With China’s growth at double digit rates into the first half of the year, the environmental concerns and pollution problems are escalating as quickly as the economy, with an estimated 76 reported pollution incidents in the past 8 months. The impact of rapid industrialization has created massive environmental problems in the water air and soil, creating disease and multiple health problems for people living in the affected areas. China is working to create and restore balance and harmony in their environment through pending law, regulation, and investment in new technology. Public companies Vitasti, Inc. (OTCBB: VITS), CECO Environmental Corp (NASDAQ:CECE), Hendrx Corp (OTCBB: HDRX) and Bridgetech Holdings International, Inc. (OTC.PK: BGTH); in renewable energy, air and water treatment and healthcare discuss how the serious problem of pollution has created business opportunities for their respective sectors.
The All China Environment Federation (ACEF) was launched in Beijing in 2005, receiving backing from high-level government officials as part of a movement to show that China is becoming very serious about the environmental damage and repercussions of the rapid economic growth. It’s receiving global support as evidenced by The World Bank loan of $668 million to the People’s Republic of China to support projects to address environmental problems and developing transport infrastructure. China may be positioning to change its global image from environmental disasters to an environmental leader, as it was recently recognized as the world leading investor in renewable energy. In order to pave the road to change, China is changing policy and legal framework to incite investment and innovation in technology.
Renewable Energy; Regulation and Investment Driving the Sector
China has set a target of twenty percent of its power to come from renewable sources by 2020. That kind of aggressive strategy sets the stage for renewable energy companies to participate in the anticipated growth in wind, solar and energy efficient technologies.
Wind energy technology is on the rise and China’s largest wind electric power generator manufacturer, Goldwind Science and Technology Co. Ltd., is currently pursuing a U.S. IPO, following on the tracks of several renewable IPO’s. The company plans to go public to finance its anticipated substantial growth as China demands green energy solutions as evidenced by its 6 billion U.S. investment in renewable energy in 2005.
Vitasti, Inc.’s (OTCBB: VITS)Director , Mr. deDelley, a wind farm developer targeting China commented “ The stage is set to provide environmentally friendly power to fulfill the needs of a electrically thirsty nation and stave the pollution associated with the massive developments China is experiencing. Our Company, Vitasti/Welwind ,has been moving projects ahead to develop 1000 megawatts of wind powered generation along the coast of the south China sea. All levels of government and industry are accepting the wind technology with great enthusiasm and willingness, making our work easier. “
Mr. deDelley went on to state” With the political and industry relationships Welwind has forged within China we are looking at continued support to advance the projects and to ensure successful wind farms, creation of rural employment, mitigation of pollution, and provide a greatly needed commodity : wind powered electricity.”
Chinese officials have announced plans for the country’s first energy “basic law” passed by the legislature in two years with a goal of reducing national energy consumption by 20 percent from 2006 to 2010 and creating an energy-efficient and environmentally friendly society. The law would encourage domestic energy exploration and international energy cooperation, optimize energy reserves and emergency response systems, scaling and development of renewable and new energies and enhance energy efficiency.
The China Environment Fund, http://www.cefund.com/, a leading VC fund in sustainable investment in China is investing in energy efficiency, solar and bio-diesel.
China’s Water and Air Pollution and Solutions
Recent news in China including the toxic spill into the Desha River have made China’s officials and global leaders take action into addressing the urgent environmental and water issues. It’s currently estimated that 300 million people, representing one-quarter the population, drink unsafe, water. Additionally, only one third of the 3.7 billion tons of wastewater discharged is treated.
China is taking steps to create law and regulation to address critical water issues including recently ratifying an international treaty to preserve the marine environment and prevent pollution on the high seas.
Global funding to address water problems has been approved by the World Bank. The World Bank’s Board of Executive Directors recently announced loans of $668 million to the People’s Republic of China in support of four projects to address environmental problems including water treatment and waste treatment.
Hendrx Corp (OTCBB: HDRX), a manufacturer of water purification technology with operations in China describes, “Senior management of our company is evaluating our current capabilities and seeking complimentary engineering, service and reporting capabilities to remedy and prevent future occurrences that will harm the environment. Our objective is to use computer age technology and instant monitoring of contributing factors that may predict future weaknesses and thereby enabling operating management to implement the appropriate safety measures.”
According to a Hendrx spokesperson, “In as much as the regulatory agencies have not yet begun to create the inquiries, we expect that we will be able and ready to respond to such inquires as they are forthcoming. Realistically, we don’t expect any one entity to be selected to find a solution to the different challenges; rather we expect to be part of a team that will over time solve the total problem.”
“Hendrx is in a unique position to be optimistic about our chances to be part of the “problem- solving team” because we already have more than 200 employees in the Fujian province of China. Our technical know how and our reputation is well respected on both sides of the Pacific.”
In terms of air pollution, according to a 2006 report by the World Watch Institute, China is home to 16 of the 20 cities with the most polluted air in the world.
According to Phillip DeZwirek, Chairman & CEO of CECO Environmental (NASDAQ: CECE), a world leader in clean air solutions, “CECO Environmental is the largest independent air pollution control company in N.A. and having been in business since 1907 has established a customer base of over 2000 companies including most of the Fortune 500. As many of our customers have established manufacturing operations in China they imported our technology and expertise into their Chinese facilities. Chinese based companies recognized the multiple benefits that CECO’s environmental installations brought to these new U.S. owned factories and are now hiring CECO to solve their environmental challenges. The market for air pollution control systems in China is vast and with the imminence of the 2008 Olympics plus the pollution potential from the rapidly expanding Chinese economy the demand for all methods of pollution control is and will be enormous.”
Healthcare – The Impact of Air and Water Pollution on Human Health
If you survey any average person on the street that saw Julia Roberts play Erin Brockovich, they can make the instant connection that industrial water pollution can cause multiple forms of cancer. It’s no different in China, but the problem is multiplied beyond anything North America has experienced. Last November, for example, a factory explosion resulted in benzene, a cancer-causing chemical linked to forms of leukemia, to run into the Songhua River, effecting millions of people in northeast China. More recently, the Dasha River was contaminated when a truck overturned dumping in 60 tons of potentially carcinogenic coal tar.
According to a 2006 report by the World Watch Institute, (http://www.worldwatch.org/node/3881), “a Chinese research institute found that 400,000 premature deaths are caused every year in China by diseases linked to air pollution.”
Bridgetech Holdings International, Inc (BGTH:OTCBB), a medical and healthcare company sees China’s environmental situation creating a major impact on the country’s healthcare, as well as influencing the product mix their company is bringing to the Chinese market.
According to Michael Chermak, Bridgetech’s Chairman & CEO, “Over the near term Bridgetech will specialize in introducing oncology products. This is a direct response to the fact that China is experiencing dramatic changes in the types of cancer and in the overall cancer incident rate. This rate is growing at the unprecedented pace of 3.3 percent per year. The environmental problems associated with rapid industrialization, like coal fired power plants, certainly contribute to this high growth rate. The growth of cancer has affected women most severely. In the last fifteen years the incident rate for women has grown from 89 per 100,000 women to 138 per 100,000. For men it is now at 200, up from 148. “
At present, Bridgetech is very encouraged by developments in China’s regulatory system. The government’s moves to protect intellectual property and to stem the favoritism and traditional practices in China’s product distribution system hold much promise for Bridgetech’s future because they will allow the company to introduce the very best in foreign technology with less fear that technology might be unfairly appropriated and because the company will be able to apply professional business practices to more effectively distribute its products throughout China. Faced by the demands of a evolving healthcare system and challenged by sudden changes in the nation’s epidemiological profile, China’s State Food and Drug Administration recognizes the need to supplement its domestic pharmaceutical industry with foreign medications and is proving a fast track to approval for medications that have undergone the approval process of other regulatory agencies such as the U.S. Food and Drug Administration. This is another positive development for Bridgetech because these are exactly the types of medications the company is seeking approval for.
The Ultimate Goal
We often hear and use the expression “follow the money” to watch and understand industry trends. In China, it’s a case of “smell the water and the air” to understand what is needed and where the money should be going in China.
Ironically, information on disasters and health crises may not always be available to the public if the Chinese government has its way, based on newly drafted legislation that will allow them to fine newspapers up to $12,000 if they report on these types of emergencies without first getting permission.
But we won’t be in the dark completely if renewable energy companies like Vitasti have their way. As Vitasti, Inc states, “The country knows that it cannot proceed with the economic development and ignore the environment in future growth”
Consumers in China are readily embracing the environmental movement as evidenced by recent info released by Greenpeace International stating that their surveys showed Chinese consumers were prepared to pay more for environmentally friendly PCs than any other country. It’s a step towards the ultimate goal of creating balance and harmony with technology and the environment.
The environmental race is one that China cannot afford to loose and based on recent news, they are making serious efforts to repair the damage of the past and find solutions for the future. The question remains – are they moving fast enough? The outcome of the balancing act of managing rapid economic growth and the environmental concerns will impact the world for generations to come as the pollution moves outside of China’s borders.
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