There’s an interesting piece in today’s Wall Street Journal about the simmering but as-yet unfocused backpressure on Chinaâ€™s growing embrace of â€˜state capitalismâ€™ â€“ an issue all too familiar in the clean technologies sector.
It is not a simple problem to discuss in public, and nobody in the industry yet seems to have an answer for how to talk about it. Complications get worse when youâ€™re trying to sell into the Chinese market, or are sourcing (or tempted to source) there.
Case in point, from the article, Deng Xunming, founder and CEO of solar innovator Xunlight, who is a U.S. citizen born in China:
Xunlight has pulled in more than $50 million in state and federal grants, loans and tax credits, partly aimed at bringing needed jobs to Toledo, Ohio, where the company is based.
But two years ago, Mr. Deng, who left China in 1985 to study at the University of Chicago, set up a Xunlight unit on a giant industrial estate near Shanghai. The company now also makes its thin-film solar panels there and employs 100 workers. The panels are exported back to the U.S.
Mr. Deng says he is trying to keep the Chinese operation “low key.” It isn’t mentioned on Xunlight’s website, and Mr. Deng declined to comment on the China factory in an interview.
There are plenty of others in the sector who would face some version of this same challenge if asked the question. And increasingly, they will be.
Itâ€™s not a matter of having the right or wrong answer. The facts are whatever they are in any given case. But companies need to beware this one is coming their way and have a clear, cogent and confident response. “No comment” isn’t it.
Political Scrutiny Mounts
Neither Democrats nor Republicans seem to have settled on a coherent direction yet, either. Thereâ€™s a mix of protectionism, boosterism brewing on both sides.
But itâ€™s worth noting that s significant number of Republican congressional candidates ran adds this season charging that wind industry stimulus dollars were going to buy Chinese turbines.
The Journal reported a couple of weeks ago that:
At least a dozen ads portray stimulus spending on wind power or renewable energy as an example of waste. Another dozen or more allege the stimulus sent jobs overseas to China. None explicitly calls for ending the tax breaks for the wind-power industry once they expire this year, but the wind association fears the criticism will make them harder to renew.
Brace yourselves, folks.