To Create a Greener Future, the West Can’t Ignore China

Four ways for companies to safely engage

by

Shameen Prashantham

and

Lola Woetzel

by

Shameen Prashantham

and

Lola Woetzel

From the Magazine (May–June 2024) · Long read

Yan Wang Preston

Summary.

Fighting climate change is a promising area for engagement between Western companies and China. However, geopolitical strains, the disruption of business relationships by the Covid pandemic, and domestic Chinese policies all make engagement complex. In this article the authors examine the complexities of the current climate-change opportunities in China and present practical strategies for businesses ready to enter the market.

There is a twofold opportunity, they explain. First, China offers a vast market for Western-developed solutions. The Chinese government has set ambitious targets, aiming to achieve carbon neutrality by 2060. That goal creates significant opportunities for firms with cutting-edge technologies. Second, businesses have an opportunity to integrate China’s own advances in climate-related technology.

The authors go on to outline four strategies, all of which involve partnering in some way. They advise companies to make sustainability a global theme, to join or form coalitions to find safe spaces for technological development, to forge partnerships with local companies for market access, and to insource technology.

Idea in Brief

The Opportunity

Fighting climate change is a promising area for engagement between Western companies and China. After all, China is responsible for 27% of global emissions and offers a vast market for green tech.

The Challenge

Geopolitical strains, the disruption of business relationships by the Covid pandemic, and domestic Chinese policies all make engagement complex.

The Solution

To engage effectively with China, consider forming coalitions for safe technological development, forging local partnerships for market access, and insourcing innovative technology.

In the current geopolitical landscape, marked by escalating tensions between Western nations and China, it’s a challenge to identify potential areas of collaboration between East and West that would yield mutual benefits and foster trust. But fighting climate change is one. Climate change is a problem that affects every nation, and it cannot be solved without China’s involvement because the country contributes 27% of global emissions, according to the World Bank.

A version of this article appeared in the May–June 2024 issue of Harvard Business Review.

Shameen Prashantham is a professor of international business and strategy at China Europe International Business School and the author of Gorillas Can Dance (Wiley, 2021).
Lola Woetzel is a senior partner emerita of McKinsey & Company in Shanghai, and until recently, was the global leader of its Cities Special Initiative and the Asia-based director of the McKinsey Global Institute.

To Create a Greener Future, the West Can’t Ignore China

Idea in Brief

The Opportunity

The Challenge

The Solution

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