By Shen Jianyuan (沈建緣)
Issue 610, March 11, 2013
Corporation, page 31
Translated by Yu Menglu
Original article: [Chinese]

With China’s urban residents gaining greater awareness of just how “crazy bad” air pollution around them can get, many investors are anxiously looking to companies offering ways to clean up the environment and the air we breathe.

One player trying to capitalize on the clean technology industry is Northern Light Venture Capital (NLVC). Managing Director Yang Lei (楊磊) says he firmly believes in the rise of clean energy and environmental protection investment in China.

“This is an industry chain with wide coverage,” Yang said. “Besides air purification, a lot of investment opportunities exist in emissions reduction, smelting additives, desulfurization, denitration, demercuration and fuel cell technology.”

Like developed countries before it, China’s environmental investment focus has gone through three stages: water, solid waste and air. The prevention and remedy of air pollution is now the primary focus of NLVC’s clean technology investments.

In the next 10 years, China will increase its focus on pollution control, but that’s not the only reason for enthusiasm among investors. Compared to other countries, the cost structure of China’s clean technology industry chain enables start-ups to break even quickly.  

It takes companies in this field about one year to complete the process from technology research and development to product launch, and the costs are relatively low. For an industry with a low gross profit ratio, it’s beneficial for long-term development to see a quicker return on investment.

This cost structure lowers risk, which promotes investment in techniques and technologies that may not be considered cost-effective in countries like the U.S. 

Yang says, “China is unique in this field and can provide historical opportunities.”