by David Schwartz  (Algae Industry Magazine)  In 2008 David DuByne helped start and run an algae biodiesel company, Dao Energy, LLC, in Chengdu city of Sichuan Province, in western China. Their concept was to use low cost labor and materials within China to mass produce recyclable floating bag grow-out units on fish farm water surfaces, theoretically driving down installation costs to around $4-5 dollars per square meter.

…Long story short, “In the end Tongwei stole our idea and went it alone,” he says. “The government then told us that even one single cell of algae was a Chinese natural resource and we, as an American company, were unable to grow algae unless we joint ventured with a local company.”

…There is no real algal industry in China yet, only a few startup companies and some university research labs searching for the best strains of algae for oil production. There will probably be nothing very unique or innovative about the Chinese algae industry as most of it will be copied or pirated from the west. Chinese are masters at learning vast amounts of information on paper and reciting it back word for word, but when it comes to innovative and creative thought, China’s solution is to copy to stay competitive.

…Guanxi is accompanied by “gifting/bribing” and preferential business relations. If you are under-capitalized that will be problematic because if officials in power positions can’t directly benefit, they won’t bother lifting a finger. If you think Chinese officials will proceed with algae to help the country, out of patriotism, you are thinking of 1950’s Mao era China. Now, in “modern” China, its pay for play.

… But, overall, disadvantages and weaknesses outweigh any advantages. The lack of knowledge and research compared to the United States is huge. Necessary technology and technical skill is very limited or unavailable.  Chinese society in general does not value the type of individuality that promotes creativity and innovation. Americans generally think change is good, but the Chinese are usually resistant to change, as we were repeatedly reminded by many of our Chinese interns when dealing with the obstacles in the government bureaucracy and business world.

…Another reminder, security at your overseas facility should be a high priority, namely a strong and secure computer network. As you may already know, the Chinese are expert hackers. We found in China that there are no ease-dropping laws; your emails or phone calls can/will be monitored and recorded. You will probably be followed at times, especially if you’re doing cutting edge technology business, and expect your interns or employees to be of questionable loyalty.

As our Chinese friends would say “there are no secrets in China.”  If you’re managing an algae company in America you should definitely develop all your technology in the United States and, if you choose to have it manufactured in China, follow this advice: Do not manufacture the entire unit in one location/factory. Have it separated into individual components; piece it out to different factories with no affiliation to one another, preferably in different provinces. Then re-import the separate pieces into the USA from several different ports out of China and assemble the unit on your home soil.   READ MORE