Of Cuban Missiles and Chinese Wind Turbines

6/7/10

Recently I had the opportunity to participate in a series of meetings in Washington, DC, together with an impressive array of business leaders and investors. The group that held the meetings is called the Progressive Business Leaders Network, and it focuses on a select set of issues that are critical to driving U.S. competitiveness. PBLN’s efforts toward energy independence and education are of particular interest to me.

I have spent most of the past 10 years bringing U.S. tech companies and their products into Asian markets. I have had the opportunity to do business in all of the major economies there, including Japan, China, Korea, and India, and have experienced firsthand what many now identify as the new center of the world economy. The people I have had the good fortune to meet in Asia are bright, creative, and full of enthusiasm for the promising future ahead. They are also driven.

Last year, my family and I returned to the U.S. from Singapore. Having lived amid the incredible pace of infrastructure expansion across Asia, including China’s efforts on energy, it seemed natural that acceleration in the U.S. would soon follow. The legislators discussing progress toward American energy independence at the DC conference, however, were passionate about the need for this energy overhaul, but not so optimistic about the outcome.

Congressman Ed Markey recounted a scene from his own recent trip to China, where he saw rows of newly manufactured wind turbine blades lined up outside of a factory. He likened the blades to the threat posed by the Soviet missiles that the U.S. faced in Cuba so many years ago.

This imagery is useful for its attention-grabbing dramatization. And, since most of us respond more readily to visuals, it may well be an effective analogy.

But, unlike Soviet missiles in Cuba, China’s efforts are inwardly focused and did not originate as an offensive threat. To the extent that we in the U.S. are not equally focused inward, this nearly closed window of opportunity to take advantage of the next great manufacturing trend is a threat of our own making.

Why does China now dominate the world’s wind turbine and solar manufacturing?

Because…

it has an economy that is growing at breakneck speed and has an insatiable need for more energy…

its leaders realize that these industries provide high-skill manufacturing jobs urgently needed to support a rapidly expanding middle class…

energy independence is important for a nation that has a relatively insular history…

the country’s ubiquitous coal-fired power plants produce so much pollution that every citizen in the major cities of China feels the burning effects in their throats and eyes whenever they step outdoors.

China sees the near-term benefits that clean energy technology provides for its citizens and is proceeding rapidly to implement an organized plan to take advantage of this opportunity. Unlike the situation in many circles within the U.S., in China clean energy is not an academic discussion.

The byproduct of this cleantech manufacturing boom, and a nice bonus for China, is that the country gains economies of scale, improving both the quality of its products and its knowledge base. This ensures that China will be a formidable global competitor in this space going forward.

The industries associated with clean energy—including energy components and systems manufacturing, and not just installation—are those that we have every means to develop in the U.S, and for most of the same motivations as China.

Ed Markey mentioned how consistently sharp and focused the Chinese leaders whom he met with were on the specifics of their country’s energy plan. In contrast, the lack of unity and driving concern around a common plan in the U.S. means that these high value chain industries are powerful new opportunities that we are apparently willing to forego.

We do not need a showdown on the high seas to counter this threat. The conflict is all on our home turf.

Ray DeMeo is a technology industry executive with twenty years of international business development and operations experience. He has participated in the successful growth and transition of three companies from start-up to enterprise. Equallogic Inc. was purchased by Dell Computer for $1.4B in January 2008. Follow @

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