has significantly increased in recent years.

Some of these have been described in the previous chapter. These cooperation agreements increasingly have the goal facilitating business-to-business cooperation which would otherwise be difficult to establish. Bilateral cooperation can potentially also facilitate technology transfer to Chinese companies and protect foreign company IPRs. Examples of bilateral cooperation

56 Ibid

57 Morton Dyrholm, pers. comm.

programmes for renewable energy that aim for business and research cooperation are the U.S.-China Renewable Energy Partnership and the U.S.-U.S.-China Energy Cooperation Program, both initiated in November 2009. How far the Program will be successful in supporting leapfrogging through renewable energy or increasing innovative capacity of Chinese companies remains to be seen.

In contrast to the US, many European countries have already many years‘ experience in energy cooperation with China. While no official cooperation programme has been initiated between China and the Netherlands, Sino-Dutch cooperation on energy and environment⁵⁸ issues is very strong and is of several years‘ standing. As early as 1986 the Dutch Government supported the wind turbine company Goldwind as part of a small research project, importing and testing small 150 kW turbines in China (The Climate Group 2008).

The Dutch embassy in Beijing plays an important role as facilitator of cooperation between Dutch organisations and businesses and Chinese companies, government agencies and research bodies. In the embassy there are two departments working on energy cooperation issues. The first is the Aid Programme which directs aid funds towards projects which are energy and poverty related. One early example was a rural electrification project undertaken by the Dutch Aid programme in 2002 providing PV electric power to remote villages in Xinjiang. The project installed 78,000 solar PV and SWH systems in schools, public bathhouses and residential buildings. The manufacture and installation of the systems was carried out jointly by Xinjiang Sunoasis and Shell. For the project, Sunoasis took responsibility for installing and maintaining the systems, while Shell was responsible for supplying the systems and providing technical and management assistance.⁵⁹

The second department in the embassy dealing with energy issues is the economic cooperation department. This department has two main responsibilities: some 60 percent of the

58 William Sun, Energy and Environment Officer, at the Dutch Embassy in Beijing, provided the main body of information about the Sino-Dutch cooperation.

59 ‗PV in China‘s rural areas‘ http://www.enf.cn/magazine/issue1/pv.html

responsibility consists of working with Chinese governmental agencies, providing advice on energy issues. In this field the embassy does not provide policy advice or try to influence what the Chinese government should do. The embassy is also very careful not to give the impression that the Netherlands is trying to interfere in domestic decision-making processes. The other 40%

consists of helping companies to develop their business in China. The embassy provides support in the form of information about policies and regulations, and developments in the Chinese energy and power sector. Some companies have very close ties with the embassy and receive strong support which is crucial for successful wind power business operations in China – despite the size of the market and its fast growth, the market is extremely competitive. Other EU countries and their wind companies, particularly Spain and Denmark, are also competing with each other to strengthen their influence in China and increase their market share.

The cooperation between China and the Netherlands is perceived as having mutual benefits.

Dutch technologies and innovations in the environmental and energy related field are valuable as China addresses sustainable energy development. Dutch energy companies, such as Eneco, and their clean energy technologies have potentially a very large market in China and are therefore very active in exploring the Chinese market. There is also a political benefit as this cooperation also strengthens the bilateral relationship between China and the Netherlands. Inside the EU the Netherlands is the second largest trade partner with China, with energy and environmental technologies having an important and growing share of this trade.

The relationship is currently entering a new phase with a strong focus on wind power. The Dutch wind power community is very active in expanding its business worldwide. China, with its large market and economy underpinned by the Chinese government ambition to develop sustainable energy, is very attractive for Dutch businesses. Many Dutch renewable energy companies entered the Chinese market as early as 2000 with new companies emerging just in recent years. An example of a large Dutch player in the Chinese wind power sector is the company CTC-Energy, a blade engineering company.

Due to the strong business focus the issues of technology transfer and IPRs are ongoing important issues for Sino-Dutch cooperation. Dutch companies are leading innovations in many fields of environmental and energy technologies, and are careful to protect their IPRs. Currently technology cooperation and transfer is very limited between Dutch and Chinese companies. An example is the Dutch company CTC which offered technical support to Chinese companies with wind blade development and received a share of the profits when the product was sold by the Chinese company. According to William Sun, Energy and Environment Officer at the Dutch Embassy in Beijing, technology transfer is an important issue. His comments are offered here in some detail, as they provide insight into a key aspect of technology transfer between companies:⁶⁰

―Actually, I have checked and every party seems to be quite sensitive about the issue of knowledge transfer…. I cannot confirm there is some technology transfer between enterprises.‖

Regarding the potential of leapfrogging supported through Dutch-Sino cooperation the current status is not too positive:

―I actually hear more talk on this, and see less action. It‘s a very nice idea, even the Chinese Premier on many occasion called on this, but most of these technologies [which enable leapfrogging] are owned by business companies. It is not always easy to make them share, or let China acquire that technology easily. So the actions for promoting leapfrogging until now are quite limited between Netherlands and China, I think this is true for most cooperation with what we call developed countries.‖

Despite the lack of technological cooperation and transfer of know-how, William Sun is positive about the influence of Dutch companies on China‘s energy development:

―Dutch companies will play a big role in innovation in the Chinese energy sector. China has abundant capital and Chinese people closely follow new technological developments. Through long-term cooperation and business benefits, the Dutch business community will play a positive role.‖

Not only Dutch businesses, but also research partnerships play an important role in this cooperation. The Dutch national governmental research agency ECN (Energy Centre Netherlands) which has expansive research facilities for wind energy in the Netherlands is very actively involved in research cooperation. Another institute is WMC, a research institute under ECN, with a focus on the wind power sector.

One recent new development is the Sino-Dutch Wind Energy Research Centre in Baoding.

In early 2007 the Chinese Academy of Sciences (CAS) and ECN⁶¹ initiated a plan to set up a joint-research centre. This research centre has the goal to perform research for Chinese wind turbine manufacturers and will include a large test facility for wind turbine blades as well as a test field for testing wind turbine prototypes. One major goal of the centre is also to assist Chinese companies to make progress towards developing larger wind turbines with more generation capacity. An agreement was signed as a first joint-project, and a feasibility study for a Joint Research Centre was produced. The conclusion of the feasibility study is that the establishment of such a centre would be beneficial for both parties. This report was finalized in mid-2008 and was submitted to both the Dutch government and Chinese authorities, in this case NDRC and related government ministries. On the Chinese side NDRC has given an oral confirmation and promise that the CAS will be the leading party in setting up the research institute. Both CAS and ECN are applying for governmental funding support, from the NDRC and the Dutch government respectively. The approval for financial support has not yet been granted and is expected to be a long-term procedure. From the Dutch side the project will be financed in part by the Ministry of Economic Affairs in the context of the Dutch Programme Economic Cooperation Projects. There will also be companies involved in the project. An example is the company Huayi⁶² which has a close relationship with CAS and has the role of technical advisor and supplies the intelligence and research support. This company also plays the role of pioneer to carry out tests, development and commercialization of the CAS research results.

61 ―Co-operation between ECN and Chinese Academy of Sciences‖

http://www.ecn.nl/en/wind/news/item/article/191/558/

62 华翼 http://www.hywind.cn/

Another government supported research partnership will be established between Tsinghua University and TU Deft University. An inauguration event was held in October 2008 with participation of high-level political leaders from both countries, showing the political importance of such a partnership. Workshops on a range of different clean energy technologies including solar, wind, clean coal, biomass and efficient building were held. Both universities are very actively involved in this cooperation based on mutual interest. The long-term plan of the Dutch government is to set up a joint education and energy research centre located at Tsinghua University. This project is still under exploration with the establishment of the centre planned for 2010. The centre‘s field of activities will include student exchange programmes and a joint research platform. The intention is to promote this research cooperation nation-wide, with other universities joining at a later stage. The centre name is likely to be Sino-Dutch Education and Energy Research Centre.

6.5.4 Failed Cooperation - Wuxi Ryle Zhufeng Technology Co.

Ltd

It is also important to note that many potentially mutual beneficial business partnerships in the renewable energy sector have been unsuccessful. An example of a failed renewable energy technology cooperation joint venture in the wind blade sector is that between the UK-based technology company Ryle Technology, specialising in wind turbine blades from the renewable resource bamboo, and the Chinese company Miracle Logistics.⁶³ The two companies had formed the Wuxi Ryle Zhufeng Technology Co. Ltd. Joint venture in August 2006 for the operation, development, and production of bamboo-made vanes for wind power generators. After only two years of cooperation in early 2008, Ryle Technology and Miracle Logistics separated and in due course ended the joint venture because of divergent ideas on operation and management, which

63 Information about the experiences of the Wuxi Ryle Zhufeng Technology Co., Ltd. Joint-venture provided by Dr. Jim

made further cooperation difficult.

The joint venture Wuxi Ryle Zhufeng Technology initially set out to manufacture bamboo-made wind turbine blades for 800kW turbines. However, in the two years of cooperation the joint venture failed to produce any blades for trial operations on Windey turbines or even for load testing. After the split, Miracle Logistics had the right to use and share the blade technology of Wuxi Ryle Zhufeng Technology and to develop it further, which they did, supplying 100 sets of blades to Windey. However, these showed serious defects within weeks of beginning operation and are in the process of being replaced. It is questionable whether Miracle Logistics will be able to develop the technology and achieve successful commercial manufacture of the bamboo-made turbines.

According to Jim Platts from Ryle Technology, who brought the technical know-how and engineering expertise to the joint venture, a broad range of issues were responsible for the failure in cooperation and in producing functional blades. On the one hand, there were many technical issues, such as the lack of technical ability of the workforce, which made the manufacture of high-quality products impossible and cooperation difficult.

According to Platts ―in our factory in China we had many workmen…who would begin doing something and within minutes they would be doing it differently (i.e. there was no ability to keep doing something the same) and even if you pointed it out to them, they could not see that they were doing it differently (i.e. they were unable to notice the difference). There was an underlying inability to repeat, and to be consistent, and to know the difference between consistent and inconsistent.‖

Many faults appeared with the manufactured blades, e.g. the blades' trailing edges cracked and carbon fingers broke, which could have been avoided if the technical advice had been followed correctly. However, a deep unwillingness to cooperate and make decisions according to technical data and engineering requirements proved to be the major obstacle to developing functional blades, although the basic technology is completely sound and has much to offer.

On the other hand, this failure cannot only be attributed to the technical capacity of the workforce, but also on management failures. Many decisions of the senior Chinese company management were not made based on available technical data and engineering knowledge. The cultural aspects of ‗saving face‘ and ‗loyalty‘ to the Chinese director, important elements of traditional management structures, made it difficult to point out things that were going wrong, even when technical and engineering expertise clearly pointed to the issues that needed to be addressed and corrected. Even if decisions by Chinese senior company directors proved wrong, mistakes were not corrected. When the errors during trial phases occurred, responsibility was not taken by the persons responsible for the poor decisions; the blade failures were blamed on other factors.

It can be assumed that these issues are not only a single case experience, but rather widely spread among Chinese small and medium sized companies. This example strongly points to a range of underlying issues that are likely to make it very difficult for many Chinese companies to achieve leapfrogging of any kind. According to Platts, creating a technically literate workforce might take several decades rather than years. Changing the existing business culture and management structures is likely to be an even harder challenge. Also, in a culture that values outward appearance over inner reality, which also permeates the engineering and manufacturing sectors, the results are likely to be a technology that has outwardly the right appearance but is in effect dysfunctional.