What do vehicles and cell phones have in common in China?

I used to marvel at the cutting edge cell phones I saw in China when I first went there years ago. In comparison, it seemed that we always had the older technology here. Theirs seemed much better and had cooler features. The reason was, in part anyway, that because their wired infrastructure was immature, they were able to go to wireless quicker and embrace new technology because for the most part, they were starting from scratch. In North America, on the other hand, we were hard wired already, so the impetus to go wireless was less and therefore the uptake of the new technology was slower.

How about vehicles? The big push in Canada seems to be going towards alternative energy cars, primarily hybrid and battery powered electric cars. Why? Well, everyone has electricity to plug such a vehicle into and more importantly, the car companies are making hybrids as well as fully electric cars. China is doing this too, correct? Well, the answer may surprise you.

Natural gas powered vehicles have been around for a long time and their popularity has gone up and down.

In the US, T. Boone Pickens proposed two years ago that the U.S. power vehicles with natural gas instead of oil. In the end, Washington wasn’t particularly enthusiastic, and a vote on a bill that would have enhanced tax breaks for natural-gas vehicles, or NGVs never happened.

China however, is turning out to be another story because they do not want to continue their total dependency on oil. NY research firm Samuel C. Bernstein stated last year in a Wall Street Journal article, “if Chinese per capita oil consumption ever matched U.S. levels, the country would need 45 million barrels a day, more than half of current global supply”.

Electric vehicles offer one way of reducing oil consumption, but, they use electricity, which is expensive as well.  In China’s case, 90% of their electricity comes from coal, which creates smoggy cities. Natural gas emits between 20% and 25% less carbon dioxide than petroleum fuels and also less nitrogen dioxide and carbon monoxide.

China is partly dependent on imports of natural gas, but has vast reserves of shale gas.

Like wireless cell phones in China, the vehicle market is less mature, so more NGVs could be built new, rather than having to retrofit older ones. This, I am sure was a major issue in North America. As well, more refuelling stations could be built from scratch, rather than retrofitted.

Morgan Stanley reckons LNG could displace about 3% of China’s estimated diesel demand by 2015.  Obviously, China’s consumption and need for oil will of course have a major impact on prices going forward however, China embracing natural gas as a transportation fuel would alter this.

So, what is the common link between cell phones and vehicles in China? They can adapt new technology right from the start as opposed to working around a technology structure already in existence. This is an advantage.

While our push to cleaner fuels is great and certainly hybrid cars and electric cars are in the future, maybe China’s experience and success in using natural gas as a fuel source will spur us to continue what we started in the early 90′s in this technology.

About Tony Gostling

Tony Gostling is the Director - Member Services for the Canada China Business Council, which is the premier facilitator for bilateral trade and investment between Canada and China.Since 1996, Tony has been heavily involved in Asian business activities. Prior to joining CCBC, Tony spent nine years working in China as the President and Chief Representative of a trading company with offices in Shanghai and Shenyang, which supplied “made in China” OEM components, mainly for the railroad and transportation industry, to their customers in the US and Canada. Tony has also been a manufacturer’s agent and a sourcing and business consultant and spent many years in procurement management at Westinghouse Power Transformer prior to their merger with GE in the mid 80’s.Tony, who speaks Mandarin Chinese, has spent most of his career in global procurement and supply chain management. He is very familiar with business startup and operational practices in China and the common problems associated with operating in an emerging economic power. Tony and his wife, Hua, make their home in Guelph but still maintain a residence in Hua’s hometown of Shenyang, China. Tony, who grew up in Chatham, has always had a great interest in sports and played lacrosse for the Kitchener Braves back in the early 70’s and is in the Wallaceburg Sports Hall of Fame as a lacrosse coach.

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