Dunwell’s Venture into Green Consultancy Services Pays Off

With China’s 12th Five-Year Plan keen on developing a green economy and mandating energy conservation and emission reduction measures, manufacturers must invest in environmental technologies before they can succeed in “upgrading and transforming”. Promoting green intellectual property (IP) trading in Hong Kong is therefore highly promising. In fact, after years of laying a firm foundation, Hong Kong should now enhance its intermediary services on green technology patents and, in the long term, establish itself as green technology IP trading platform.

According to Daniel Cheng, managing director of Dunwell Enviro-Tech (Holdings) Limited, foreign companies are quite concerned with the protection of IP in the mainland, not least SMEs who are unfamiliar with the mainland business culture and do not know how to apply for patent protection for their products. So they would come to Hong Kong to identify suitable partners to help them promote their technologies. The status of Hong Kong as an international financial centre and its sound IP protection regime are providing foreign companies with much investment confidence in opening up the mainland and Southeast Asia markets via the Hong Kong “bridge”.

Since international corporations are also eyeing the “value” of Hong Kong, Mr. Cheng is all the more convinced that in Hong Kong a lot of business opportunities are available in the field the green IP trading. For this, Dunwell started changing its business model two years ago. Capitalising on Hong Kong’s all-encompassing advantages in the field of technology IP, it began to offer foreign companies with services in technology adaptation, design, packaging, patent registration and consultancy before promoting the finished products to the mainland market. Meanwhile, it also started using this model to help mainland environment companies in “Going Global” by making use of the Hong Kong platform.

As explained by Mr. Cheng, under this cooperation model, foreign companies tend to pick as business partners companies with similar operating philosophy and extensive experience in the green technology field. One advantage is that, through the network of the Hong Kong company, it can test initial market response. If necessary, it can then further improve on product design or carry out repackaging to better localise the product and meet the needs of the target market. During the process, the Hong Kong partner can also provide professional environmental consultancy services such as helping with financing and patent application This change of business model has helped Dunwell expand into a new field in environmental protection and provided it with an expansive room for development. One example is the company’s agency of an American mobile cooling unit (Port-A-Cool). In opening up the mainland domestic market, it is important to take the first move. So, on top of helping its principal apply for patent protection in the mainland, it is more important for the agent to step up the speed of market launch so that competitors can be pre-empted out. This is a vital strategy and also an inevitable approach. Under such a competitive environment, a foreign company will naturally choose a strong partner in helping with promotion throughout.

In recent years, Dunwell is also applying this operating concept in bringing in advanced Japanese environmental technologies into the mainland. Mr. Cheng points out that a considerable number of Japanese SMEs are trying to transfer their technologies to the mainland, but the majority of them have failed in their attempts. Japanese companies know how to weigh their options: rather than coming to Hong Kong again and start exploring once more, they have decided to gain time and protection by using professional environmental companies as their guides.

At this juncture, Dunwell will act as a consulting partner to help Japanese corporations carry out required patent registrations. After packaging, technologies will be touted to mainland government departments and organisations. If there is any infringement of patent rights in the mainland and the Japanese partner concerned is ill afford to entangle itself in litigation, Dunwell will follow up and help. One other advantage of doing so is that, in future Dunwell can make use of this relationship or network to help mainland environmental companies enter the Japanese market. The ultimate objective is to attract more Japanese corporations to use the Hong Kong platform through such value-added consultancy services.

Recently Dunwell has set up a joint-venture waste treatment centre with Ji Hui Environment Protection Technology Development Company Limited of Shanghai to serve as its marketing and R&D base in East China. Such cooperation fully demonstrates that it is most important to choose the right technology, beat competitors in developing products with potentials and do a good job of patent registration and protection. To prevent others from copying and infringing on the rights of a technology, Dunwell will help its partners improve their technologies and make the designs more complicated. It is generally known that infringers tend to take the easiest way and if they find that a product is not easy to fake, their interest will wane away.

Among myriad green technology areas, Mr. Cheng deems the development potential for sewage treatment the greatest. One reason is that Hong Kong lacks the technologies concerned but has a practical exigency for them for improving the living environment. Also, as environmental measures are enforced strictly in the mainland, Hong Kong factories there must recover sewage in accordance with the law. Whereas in air pollution, most factories in Hong Kong have already relocated to the mainland and the unpredictable drifting of air pollutants makes it difficult to identify their source if a problem arises. Therefore from the business investment point of view, the recovery and recycling of sewage will offer a lot of business opportunities for Hong Kong.

Referring to residential development in new districts as an example, Mr. Cheng points out the considerable cost of using sea water for toilet flushing: in addition to the need to build district reservoirs and pump houses (easily costing hundreds of million dollars), there are also costs for filtering, for pumping sea water to high-rises and for electricity, etc. Moreover, sea water pipes easily suffer from erosion damage which, once sustained, would need repairing by the house owners concerned. On the contrary, if a sewage recovery system is used in a new district, in addition to a reduction in the use of water, there are savings also in the cost of civil engineering and maintenance—all it takes is to install sewage tanks in buildings.

According to Mr. Cheng, in the last few years, Dunwell’s use of a number of green technologies in setting up green public lavatories in villages in the New Territories and in country parks has considerably reduced the stench and noise of night soil suction. It has also helped a number of hotels in Macau as well as the Drainage Services Department of Hong Kong in treating sewage for reuse. With the Hong Kong government’s concern over the development needs of new districts and with the continual implementation of the West Kowloon and East Kowloon Planning, it is expected that there will be a huge market demand for sewage treatment.

On the importance of adding new green technologies to the development of Dunwell, Mr. Cheng says that new technologies will be combined with the company’s traditional business and different lines of business will be run parallel to each other to magnify any synergic effect. Since Dunwell already has a foundation in green research and is familiar with the ways of protecting patented technologies, it is easier to attract the cooperation of foreign companies. So in future, he does not rule out the possibility of further entrenching Dunwell’s core business through mergers and acquisition or even public listing. He believes that SMEs has an edge when it comes to investing in green technologies because they can still spare time in carrying out R&D even though business workload is heavy, whereas the focus of large enterprises may be diverted by cumbersome administrative work.

As to the prospects of the green market, Mr. Cheng’s personal expectation is quite optimistic. He explains that green technologists are affecting every detail of our lives, so much so that everything we deal with on a daily basis is related to environmental protection. So the actual applications of green technologies are much wider than in our imagination and market demand is no less than that for electronic products. Now that people’s lives are reverting back to simplicity, environmental protection has become a concept, an altitude in life and is no longer simply some kind of technology.

Moreover, should in future Hong Kong’s economy need to be transformed or the green industry need to be promoted, we cannot just rely on hardware or technology. We should also bring in state-of-the-art technologies from overseas and help patent holders in redesigning, repackaging and registering their technologies. And we should make use of the advantages of Hong Kong as an IP trading platform to expand existing green businesses into an industry sector and generate a benign ecological cycle. This way, we can entice the inflow of more IP into and foster the development of the whole IP trading economy in Hong Kong.

To consolidate the status of this trading platform, Mr. Cheng proposes the strengthening of communication and cooperation among members through the local trade association, so as to raise together the level of local green technology. He points out that if we want to enlarge market share, we should not rely on the isolated efforts of individual players—without key technologies or a social network, it is very difficult for an SME to develop continuously. In fact, from a macro point of view, since SMEs are wanting in R&D capabilities, they need this communication platform more urgently for exchange of market information and for identifying partners for cooperation.

Therefore, he hopes that the Hong Kong Trade Development Council can offer assistance in introducing and absorbing more industry players into the local trade association so as to bring together all the strengths of Hong Kong’s green industry and create more opportunities for cooperation for the members. On the other hand, the government should also put in more resources to foster cooperation among the public sector, the industry and the academia. Or it can offer more tax incentives to firms investing in green technologies.