Startups return to China to battle pollution
Some Chinese entrepreneurs in Silicon Valley are returning to their home country to launch startups focusing on one of China’s biggest problems — air pollution, especially smog, Lia Zhu reports from San Francisco.
When a major sand storm hit Beijing 15 years ago, Carl Wang was shocked to see the sky turn orange while sitting in his high school classroom. The bad air quality caused by the storm would play a major role in putting him on a path to become an environmental engineer. Now, pollution in his hometown of Beijing has worsened and will help determine his path back in China.
More than 10 years after that incident, Wang got his doctorate in the United States, and is an expert on air quality monitoring/modeling and air pollution control at Environmental Resources Management, a consulting firm in the San Francisco Bay Area.
Wang and the six other members of his team, all experts in computers, the environment or finance in California’s Silicon Valley, expect to return to China in the second half of this year to launch their environmental startup: GAGO Inc. “Now is the most favorable time to launch our startup. We can’t miss it,” Wang told China Daily.
Next month, the software they developed, called “GAGO Smog Map”, which provides real-time updates of smog levels and three to five days of forecasts, will be available to customers in China. “With this software, users will be able to check the smog level of any place in China with their smartphones,” Wang said. “So they can make better decisions for travel.”
Wang will be joining other Chinese who have returned to China from the United States to launch a startup. There are no definitive numbers on how many startups created by Chinese in the US have done so, but Wang, Kai Sun and Charlotte Wang (no relation to Carl Wang) are three entrepreneurs focusing on one of China’s most pressing problems: air pollution, especially smog.
Tackling health-harming smog has become a major initiative of the central government. In January 2014, China, for the first time, included health-threatening smog in its 2013 natural disaster report.
In response to large-scale smog covering the robust Yangtze River Delta, Pearl River Delta and especially the Beijing-Tianjin-Hebei cluster in North China, the central government adopted the Air Pollution Prevention and Control Action Plan in September 2013. It is believed to be the strictest pollution control measure as the government vows to bring “visible changes” to air quality by the end of 2017.
Stations have been built in 161 cities to monitor smog levels to raise the public’s self-protection awareness and enhance the government’s sense of responsibility, Chinese Premier Li Keqiang told reporters at the conclusion of this year’s National People’s Congress.
“We certainly feel the pressure,” said an atmospheric expert with a Shanghai environmental monitoring agency who requested anonymity. “We have never received so much attention until smog became a key word in 2013.”
And more than ever, the Chinese public is focusing on smog. In March a privately sponsored documentary on smog, Under the Dome, went viral online in China. It was viewed more than 300 million times within five days.
“Of the 9.6-million-square-kilometers of China’s territory, 5 million are covered with smog,” Wang said. “I have families and friends there. I feel sad for them. I would not forgive myself if I didn’t do something now.” It is not just smog
But it’s not just smog. According to a 2013 environmental report by the Asia Development Bank, seven of the world’s 10 most-polluted cities were in China and among the 500 largest Chinese cities, only five were considered at a safe level based on World Health Organization air quality guidelines.
Sun, founder and chief scientist of He-Sai Photonics Technologies, and his two partners took their startup from Silicon Valley to Shanghai last October. They design and manufacture online gas analyzers that can monitor mixed gas composition at a higher speed and with more precision than existing technologies.
“The technical gap between China and the US is diminishing. The sooner we come back, the earlier we can bring our technology into play,” he said. “We expect to deliver the first products to our clients next month and begin manufacturing in the second half of this year.”
Energy conservation is as important as finding the source of pollution. Last October, Charlotte Wang’s startup – Equota Energy – returned to China and launched in Shanghai. The company’s technology aims to help heavy industries, like steel plants, to optimize power consumption to reduce carbon emissions. By collecting data from smart meters, they can provide analysis and assessments based on algorithms that they have developed.
“This technology is available in the US but not in China yet. What we are doing now is localizing the software for our customers,” she said. Their customers include industrial parks, and factories and commercial buildings like department stores and hotels.
One customer, a steel plant in East China, has saved $1 million on energy-related costs and realized a reduction equal to 5,000 tons of coal within six months.
Carl Wang and his team developed their software last year based on satellite remote sensing data. Through analysis of the big data, they can calculate the density of PM2.5, a major contributor to the smog in Beijing, and then convert the smog levels into a map.
PM2.5, or particulate matter with a diameter of 2.5 microns or less, is small enough to penetrate deep into the lungs and blood streams unfiltered and cause respiratory and cardiovascular diseases. It is also often associated with toxic substances like heavy metals or polycyclic aromatic hydrocarbons.
Wang said his team has been in talks with a few government agencies at provincial or city levels to build an air-quality monitoring data platform. “A visualized map is the first step. We plan to develop more practical products, like travel guidelines for urban residents, visualization tools for environmental professionals, or data analysis for enterprises or government agencies,” Wang said.
Sun’s products include gas analyzers and PM2.5 sensors, which can be used in such areas as atmospheric environmental monitoring, industrial process control and monitoring, as well as the detection of hazardous gas leakage. The equipment can be installed in buses or taxis, and when the vehicle is running the gas analyzer measures the data of the local air and uploads it to a network terminal so environmental agencies can determine the source of the pollution, he said.
The products’ core technologies, including laser scattering and absorption spectroscopy, originated from the high temperature gas dynamics laboratory at Stanford University where Sun received his PhD in mechanical engineering and worked as a research associate before he returned to China.
“Our gas analyzers can monitor emissions at factory plume sites to ensure their emissions are within regulations. They can also measure the concentration of PM 2.5 suspended particulate in the air at local levels,” Sun said. “Building a monitoring station usually costs millions of yuan and it is effective only within a certain area. Our portable equipment costs only one-tenth of the similar product and it does not need maintenance, either.” Return to China
Like Sun, the two other young men on his team also quit their recent jobs in Silicon Valley and returned to China. The chief technology officer, with a dual master’s degree in mechanical engineering and electrical engineering from Stanford, had worked at Apple Inc in charge of iPhone electrical-circuit system design. The CEO, with a PhD in robotics and pattern recognition from the University of Illinois at Urbana-Champaign, had worked at Western Digtal.
“The job is stable and the life is comfortable [in the US], but the career potential is limited,” said Sun. “In a big firm, we are responsible for only a tiny part of the whole operation, but in our own startup, we have the power to control the company’s direction, and maybe the direction of the entire industry. What’s more, we would feel a better sense of accomplishment if our knowledge and technology can benefit our homeland and people.”
What attracts the Silicon Valley entrepreneurs is not only the career potential but China’s huge market. However, China’s technologies in such areas lag behind and an effective instrument takes years of design and testing, so China’s environmental agencies have to purchase monitoring equipment from foreign companies, such as the US multinational Thermo Fisher, which has built a substantial presence in the Chinese market, according to Sun.
China’s new environmental protection law, which became effective on Jan 1, is considered the strongest ever.
It replaces limits on fines for polluting factories with daily fines until the pollution stops. Under the amended law, local officials may be demoted or sacked if found guilty of covering up pollution or other environment-related wrongdoing.
Environmental authorities also have more power to detain managers of polluting factories for 15 days if they don’t complete environmental impact assessments or their plants continue to pollute despite warnings. The law also stipulates that offenders will be held criminally accountable for their behavior.
Since taking effect, the biggest fine was issued in February against a power plant by an environmental authority in the Xinjiang Uygur Autonomous Region: 2.08 million yuan ($335,133) for discharging pollutants beyond the allowed limit.
Compared with the environmental protection law passed in 1989, the new one shows the government is addressing environmental issues in the ecosystem, said Gao Song, vice-president of the Jiangsu (Yixing) Institute of Environmental Industry.
“In the past, violating the
Carl Wang said China’s promotion of innovation and mass entrepreneurship accelerated his return to China. “We received a few offers from Shanghai’s innovation park, but we are considering Beijing as its environment for a startup is more mature and the Beijing-TianjinHebei cluster has been made a priority,” he said.
To attract more overseas Chinese professionals to return home, some major innovation parks are underway in Beijing, such as the 10-square-kilometer Future Science & Technology Park, which is expected to lead China’s applied science and technology and innovative entrepreneurship, as well as Zhongguancun Science & Technology Zone and 16 other high-tech parks, covering a total of 488 square kilometers across the municipality.
In Shanghai, such innovation parks are also stepping up efforts to woo overseas Chinese talents back home. Sun, whose team settled down in Jiading Industrial Park in Shanghai, said all they met was green lights. “The park offered us a 400-square-meter office venue for free and 600,000 yuan (about $100,000) of subsidy a year,” he said. “We are also allowed to eat at environmental law cost very little. It didn’t make much difference if you polluted for one day or for a month,” he said. “Now the factories will have to seek solutions from advanced technologies and management in order to meet the law’s requirements.”
He said there will be challenges to implementing the new law because some local authorities aren’t fully prepared to enforce it. “On the other hand, the new law can serve as a sharp weapon to help raise the whole society’s awareness of pollution and ultimately promote the cause of environmental protection,” he said.
Last March, Chinese Premier Li Keqiang said during the annual National People’s Congress (NPC) that the government would “resolutely declare war against pollution as we declare war against poverty.”
He said at a press conference at the end of the NPC session that strict enforcement of the new law would be a focus of environmental-protection efforts this year, and the cost for those involved in the illegal production and emission of pollutants would be too high to bear.
“The environment protection law is an ultimate weapon instead of a cotton swab,” he said. the cafeterias of the nearby police department and revenue bureau.”
Early this year, China’s state council announced a commitment of 40 billion yuan ($6.66 billion) for a national entrepreneurial investment foundation for emerging industries to support innovation and startups.
The domestic demand and the government’s support both play a role in attracting overseas environmental talent back home, said Xin Yuan, who is vice-president of the Chinese Environmental Scholars and Professionals Network (CESPN), founded in 2007 in the US by a group of Chinese scholars and professionals studying and practicing environmental science and engineering in North America and Europe.
“One of our organization’s missions is to help professionals start up their own projects in China,” said Yuan, who is also a New York-based senior environmental analyst. “In the past three or four years, almost half our members have returned to China.”
“An increasing number of Chinese students have come to the US to study environmental science or engineering. Many of them returned to China directly after graduation and some of them chose to work in the US so that they could accumulate necessary experience before launching their own startups in China,” he said.
CESPN has more than 1,000 members and around 6,000 followers on their Weibo account and forum website. They are from academia, government agencies and enterprises or non-profit organizations.
CESPN also partners with the Jiangsu (Yixing) Institute of Environmental Industry (JIEI), a nonprofit organization promoting environmental industry with technology and information support, to bridge the channels for overseas talent and Chinese environmental enterprises. The institute was established by the Yixing Industrial Park for Environmental Science and Technology, which is considered the birthplace of China’s environmental industry in the 1970s, and is home to more than 1,000 enterprises now. A wave of startups
“We noticed a wave of startups in the past one or two years,” said Gao Song, vice-president of the institute. “Unlike the traditional enterprises, these startups cover a variety of areas, ranging from polluted soil and water to mud flat garbage.”
“The traditional environmental industry mainly focused on manufacturing and the projects were usually used to deal with the government’s inspection,” he said. “Now the industry is transforming from policy-driven to societyand innovation-driven, which will greatly accelerate the industry’s development.”
Last month, Gao’s institute launched a global innovation competition with the aim of promoting sustainable development of the environmental industry. So far, 200 teams from China and abroad have presented their projects to juries composed of venture capital firms, angel investors and successful entrepreneurs.
“The industry is in great need of overseas talents with complete professional training and they are expected to bring back advanced technologies as well as operational methods,” said Gao. “The operations in China have traditionally been based on experience, but in advanced countries the practice is based on data modeling. Currently, computer software has not been widely used in China’s environmental industry.”
Chinese Premier Li Keqiang proposed the “Internet Plus” strategy in March to stimulate new economic growth by focusing on Internetpowered startups and the application of new technology to traditional sectors.
The “Internet Plus” was going to be an inevitable trend to integrate the Internet, cloud computing and big data with the environmental industry, Gao said.
That’s why startups like GAGO, He-sai Photonics Technologies and Equota Energy are favored by investors. “If you have good technology, you don’t worry about investment,” said Carl Wang, who had just scheduled a conference call with an investor in Shanghai.
Kai Sun agreed. “We have turned down over 10 investment offers,” he said, declining to reveal the amount of funding they had secured.
In the past three years, an additional 100 billion yuan has been invested in the environmental industry each year and China still needs tremendous investment in the next few years, which is estimated at 8 trillion yuan to 10 trillion yuan, said China’s Minister of Environmental Protection Chen Jining during the NPC in March.
In 2013, the State Council set a goal of increasing the environmental industry output to 4.5 trillion yuan by the end of 2015 and making the environmental industry the pillar industry of the national economy. The government expects to stimulate consumption demands by promoting energy-conserving and environmental products, as well as increase social investment by enhancing engineering competence. Contact the writer at liazhu@ chinadailyusa.com