an assessment and ranking of barriers to doing environmental business with china

Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment

* Correspondence to: Turlough F. Guerin, Telstra Corporation Limited, L33/242 Exhibition Street, Melbourne 3000, Australia.E-mail: [email protected]

Business Strategy and the EnvironmentBus. Strat. Env. 18, 380–396 (2009)Published online 31 October 31 2007 in Wiley InterScience(www.interscience.wiley.com) DOI: 10.1002/bse.605

An Assessment and Ranking of Barriers to Doing Environmental Business with China

Turlough F. Guerin*Telstra Corporation Limited, Melbourne, Australia

ABSTRACTThe transfer of environmental goods and services to China will increasingly be of impor-tance to developed nations as the demand for environmental management services increases in China. A review of the literature on technology transfer to China revealed a range of well recognized and commonly known constraints to transferring technologies to China. There were gaps in the literature in relation to the concerns that environmental professionals have regarding technology transfer to China, as there is limited information on the transfer in environmental goods and services to China. A survey of the non-trade barriers and their practical impact on the transfer of environmental technologies and goods and services to China, focusing on Australian suppliers, was undertaken to address these gaps. The survey, which was developed from barriers to technology transfer already described in the extensive research addressing the wider issues of technology transfer to China, tar-geted environmental professionals but also included other professionals with interests in transferring environmental goods and services to China. From the survey, the highest pri-ority barriers to transferring environmental goods and service to China were identifi ed, and those that are most likely to limit Australian vendors of environmental goods and services in their technology transfers to China were protection of intellectual property (IP), limita-tions of the rule of law, fragmentation and bureaucracy of the Chinese government and establishing appropriate level of ownership (of environmental goods and services providers in China). Examples of Australian experience were also examined, which confi rmed these barriers to providing the needed technology and innovation to manage China’s increasing environmental impacts. The research also shows that the barriers identifi ed do not appear to be unique to transfer of environmental goods and services but rather generic to the transfer and adoption of Australian technology into China. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.

Received 27 January 2007; revised 25 August 2007; accepted 27 August 2007

Keywords: corporate environmental management, China, technology, freetrade agreement, renewable energy, intellectual

property, environmental consultants, training, environmental education, marketing, international trade

An Assessment and Ranking of Barriers to Doing Environmental Business with China 381

Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 18, 380–396 (2009) DOI: 10.1002/bse

Introduction

CHINA IS THE WORLD’S MOST IMPORTANT ECONOMY IN RELATION TO NEGATIVE IMPACTS ON THE ENVIRONMENT

(Guerin, 2001b; Anonymous, 2006; McDonough, 2006). With long-term growth rates of 8–10%, it is

unlikely that the negative environmental consequences of this growth will be offset by adoption of local

remedial technologies and innovation. These environmental impacts are now recognized as major threats

and of central importance for businesses to manage when doing business in China. They include water shortages

and contamination, energy demands, soil erosion and pollution. For foreign companies doing business in China,

these impacts play out as impacts on reputation, the existence of faulty supply chains, transportation accidents,

lost productivity from health impacts, collusion between government offi cials and political instability at a local

level (Economy and Lieberthal, 2007). China will therefore require an aggressive acquisition program for procur-

ing the necessary environmental goods and services (EGSs) to manage air, water and soil pollution, from both a

preventative and a treatment perspective (Watson, 2005). There is mounting evidence that China is prepared to

acquire this technology (Shanley, 1995; McDonough, 2006).

Direct technology transfer is the imparting of knowledge, skills and methodologies from one location to another.

This process also includes disseminating information on the end use and adoption of the transferred technologies

(Guerin, 1999). The introduction, through exports, of a technology or service into a developing country such as

China is not technology transfer per se, where the client or end user is then left to implement it. Licensing, in

addition to direct technology transfer, can also be used to transfer technology. A license is a contract between a

holder of a technology and an end user or distributor (licensee) of a particular technology. A license allows the

licensee to manufacture, market or use that technology (or IP), while the owner or vendor maintains the owner-

ship of the technology. With direct technology transfer, the transferor does not necessarily maintain ownership of

the technology.

Regardless of the type of technology or service, there are fundamental barriers to technology transfer, such as

local capacity, the appropriateness of technology, priorities of the vendor, funding and trade arrangements and

attributes of the end users and adopters. From the literature, it is evident that there are numerous barriers to

western countries, and technology providers from these countries, transferring or licensing their technologies

and services to China. An analysis of the literature revealed that there are a cluster of barriers related to legal,

technological, fi nancial, social and cultural, resource limitations, government, IP and organizational management

(Table 1). The literature was organized according to six themes, which were identifi ed as follows:

• rule of law

• protection of intellectual property

• intercultural sensitivity

• modernization of state owned enterprises (SOEs)

• establishing the appropriate level of ownership (of foreign companies in China) and

• fragmentation and bureaucracy of the Chinese government.

These themes were used to organize the literature fi ndings to facilitate the preparation of a survey described in

the remainder of this paper. Although numerous barriers were identifi ed, the literature did not provide any ranking

of these in relation to their importance, nor did it report studies from the perspective of corporate environmental

managers or environmental consultants as to (1) how these stakeholders perceived these barriers and (2) how

companies transferring environmental technologies to China had overcome these barriers. Nor were there any

published studies ascertaining whether these identifi ed barriers were in any way unique to EGSs.

The aim of this research was to quantify and rank perceptions of corporate environmental managers

(CEMs) and environmental consultants in relation to the non-trade barriers to transferring EGSs to China and

to identify any barriers that may be unique to the transfer of EGSs compared with non-EGSs. This article des-

cribes the methods employed in the survey, the survey results and discussion, and a brief review of their implica-

tions for CEMs and environmental consultants, and for the establishment of an FTA between Australia and

China.

382 T. F. Guerin


Bar

rier

iden

tifi e

d D

escr

iptio

n R

efer

ence

Rul

e of

law

La

ck o

f en

forc

emen

t or

und

erst

andi

ng o

f la

ws

by C

hine

se c

ount

erpa

rts

(tec

hnol

ogy

(M

artin

son

and

Tsen

g, 1

998;

re

cipi

ents

); a

bsen

ce o

f po

licin

g of

env

iron

men

tal l

aws

and

in c

onsi

sten

t in

terp

reta

tion

H

ongy

an e

t al

., 20

03;

of

law

s

McC

ubbi

n, 2

00

4)Pr

otec

tion

of in

telle

ctua

l Te

chno

logi

cal g

ap b

etw

een

supp

lier

and

reci

pien

t is

wid

e (W

arhu

rst,

1991

)

prop

erty

La

ck o

f un

ders

tand

ing

of t

he t

echn

olog

y by

the

Chi

nese

and

its

appl

icat

ion

(Gue

rin,

199

8a, 1

998b

;

Lim

ited

or in

effe

ctiv

e pr

otec

tion

of in

telle

ctua

l pro

pert

y le

adin

g to

ille

gal r

epro

duct

ion

of

G

ueri

n, 2

00

1b)

tech

nolo

gy a

nd d

isre

gard

for

hea

lth s

afet

y an

d en

viro

nmen

t co

nsid

erat

ions

in s

uch

(Tac

kabe

rry,

199

8; G

ueri

n, 2

00

1b;

repr

oduc

tion

Li

u, 2

00

5; V

icen

zino

, 20

06)

Inte

rcul

tura

l Ex

cess

ive

focu

s of

Chi

nese

on

fi nan

cial

ret

urn

at d

etri

men

t of

env

iron

men

tal p

rote

ctio

n (G

ueri

n, 2

00

1b; H

arri

s, 2

00

6)

sens

itivi

ty/s

ocia

l/cu

ltura

l La

ck o

f ap

prec

iatio

n of

cro

ss-c

ultu

ral i

ssue

s fr

om t

echn

olog

y do

nor

(Gue

rin,

20

01b

)

Cul

tura

l and

man

ager

ial d

iffer

ence

s be

twee

n do

nor

orga

niza

tions

and

Chi

nese

man

agem

ent

(Cum

min

gs, 2

00

6; H

arri

s, 2

00

6;

styl

es (

Chi

nese

fav

orin

g ce

ntra

lized

con

trol

)

Bir

kin

et a

l., 2

00

7)

Kno

wle

dge

of e

colo

gy a

nd e

nvir

onm

enta

l iss

ues

is u

sual

ly li

mite

d am

ong

Chi

nese

fro

m

ou

tsid

e of

urb

an a

reas

and

to

thos

e w

ith h

igh

leve

ls o

f ed

ucat

ion

V

ast

maj

ority

of

Chi

nese

are

con

cern

ed a

bout

dom

estic

hom

e en

viro

nmen

t (a

nd p

erha

ps

ne

ighb

ourh

ood)

but

not

the

sur

roun

ding

are

as

Chi

nese

hav

e in

stru

men

tal v

iew

of

the

natu

ral e

nvir

onm

ent

(i.e

. it

exis

ts f

or t

he p

eopl

e);

Chi

nese

dis

play

am

biva

lent

env

iron

men

t be

havi

or; C

hine

se m

anag

emen

t va

lue

quan

tity

as a

mor

e im

port

ant

valu

e th

an q

ualit

yM

oder

niza

tion

of S

OEs

Li

mite

d fi n

anci

al r

esou

rces

to

prop

erly

impl

emen

t ne

w t

echn

olog

ies

and

solu

tions

in C

hina

(J

ager

sma

and

van

Gor

p, 2

00

3)

la

rgel

y a

resu

lt of

hig

h de

bt le

vels

am

ong

SOEs

La

ck o

f sk

illed

res

ourc

es in

Chi

na is

lim

iting

em

bedd

ing

of s

usta

inab

le d

evel

opm

ent

prac

tices

(G

ueri

n, 1

998a

, 199

8b; G

ueri

n,

20

01b

; Eco

nom

y, 2

00

4)

Proc

ess

of m

oder

niza

tion

of C

hine

se s

tate

ow

ned

ente

rpri

ses

(Bir

kin

et a

l., 2

00

7)

Loss

of

loca

l Chi

nese

jobs

(M

cCub

bin,

20

04)

In

crea

sing

tre

nd o

f sm

all s

cale

loca

l cap

acity

in C

hina

(G

ueri

n, 2

00

1b)

Esta

blis

hing

the

Fi

ndin

g re

liabl

e bu

sine

ss p

artn

ers

in C

hina

and

the

lack

of

qual

ifi ed

peo

ple

in C

hina

(J

ager

sma

and

van

Gor

p, 2

00

3)

appr

opri

ate

leve

l of

A la

ck o

f co

ntro

l of

Chi

nese

inte

rest

s in

the

bus

ines

s (J

ager

sma

and

van

Gor

p, 2

00

3)

owne

rshi

p Fo

reig

n in

vest

men

t re

stri

ctio

ns f

or c

ompa

nies

ope

ratin

g in

Chi

na

(Tsa

ng, 1

999)

Frag

men

tatio

n an

d La

ck o

f po

litic

al w

ill in

Chi

na t

o in

crea

se e

nvir

onm

enta

l pro

tect

ion

and

lack

of

gove

rnm

ent

(Hill

s an

d M

an, 1

998;

Eco

nom

y,

bu

reau

crac

y of

the

actio

n in

thi

s ar

ea

20

04;

Liu

et

al.,

200

4)

Chi

nese

gov

ernm

ent

Failu

re o

f go

vern

men

t de

mon

stra

tion

proj

ects

in C

hina

(J

ager

sma

and

van

Gor

p, 2

00

3;

B

urea

ucra

cy o

f sy

stem

s im

pedi

ng d

ecis

ion

mak

ing,

iden

tifyi

ng d

ecis

ion

mak

ers

and

lead

ing

Gal

lagh

er, 2

00

6)

to

inco

nsis

tenc

ies

in a

pply

ing

regu

latio

ns a

nd d

eter

min

atio

ns

Rel

atio

nshi

ps b

etw

een

regu

lato

rs a

nd b

usin

esse

s te

nd t

o fa

vour

har

mon

y an

d co

nsen

sus

build

ing

and

limit

pros

ecut

ions

and

enf

orce

men

t

Abs

ence

of

stri

ngen

t an

d ef

fect

ive

envi

ronm

ent,

ener

gy a

nd im

port

ing

polic

ies,

sta

ndar

ds

an

d gu

idel

ines

Ti

ght

cont

rol o

f pr

oduc

tion

by t

he g

over

nmen

t in

Chi

na

Frag

men

ted

mar

ketp

lace

, refl

ect

ing

the

gove

rnm

ent

frag

men

tatio

n

Diffi

cul

ties

in r

epat

riat

ing

profi

ts f

rom

Chi

na

Tabl

e 1.

A li

tera

ture

rev

iew

of

the

barr

iers

to

tech

nolo

gy t

rans

fer

to C

hina



Method

Survey Design

A survey was designed after a review of literature on barriers to transferring technologies to China, the results of

which are presented in Table 1. The literature revealed numerous items, which were then clustered into six themes.

A series of 39 items, which formed the individual options for answering questions in the survey, was developed,

that represented each of the six themes. The survey was comprised of a series of closed questions (with forced

ranking), which enabled quantifi cation of results, as well as open questions enabling respondents to provide

qualitative responses to each of the questions related to the six constraint themes (described in the sub-section

‘Survey Questions’).

Survey Sampling

The types of organization sampled and represented in the survey were predominantly Australian-based or operated

companies (including individuals, small to medium sized enterprises and corporations), many of which were listed

on the Australian Stock Exchange. Approximately 100 companies, likely to be involved in export of EGSs, were

identifi ed on publicly available databases, which contained company email addresses (including www.environ-

mentdirectory.com.au). A further 100 individuals from companies and organizations likely to be involved in the

export of EGSs, either known by the author or otherwise identifi ed from internet searches, or through professional

networks, were identifi ed. Finally, a link to the survey was posted on several active Internet listservers, which were

elected based on the range of topics that they covered and their level of activity as described by Guerin and Schaff-

ner (2000, Guerin, 2001). The listservers chosen covered soil and groundwater treatment, climate change and

general corporate environmental management and sustainability. The listservers represented a population of

approximately 2000 potential respondents.

Description of Respondents

The response rate, when based on the potential number of targeted organizations and individuals (200), was 29%.

The rate dropped to 3% when the listserver populations were used to calculate response rates. The majority (55%)

of the organizations responding to the survey were either Australian based or operated, including small and

medium sized enterprises, corporations and universities. Australian government organizations represented 12%

of respondents. The remainder of respondents (33%) were organizations (corporations, private consultants/indi-

viduals, small and medium sized enterprises, and universities) from outside of Australia. These organizations were

not targeted specifi cally, but were a result of the requests sent to potential Australian EGS exporters, the author’s

professional networks and Internet listservers. Of the 57 respondents, 47% exported to China at the time of the

survey and 32% of these were organizations doing so from Australia. Of the goods and services being exported,

37% were EGSs, representing environmental education and training, consulting, water supply and treatment

technologies, energy management and waste management. The majority of roles represented (28%) were environ-

mental consultant or manager of an environmental consultancy. The remainder were HSE advisors or managers

and corporate environmental managers (19%), sales and marketing roles (10.5%), government representatives

(8.8%), export co-ordinators or managers (5.3%), researchers (5.3%), technologists (3.5%) and miscellaneous roles

including students, retired individuals, individual business owners, professional architect, strategic planner, busi-

ness executive, chief executive offi cer, company director, sustainability manager, safety director and management

consultant (19.6%).

Survey Administration

The survey was conducted from August to October 2005. It was administered using an introductory email contain-

ing a direct link to the survey. The survey was prepared using an online survey program called Survey Monkey

(www.surveymonkey.com).

384 T. F. Guerin


Survey Questions

The survey questions asking for demographic information, perceptions on the role of a FTA (in EGS transfer to

China) and the relative importance of Australian EGS vendors, and examples from Australia, are presented in

Table 2. The remainder of the survey questions, which contained the items forming each theme (see the six listed

below), are provided below. For each item, respondents were required to state whether it was ‘a signifi cant barrier’,

‘a potential barrier’ or ‘not a barrier’.

Rule of law. How would you rate the following barriers related to limitations of the rule of law in China?

• Lack of transparency of legal systems in China

• Inconsistent interpretation of laws and regulations across provincial boundaries

• Absence of policing of laws and regulations in a consistent manner across China.

Protection of intellectual property (IP). How would you rate the following which relate to problems in the protection

of intellectual property?

• Ineffective IP laws in China

• Potential rapid illegal reproduction of goods imported or concepts/ideas introduced into China (i.e. pirating)

• Absence of exporting organization’s safeguards against IP loss when they introduce their goods or services to

China

• Health safety or environmental consequences of pirated goods when exported from China (e.g. which do not

meet original manufacturer’s intended standards).

Modernization of state-owned enterprises (SOEs). How would you rate barriers related to the modernization of state-

owned enterprises in China?

• The process itself of modernization of Chinese SOEs (which is now occurring at a fast rate in China)

• Loss of local jobs of employees employed in China

• The increasing trend of small scale of local capacity in China

• High debt levels among state-owned enterprises.

Fragmentation and bureaucracy of the Chinese government. How would you rate the following barriers related to

fragmentation and bureaucracy of the Chinese government?

• Inconsistent requirements at each level of Chinese government

• Lack of transparency in the application of taxes across China

• Diffi culties in repatriating profi ts from China

• Different bureaucratic rulings within and beyond provinces

• Different customs requirements at different ports in China

• Inconsistent enforcement of import duties across China

• Unclear and confl icting standards across provinces in China

• Confl icting Chinese importing guidelines

• Diffi culty in fi nding decision makers at the appropriate location and level in the Chinese government.

Establishing the appropriate level of ownership. How would you rate the following barriers related to establishing the

appropriate level of ownership (for an Australian-based or operated company planning to do business in China)?

• Foreign investment restrictions for companies doing business in China

• Diffi culty in fi nding reliable business partners in China

• Level of foreign capital investment is not necessarily proportional to the profi ts shared by partners (under Chinese

legal framework)

• A lack of control over Chinese interest in the business.

Intercultural barriers. How would you rate each of the following intercultural aspects in terms of their potential to

be a barrier (i.e. if they were not recognized and acted upon/embraced they could be a signifi cant barrier)?



Que

stio

n gr

oupi

ng

Que

stio

ns

Dem

ogra

phic

s D

oes

your

org

aniz

atio

n cu

rren

tly e

xpor

t an

y go

ods

and/

or p

rovi

de s

ervi

ces

to C

hina

?

Doe

s yo

ur o

rgan

izat

ion

curr

ently

exp

ort

any

good

s an

d/or

pro

vide

ser

vice

s to

Chi

na f

rom

Aus

tral

ia?

D

oes

your

org

aniz

atio

n ex

port

env

iron

men

tal g

oods

(e.

g. t

echn

olog

ies)

or

prov

ide

envi

ronm

enta

l ser

vice

s (e

.g. c

onsu

lting

or

qadv

ice)

fro

m A

ustr

alia

to

Chi

na?

H

ave

you

or y

our

orga

niza

tion

had

any

indi

rect

invo

lvem

ent

in t

he e

xpor

ting

of e

nvir

onm

enta

l goo

ds (

e.g.

tec

hnol

ogie

s) o

r

pr

ovid

ing

envi

ronm

enta

l ser

vice

s (e

.g. c

onsu

lting

or

advi

ce)

from

Aus

tral

ia t

o C

hina

?

If y

our

orga

niza

tion

does

exp

ort

envi

ronm

enta

l goo

ds (

e.g.

tec

hnol

ogie

s) o

r pr

ovid

e en

viro

nmen

tal s

ervi

ces

(e.g

. con

sulti

ng o

r

ad

vice

) to

Chi

na h

ow w

ould

you

bes

t de

scri

be t

hese

?

How

wou

ld y

ou b

est

desc

ribe

you

r or

gani

zatio

n? H

ow w

ould

you

bes

t de

scri

be y

our

role

?Tr

ade

barr

iers

O

vera

ll ho

w w

ould

you

rat

e th

e fo

llow

ing

trad

e ba

rrie

rs f

or a

n A

ustr

alia

n-ba

sed

or o

pera

ted

orga

niza

tion

expo

rtin

g en

viro

nmen

tal

good

s te

chno

logi

es o

r se

rvic

es t

o C

hina

?1

W

hat

othe

r tr

ade

(onl

y) b

arri

ers

are

ther

e fo

r an

Aus

tral

ian-

base

d or

ope

rate

d or

gani

zatio

n ex

port

ing

good

s te

chno

logi

es o

r

se

rvic

es t

o C

hina

?

Not

e: D

o no

t in

clud

e no

n-tr

ade

barr

iers

as

thes

e ar

e ad

dres

sed

in t

he r

emai

nder

of

the

surv

ey.

Non

-tra

de b

arri

ers

How

wou

ld y

ou r

ate

the

follo

win

g ba

rrie

rs r

elat

ed t

o lim

itatio

ns o

f th

e ru

le o

f la

w in

Chi

na?2

H

ow w

ould

you

rat

e th

e fo

llow

ing,

whi

ch r

elat

e to

pro

blem

s in

the

pro

tect

ion

of in

telle

ctua

l pro

pert

y (I

P)?2

H

ow w

ould

you

rat

e ba

rrie

rs r

elat

ed t

o th

e m

oder

niza

tion

of s

tate

-ow

ned

ente

rpri

ses

in C

hina

?2

H

ow w

ould

you

rat

e th

e fo

llow

ing

barr

iers

rel

ated

to

frag

men

tatio

n an

d bu

reau

crac

y of

the

Chi

nese

gov

ernm

ent?

2

H

ow w

ould

you

rat

e th

e fo

llow

ing

barr

iers

rel

ated

to

esta

blis

hing

the

app

ropr

iate

leve

l of

owne

rshi

p (f

or a

n A

ustr

alia

n-ba

sed

or

oper

ated

com

pany

pla

nnin

g to

do

busi

ness

in C

hina

)?2

H

ow w

ould

you

rat

e ea

ch o

f th

e fo

llow

ing

inte

rcul

tura

l asp

ects

in t

erm

s of

the

ir p

oten

tial t

o be

a b

arri

er (

i.e. i

f th

ey w

ere

not

reco

gniz

ed a

nd a

cted

upo

n/em

brac

ed t

hey

coul

d be

a s

igni

fi can

t ba

rrie

r)?2

Oth

er t

rade

and

non

-tra

de

Wha

t ot

her

sign

ifi ca

nt t

rade

or

non-

trad

e ba

rrie

rs d

o yo

u th

ink

ther

e ar

e fo

r A

ustr

alia

n-ba

sed

or o

pera

ted

com

pani

es e

xpor

ting

ba

rrie

rs

en

viro

nmen

tal g

oods

and

ser

vice

s to

Chi

na?3

Free

tra

de a

gree

men

t W

hat

impa

ct d

o yo

u th

ink

an F

TA b

etw

een

Aus

tral

ia a

nd C

hina

will

hav

e on

the

rol

es o

f co

rpor

ate

envi

ronm

enta

l man

ager

s in

A

ustr

alia

? Pl

ease

des

crib

e w

hy y

ou g

ave

the

answ

er y

ou d

id a

bove

W

hat

impa

ct d

o yo

u th

ink

an F

TA b

etw

een

Aus

tral

ia a

nd C

hina

will

hav

e on

Aus

tral

ian-

base

d or

ope

rate

d en

viro

nmen

tal

cons

ulta

ncie

s? P

leas

e de

scri

be w

hy y

ou g

ave

the

answ

er y

ou d

id a

bove

Aus

tral

ian

exam

ples

W

hat

was

the

env

iron

men

tal g

ood

or s

ervi

ce in

volv

ed?

Wha

t w

as t

he v

alue

(es

timat

e) in

USD

of

the

activ

ity?

Whe

n di

d th

e ac

tivity

(c

ase

stud

ies)

occu

r? W

as t

he o

vera

ll ou

tcom

e of

the

act

ivity

a s

ucce

ss in

ter

ms

of g

oods

or

serv

ices

pro

vide

d an

d pa

ymen

t re

ceiv

ed?

R

egar

dles

s of

whe

ther

the

act

ivity

was

suc

cess

ful o

r no

t w

hat

wer

e th

e m

ain

barr

iers

tha

t w

ere

face

d in

exp

ortin

g th

e go

ods

or

prov

idin

g th

e se

rvic

es?

If

the

act

ivity

was

suc

cess

ful,

how

wer

e th

e ba

rrie

rs o

verc

ome?

Rel

ativ

e ad

vant

age

of

Do

you

thin

k A

ustr

alia

n or

gani

zatio

ns h

ave

an a

dvan

tage

(in

any

way

) ov

er a

ny o

ther

cou

ntri

es in

pro

vidi

ng e

nvir

onm

enta

l goo

ds

Aus

tral

ian

EGS

an

d se

rvic

es t

o C

hina

?

vend

ors

If y

ou a

nsw

ered

yes

to

the

prev

ious

que

stio

n in

wha

t w

ay a

re A

ustr

alia

n or

gani

zatio

ns li

kely

to

have

an

adva

ntag

e (o

ver

eith

er

Chi

nese

or

othe

r in

tern

atio

nal o

rgan

izat

ions

)?

Tabl

e 2.

Sum

mar

y of

the

que

stio

ns a

sked

in t

he s

urve

y1 R

esul

ts n

ot r

epor

ted

in t

his

stud

y.2 It

ems

unde

r ea

ch o

f th

ese

six

grou

ping

s of

con

stra

ints

are

sho

wn

on t

he y

axe

s in

Fig

ures

1–6

. A

fter

eac

h of

the

se q

uest

ions

, re

spon

dent

s w

ere

aske

d if

ther

e w

ere

any

addi

tiona

l bar

rier

s; h

owev

er, n

o ad

ditio

nal b

arri

ers

wer

e id

entifi

ed.

3 The

re w

ere

no a

dditi

onal

bar

rier

s id

entifi

ed

from

thi

s ‘c

atch

-all’

que

stio

n.

386 T. F. Guerin


• Basic understanding of the language

• Harnessing the interpersonal networks in China (‘social networks’ rather than ‘markets’)

• Speaking and questioning so as to ensure understanding

• Group setting and group context in training

• Flexible in your dealings with the Chinese

• Developing an alliance with the Chinese customer (over a long period)

• The ‘work unit’ (as opposed to the individual worker) in China

• Being non-judgmental

• Tolerance for ambiguity

• The capacity to communicate respect

• The capacity to personalize one’s knowledge and perceptions

• The capacity to display empathy

• The capacity for taking turns (in conversation)

• Establishing trust

• Autocratic control of information.

In addition to the questions asked above, a further catch-all (i.e. an open) question was asked: ‘What other sig-

nifi cant trade or non-trade barriers do you think there are for Australian-based or operated companies exporting

EGS to China?’. No answers were provided in response to this question. A question was also asked for the purpose

of rating the importance of trade barriers to transferring EGSs to China. The purpose of the question was to ensure

that respondents were made aware of the difference between trade and non-trade barriers. These questions, and

the results of these questions, are not included in the survey results.

Results and Discussion

Statistical Analyses

Analysis of variation (ANOVA) tests were conducted between each of the six themes of barriers to the transfer of

EGSs to China. These analyses were conducted on the ‘signifi cant barrier’ responses. The p values that were

obtained from the outputs from the ANOVA tests between each of the barrier themes (Table 3) showed that there

were two main groupings of the barriers:

• protection of IP; rule of law; fragmentation and bureaucracy of the Chinese government and establishing the

appropriate level of ownership (30–50% of respondents thought these were signifi cant barriers) and

• intercultural barriers and modernization of SOEs (less than 25% of respondents thought these were signifi cant

barriers).

Barriers 1 2 3 4 5 6

1. Protection of IP – – – – – –2. Rule of law 0.56 – – – – –3. Fragmentation and bureaucracy of the Chinese government 0.08 0.3 – – – –4. Establishing the appropriate level of ownership4 0.09 0.16 0.64 – – –5. Intercultural sensitivity 0.0007 (S) 0.007 (S) 0.02 (S) 0.16 – –6. Modernization of SOEs 0.006 (S) 0.008 (S) 0.009 (S) 0.03 (S) 0.12 –

Table 3. Results of ANOVA comparing non-trade barriers1

1 An (S) after the calculated p value from ANOVA tests indicates that the comparison between barrier themes (or groups) (listed as numbered text in rows 1–6 in the fi rst column) compared to the same group of barriers (listed 1–6) in the corresponding columns, were signifi cant at α = 0.05.



Non-Trade Barriers

Protection of IPOn average for this theme (which contained four items), 50% of all survey respondents were concerned that their

IP would not be protected. Three of the individual items of this constraint, health, safety, environment and secu-

rity concerns from pirated goods, absence of safeguards against IP loss when exporting to China and the illegal

reproduction of goods imported into China, were each perceived to be signifi cant barriers by 58%. Only 27% of

all respondents considered that the fourth item, ineffective IP laws in China, was a signifi cant barrier (Figure 1).

Respondents strongly expressed their concerns with IP protection, which was expected. One stated ‘The major

issue is lack of confi dence in the IP protection system. We are technology providers. We have no confi dence our

technology rights will be protected’. While there are laws in place, enforcement of these represents a greater

concern. Of critical concern are the health, safety and environmental problems posed by pirated goods. These

results are not surprising. China is plagued by a history of lax enforcement of laws on IP rights (Guerin, 2001;

Liu, 2005). The risk of technology or IP ‘leakage’ is greatest when the Chinese partner is in the same line of busi-

ness as the Australian technology vendor (Guerin, 1998, 2001). Foreign vendors must be ready for this and take

appropriate protective action.

Enforcement of IP rights is largely the preserve of an administrative, rather than a judicial, system in China,

and this refl ects the high incidence of IP infringements. Of the 43 000 infringement claims in China during

2003–2004, over 40 000 were processed by the State Administration for Industry and Commerce. This leaves

foreign companies at risk of ‘home town’ determinations, especially at local levels of government (McCubbin,

2004). McCubbin (2004) states that China is serious, however, about reform of IP protection, not necessarily

because of its WTO commitments, but rather because China now produces more than 350 000 technologically

trained engineers annually. According to the OECD, it is third in the world in gross expenditure on R&D at $US

>100 billion. It also has 750 000 researchers, which is second only to the US. China is therefore rapidly learning

the value of technology, and the need to protect it. Companies that previously moved their manufacturing opera-

tions to China to take advantage of a low cost base are now also moving their R&D operations to China to take

advantage of this skill base (Lo and Tang, 1994; McCubbin, 2004; O’Connell, 2007). The Chinese government is

promulgating new laws to combat the IP protection problem (McCubbin, 2004), but this is a ‘deep-seated’ cultural

issue that will not be changed easily, even with training of the local Chinese partners or the wider Chinese markets

(von Krogh and Haefl iger, 2007). The Chinese do not necessarily see protection of IP as a problem so change is

only likely to occur when the Chinese become victims of such IP loss themselves, causing economic loss.

This constraint, in conjunction to that of the rule of law (discussed in the following sub-section), is of critical

importance in the licensing of technologies in China and therefore to technology transfer. In China there is limited

evidence that IP rights of individuals or organizations are enforced and Australian organizations are clearly

0.0 25.0 50.0 75.0

Ineffective IP laws in China

Potential rapid illegal reproduction of goods imported orconcepts/ideas

Absence of exporting organization's safeguards against IPloss

Health safety or environmental consequences of piratedgoods when exported from China

%

A Significant Barrier A Potential Barrier Not a Barrier

Figure 1. Problems in the protection of IP

388 T. F. Guerin


concerned that Chinese end users of the technology, even under licence, may not co-operate with the terms of the

licence. This is a fundamental issue about which survey respondents are concerned.

Rule of LawThis constraint was also identifi ed as a signifi cant or high priority barrier by 44% of respondents (Figure 2). Spe-

cifi cally, it includes the items of absence of policing of laws, lack of transparency of the legal system and incon-

sistent interpretation of laws. A consequence of the weak laws, including those designed to protect the environment,

is unfair competition in the EGS markets. The major problem is protectionism in local Chinese markets, largely

by the actions of various government departments. Municipal and provincial authorities protect local markets for

local fi rms and may not enforce environmental protection measures (Economy and Lieberthal, 2007). Obsolete

products, technologies and services are then protected with a consequent loss to the environmental protection

industry and to the economy (Guerin, 1998b; Tackaberry, 1998; Anonymous, 1998; Guerin, 2001b; AIG, 2004;

Liu, 2005). While there are laws prohibiting anti-monopolistic and anti-competitive behaviour, the existing laws

require consolidation to remove inconsistencies (McCubbin, 2004). Anti-monopoly law is now approved in prin-

ciple by the Chinese Cabinet. China lacks an anti-competitive authority charged with the responsibility, and

equipped with the sanctions, however, to make the law effective operationally. In effect, the lack of competition

policy means that the introduction of new, eco-effi cient technologies is limited. Environmental laws are also likely

to become more stringent, but the inconsistent policing of existing laws will act to limit foreign companies or

organizations attempting to transfer EGSS to China. This constraint is likely to have a direct impact on environ-

mental protection in China. Overall, the combination of local protection of obsolete and polluting production, the

fl outing of environmental laws and a lack of effective competition policy could be a signifi cant barrier for foreign

EGS suppliers.

The Chinese Government’s Fragmentation and BureaucracyThis constraint was grouped with the ‘signifi cant barriers’ group by 35% of respondents (Figure 3). One respondent

indicated, however, the ubiquity of this problem more widely in stating ‘This matter is a barrier in Australia let

alone China. Government owned enterprises world wide are hard to do business with for these and related

reasons’.

In China, the State Environmental Protection Agency (SEPA) has overall responsibility for environmental man-

agement, though its infl uence is relatively weak (Economy and Lieberthal, 2007). Typically, there will be more

than one agency involved in decision making for any particular environmental program. Interacting with the

Chinese government can therefore be complex. Under the former command system, the State Planning Commis-

sion in Beijing issued directives to its branches throughout the country, usually based on State Council rulings.

0 25 50 7

Inconsistent interpretation of laws & regulations

Lack of transparency of legal systems in China

Absence of policing of laws & regulations in aconsistent manner across China

%

5

A Significant Barrier A Potential BarrierNot a Barrier

Figure 2. Limitations of the rule of law



Regulation was ‘top down’. In most industries, the implementation of regulation is now devolved to provinces and

municipalities (Economy and Lieberthal, 2007). In effect this means that local government authorities regulate

environmental protection according to their own interpretation. A consequence of the current arrangements is

that problems arise on major projects that require central government approval. It is common to fi nd that, having

negotiated the bureaucratic maze of local and provincial authorities successfully, the National Development and

Reform Commission (which supersedes the State Planning Commission) in Beijing then declines to approve a

project (McCubbin, 2004). Although these delays can limit technology transfer, central government approval may

lead to more stringent environmental requirements for a project (even if it delays a particular proposal).

EGS vendors must be fl exible and open minded to the bureaucratic and often unpredictable changes in the

Chinese government. It is important that the Australian or western vendors develop strong relationships with both

the Chinese partners and the local Chinese government so that trust can be built between all parties. Furthermore,

vendors need to recognize that there are only very loose connections between government departments, and this

inevitably leads to lack of communication between government departments.

Establishing Appropriate Level of OwnershipThis was grouped with the most signifi cant group of barriers by 32% of respondents, and it has the potential to

impact foreign investment restrictions (Figure 4). The importance of this constraint was refl ected in the commen-

tary provided by one respondent, who stated ‘You need reliable joint-venture partners that you can trust to look

after your interests as well as their own, and these are very hard to fi nd (in China)’.

Establishing the right level of ownership in a joint venture is important, but of equal importance is that forming

a joint venture with Chinese partners should not be assumed to be the way to go. Many multinational corporations

remain in ‘unhappy marriages’, as the majority of joint ventures in China continue to lose money. Since the 1990s,

there has been a steady decline in foreign direct investment in China through joint ventures (Guerin, 2001b). One

of the reasons is that many foreign managers have come to perceive their local partner as a disabler rather than

as an enabler, while the Chinese are disappointed about unfulfi lled expectations in these ventures.

0 25 50

Inconsistent enforcement of import duties across China

Different customs requirements at different ports in China

Conflicting Chinese importing guidelines

Lack of transparency in the application of taxes across China

Unclear and conflicting standards across provinces in China

Different bureaucratic rulings within and beyond provinces

Inconsistent requirements at each level of Chinese government

Difficulties in repatriating profits from China

Difficulty in finding decision makers at the appropriate location and levelin the Chinese government

%

75


Figure 3. The Chinese government’s fragmentation and bureaucracy

390 T. F. Guerin


A fundamental requirement for any EGS technology transfer to China is for vendors to establish a local pres-

ence. A fi rst step is to establish a partnership with a local organization well established in China. Further, an

effective sales and distribution system for an EGS needs to be developed commensurate with the geographical

region and the client base aiming to be served. This sales and distribution system must be closely aligned with

the vendor’s networks in the Chinese market place for EGSs.

Intercultural SensitivityA lack of intercultural sensitivity on the part of EGS providers was considered to be a signifi cant barrier by 23%

(Figure 5). Intercultural sensitivity was therefore ranked relatively low as a signifi cant constraint, and one explana-

tion is that Australians are able to manage the intercultural issues so they do not become barriers. This was also

demonstrated in the ‘Examples of Australian Experience’ section of this article. Sixty-seven percent of the respon-

dents in the survey were Australians. The fi ndings may also mean that there was a lack of appreciation of this

constraint by respondents.

Given that technology transfer is more than exporting a technology or service into China, but rather a sustained

implementation, Watson (2005) describes the term ‘absorptive capacity’ of the technology recipients. Intercultural

issues and how these are managed will directly impact on the absorptive capacity of the Chinese recipients and

should be considered in any proposed EGS transfer.

An implication for transferring technology to China is that training and inductions should focus on skill devel-

opment of the Chinese end users, a major reason being that the high availability of labour means less emphasis

by the Chinese in applying technology effi ciently. Also, given the importance of gaunxi1 (Guerin, 2001b) to the

Chinese, it is likely that changes in technologies that negatively impact the end users or decision makers or their

immediate family or friends are less likely to be adopted.

Modernization of State Owned Enterprises (SOEs)Only 14% of the survey respondents considered modernization of the SOEs to be a signifi cant non-trade barrier

(Figure 6). Notwithstanding China’s rapidly expanding private sector, the reality is that most of the transactions

undertaken between Australia and China involve SOEs. To provide an indication of the signifi cance of the SOEs,

every year in China the reform of these organizations creates 14 million unemployed workers (McCubbin,

2004).

0 25 50 75

Foreign investment restrictions for companies doing businessin China

A lack of control over Chinese interest in the business

Difficulty in finding reliable business partners in China

Level of foreign capital investment is not necessarilyproportional to the profits shared by partners (under Chinese

legal framework)

%


Figure 4. The problem of establishing appropriate level of ownership

1 This describes the basic force that holds the personalized networks of infl uence among the Chinese.



20 55 70 5

The capacity to display empathy

Group setting and group context in training

The capacity for taking turns (in conversation)

Being non-judgmental

Flexible in your dealings with the Chinese

The "work unit" (as opposed to the individual worker) in China

The capacity to personalize one's knowledge and perceptions

Tolerance for ambiguity

Developing an alliance with the Chinese customer (over a long period)

Harnessing the interpersonal Networks in China ("Social networks" rather than"markets")

Basic understanding of the language

Speaking & questioning so as to ensure understanding

The capacity to communicate respect

Autocratic control of information

Establishing trust

%


Figure 5. The need for intercultural sensitivity

20 55 70 5

The increasing trend ofsmall scale of localcapacity in China

Loss of local jobs ofemployees employed in

China

Process of modernizationof Chinese state owned

enterprises

%

High debt levels amongstate-owned enterprises


Figure 6. The implications of modernization of state owned enterprises (SOEs)

392 T. F. Guerin


Forty-two percent indicated that this was not a barrier; the highest response compared to the other fi ve themes

(or groups of barriers) surveyed. This survey result refl ects a perception that modernization of SOEs is unlikely to

be a barrier. Rather, it is conceivable that the modernization process will open many opportunities for foreign EGS

vendors to meet the needs of these organizations as they are transformed. The reform process of the SOEs will

probably reshape China’s economy and its environmental performance (Watson, 2005). More importantly, the

behaviour of the SOEs will drive market behaviour so signifi cantly that it will have a substantial impact on both

the implementation and the compliance with the terms of any Australia–China FTA (McCubbin, 2004). This is

also an opportunity for companies from Australia and other developed nations and is likely to lead to the purchase

of new foreign (including Australian) EGSs.

General DiscussionThe problems of enforcing regulations and laws, and protecting IP, were the most important barriers identifi ed

in the current study. There were no new barriers or groups of barriers identifi ed by the survey respondents, over

and above those already ranked as part of the current study. This was the case even though respondents were

provided with an opportunity to describe additional barriers. The study has also shown that the barriers identifi ed

in the transfer of EGS to China appear to be the same as those encountered when transferring other non-EGS

technologies to China. No unique barriers associated with EGS were identifi ed from the study.

The Role of Australia in EGS Transfer to China and the Potential Impact of an FTA

This section attempts to focus on Australia’s role and experience in EGS transfer to China. Australian organiza-

tions were perceived to have an advantage in providing EGS to China (56%). This is likely to be, as stated by the

respondents, largely due to attributes of the intercultural sensitivity of Australians. This has implications for Aus-

tralian organizations planning to enter China. Australian organizations can overcome these intercultural barriers

through their awareness of them and proactively managing the relationship with their Chinese counterparts.

The respondents perceive that an FTA between Australia and China will have at least some impact on corporate

environmental managers and environmental consultants in Australia, both positive and negative (Table 4, Figure

7). An FTA would create a favourable context for EGS transfer, and ultimately enhance profi ts of Australian

Corporate environmental managers (CEMs) Increase the responsibilities of Australian environmental managers to manage facilities in China, which will be quite diffi cult to do to a standard acceptable in Australia, primarily due to cultural differences Lower the standards that Australian companies work to, in order for Australia to stay competitive (with China) Easier to develop business in China and make more profi t Provide short term hope Create a positive context for trade It will become necessary to export best practice to collaborative enterprises in China More Australian manufacturing businesses will diminish as they have done over recent years under the reduction of tariff barriers but at a far greater rate While the FTA provides a rules-based framework for engagement, cultural issues will still dominateEnvironmental consultants (ECs) It sets a scenario that there is a special relationship between Australia and China, which is the basis for developing the required personal and professional relationships Provide Australian consultancies more business opportunities1

Table 4. Perceived impacts of an FTA between Australia and China1 This was stated by two consultants.



companies. However, Australian corporate environmental managers are concerned about lower operating stan-

dards in China (than Australia) and the likelihood of the further diminution of Australian-based manufacturing.

The barriers presented in this article, in particular those related to the Chinese regulatory system, will act in

effect as a non-tariff barrier to market access, which a traditional FTA between Australia and China is unlikely to

resolve. Any FTA between these two countries will need to incorporate measures that address the less tangible

non-trade barriers.

It is likely that Australia (and other developed countries) have under-estimated China’s technological capacity.

Australian manufacturers will need sustained reliance on their innovative skills if they are to remain competitive,

with or without an FTA with China. Regardless, progress towards effective IP protection will still be perceived by

Australian companies as an important consideration in determining whether an FTA can deliver real market access

in China.

Examples of Australian Experience

A subset of the survey respondents (30%) was or had been directly or indirectly involved in the transfer of an EGS

to China. The majority of the activity (65%) was in provision of environmental consulting services provided to

other companies, water supply or treatment technologies or advice, internal environmental consulting or corporate

environmental advice and renewable energy technologies and advice.

The value of EGS transfer activity ranged from $US10 000 to greater than $US1 M for each of the Australian

examples. Of the 19 Australian examples, 15 were valued at $US50K and over. Seventy-fi ve percent of EGS trans-

fers occurred during 1996–98, though 20% were either in progress or completed in 2005. The examples of the

Australian experience were most prevalent during the period 8–10 years ago; however, the total value of the EGS

transferred across all the Australian examples represents a total value of more than $US10M, indicating they are

likely to be representative of the range of EGS transfers to China. Of the successful examples of EGS transfer,

80% were from Australia, representing more than $US2.5M, indicating the Australia to China transfer activity

was well represented. The responses describing the Australian experience suggest that Australia has an important

role in assisting China to meet its demand for EGSs.

The range of EGSs transferred in the Australian examples is consistent with the needs of China as it expands

and its ecomony continues to grow, particularly general environmental consulting services, which include soil and

groundwater assessment. The demand for ‘end-of-pipe’ treatment technologies for wastewaters from manufactur-

ing processes, as well as contaminated site management, and for reducing greenhouse gas emissions, is expected

to continue to increase as environmental legislation in China becomes more effective. As the Australian examples

0

10

20

30

40

50

Sig

nific

ant

Som

e

Min

or

Unk

now

n

Non

e

% R

espo

nses

CEMs Consultants

Figure 7. Perceived Impact of an FTA on Corporate Environmental Managers (CEMs) and Environmental Consultants from Australia

394 T. F. Guerin


showed, it is apparent that renewable energy technologies and advice are also likely to become increasingly impor-

tant in the mix of EGS being exported to China from Australia. This is important as Australia has these technolo-

gies and experience with these, including solar, wind, geothermal and biofuels. Other successful EGS transfers to

China were in environmental education and training, advice to companies in the area of corporate social respon-

sibility, energy management, sustainable agriculture, air pollution control and the development of an environment

investment program.

The most common barriers observed from the Australian examples were the absence of skilled personnel where

the EGS was being used, local protectionism and legal, fi nancial and intercultural barriers (Table 5). Respondents

overcame the barriers when common aims for the project were established with the Chinese, communication

between the Australian and Chinese team members was effective, trust and goodwill was present and the Austra-

lians demonstrated intercultural sensitivity (Table 6). These fi ndings suggest that intercultural sensitivity is impor-

tant in ensuring technology transfer occurs effectively.

Conclusions

This survey confi rms concerns that Australian companies (and companies from other developed countries) have

in relation to China’s lack of safeguards to protect IP, the lack of policing of laws across China, the fragmentation

and bureaucracy of the Chinese government and the importance of establishing the appropriate level of ownership

of new businesses (for transferring EGS to China). It also shows quantitatively that these four constraints were

Getting the Chinese to understand what the technology could and could not doLack of educated persons on the ground who could service the equipment2

Availability of skilled Australian personnel in ChinaSeeking capital for the technology transferGraft and corruptionThe Chinese essentially wanted monetary inputDifferences in expectation of work processes between the Chinese and foreignersCompetition from local providers [in China] of notionally similar technology that was markedly inferior but much cheaperInternal and local politics in ChinaUnderstanding the legal processes in ChinaLanguage problemsLack of cultural understanding by both parties

Table 5. Barriers faced in transferring EGSs in the Australian examples1

1 Respondents were not asked to distinguish between trade and non-trade or non-tariff barriers. These are not ranked as they are individual responses.2 This was stated by two consultants.

Establishing common aims for the projectBy good communication in English and a visit to the customer in ChinaGood communication, testing assumptions and establishing trust with the ChineseSpending time and putting the effort in at the grass roots levelGood will by all parties Demonstrations of the equipment to the ChineseLack of cultural ‘arrogance’ from the Australian team and awareness (within the Australian team) of the need to be sensitive

to different nuances (in the Chinese culture)

Table 6. How barriers to transfer of EGSs were overcome in the Australian examples



perceived as signifi cant barriers compared with intercultural issues and modernization of SOEs. These perceptions

are the fi rst from corporate environmental managers and environmental consultants, providing a new contribution

to the literature in this fi eld. In terms of how these barriers may be managed, IP loss may be overcome at least to

some extent by only transferring those EGSs that are diffi cult to replicate such as those involving the provision of

high quality consulting and advisory services, and the product of strategic alliances (i.e. synergy generated between

collaborating vendors or partners in a supply chain). The results also confi rm that training and awareness in IP

rights will be critical for long-term changes in attitudes to IP rights in China, and Australian and other western

organizations should have a vested interest in seeing that a proportion of China-derived profi ts is put back into

this activity locally in China. For companies aspiring to do business in China, a reliable source of advice on the

changing legal landscape in China will also be critical, as will knowing the key players in both the industry and

within the relevant Chinese government authories (regulating a particular industry). Establishing the appropriate

level of ownership is important, and ensuring that skilled operators are available at the point of use of the tech-

nology. These abovementioned barriers present high priority areas for Australian and other western vendors to

consider when planning their market entry into China, and for the Australian Government to consider when

establishing the terms of the pending FTA.

Intercultural issues and modernization of SOEs were rated as medium priority barriers. A reason for this ranking

is that Australians sense the importance of intercultural sensitivity and manage these barriers as part of their

technology transfer activity to China. However, it was evident that absence of effective training of both the Aus-

tralian team involved in the technology transfer activity and of the local Chinese organization co-ordinating distri-

bution, sales or implementation of the EGSs is likely to be a potential constraint in the ongoing success of EGS

transfers. This issue of intercultural sensitivity was not examined in depth in the survey and therefore is not dealt

with further here. Modernization of SOEs was not considered by respondents to be a signifi cant barrier. Potentially,

this transformation in China is perceived as opening a new area for marketing of Australian and other foreign

EGSs.

From the study, there were no unique aspects of the constraints to EGS technology transfer to China. As such,

the barriers identifi ed and discussed in this article appear to be generic to a range of types of good and service.

Further research would be required to ascertain whether there are any unique attributes of the transfer of EGSs

compared with that of technologies in general. Further, no new barriers to technology transfer were identifi ed.

Apart from weak laws leading to unfair competition, the impact of the constraints identifi ed on actual environ-

mental protection in China is unclear. If there were any effects of the identifi ed constraints on environmental

performance, then this assessment was beyond the scope of the study (including rate, extent and/or type of EGS

adopted). Modernization of SOEs is another barrier that may have a direct impact on environmental protection in

China, as the economic incentive to improve the business performance of SOEs will also probably improve envi-

ronmental performance of the same organizations if low or non-polluting technologies and services can be imple-

mented as the SOE facilities are upgraded. Similarly, intercultural issues and in particular the perception of

environmental problems by the Chinese as of minor concern only (Harris, 2006) is also likely to limit transfer

and adoption of EGSs in China. Further research is required to establish to what extent the identifi ed constraints

are impacting the protection of the environment.

Statement of Limitations

This article presents the views of the author only and does not necessarily refl ect those of his employer, Telstra

Corporation, or former employer, Shell Australia.

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