White paper - Business Development for Clean Tech

MEET-BIS VIETNAM PROJECT
Mainstreaming Energy Efficiency through Business Innovation Support – Vietnam
Commercial solutions
for clean technology
in small to medium-sized enterprises
in Vietnam
The European Union’s MEET-BIS Vietnam Project
This project is funded by the
European Union
MEET-BIS is a project under the SWITCH Asia
Program (Project 2008 VN 171-201)

MEET-BIS Vietnam acts as a catalyst for eco-entrepreneurship and busi-
ness promotion. To enhance the efficient use of energy and water, it
brings together suppliers, technologies and customers. By targeting
complete supply chains, the project aims to provide commercial solu-
tions for a wider introduction of clean technology in small to medium-
sized enterprises in Vietnam.
It works both ways: suppliers create new business opportunities, and
their customers not only enjoy the competitive advantage of ‘going
green’, but also lower energy and water bills.
This is the story in a nutshell. Obviously, the wider story contains both
pitfalls and victories. This document reveals the most important ones,
not only to prevent future ventures from replicating futile steps, but also
to disseminate the vital elements for success.
TURNING
MARKET GAPS
INTO
OPPORTUNITIES
Project partners
MEET-BIS Vietnam is funded by the European Commission as part of its SWITCH-Asia Program that promotes sus-
tainable production and consumption in Asia.
The project started in 2009 and ran until the end of 2013, focusing mainly on urban North Vietnam and specifically
Hanoi. It is implemented by ETC Foundation, TriodosFacet (AdaPPPt) and Aidenvironment in the Netherlands, and
Research Center for Energy and Environment (RCEE) and Vietnam Chamber of Commerce and Industries (VCCI-
IBCI) in Vietnam.
During its four and half years, the project partnered with a dozen suppliers of energy and water efficient technolo-
gies to perform market research and to develop innovative business and sales techniques.
This project is funded by the European Commission's SWITCH-Asia program (Project 2008 VN 171-291)
* This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of MEET-BIS Project team
and its implementing partners and can in no way be taken to reflect the views of the European Union
Project team and local team
The project team consists of a core local team, based in Vietnam, and is headed by an international team leader.
On an intermittent basis, the local team is supported by a pool of international consultants.
The local team provides on the ground support for business development and marketing research, and manages
sales activities and sales agents.
2

In Vietnam, economic and population growth is resulting in severe pressure on the environment and on the use of energy
and water. Much of Vietnam’s growth is expected to be fuelled by small to medium-sized enterprises (SMEs). They have a
clear potential to save on their water and energy consumption bills. For suppliers they are a promising business opportunity,
currently accounting for over 60 per cent of the market value of all final goods and services produced in the country.
Vietnam has already seen many projects to introduce energy and water efficient technologies. As a result, market research,
technology reports and environmental impact studies are readily available, as are well-trained installation companies. How-
ever, the diffusion of technologies for sustainable production has not yet achieved significant penetration in mainstream SME
markets.
THE OPPORTUNITIES
THE CIRCUMSTANCES
Many SMEs in Vietnam work with outdated and inefficient technology, rendering high business costs and environmental det-
riment. Technologies that enhance energy and water efficiency of SMEs do exist, but suppliers are not aware of the market
opportunities in this sector, and staff is not trained for sales to relatively small companies. They lack capacity to adequately
translate technical solutions into business-smart, cost-saving products for SMEs. At the same time, SMEs are often not aware
of the benefits of investing in cleaner technology and lack the capital to invest in cleaner technology.
Infrastructure is generally good in Vietnam; entrepreneurs enjoy high standards of communication, roads and transport. The
legal environmental framework is mostly in place, but its enforcement could be more supporting. Energy subsidies reduce
incentives to save on electricity. Yet, energy prices are slowly increasing and a law promoting energy saving has been passed.
Unfortunately, non-compliance with the laws remains abundant and is seldom fined. Concerning water efficiency, govern-
ment action would be even more welcome, as the concept is quite unknown and the market is hardly explored.
Another challenge is the access to inexpensive loans. Most Vietnamese banks are not used to assess the needs and risks
involved in financing clean technology of SMEs and their suppliers. The level of loan requested by an SME for clean tech
investments tends to be relatively small for a bank, compared to the transaction costs involved. Hence, it is an unattractive
business for banks.
We will surely continue to invest in energy saving and environmental protection,
because besides all direct and immediate benefits for our company, we also have
long term benefits which are even greater: reputation on product’s quality, stable
and sustainable long-term investment, and help build a “green industry” brand
for the enterprise.
Mr. Do Dinh Dinh
General Director - Hung Long Garment Company
“
This project is funded by the European Commission’s SWITCH-Asia program (Project 2008 VN 171-291)
3
”

Suppliers of energy and water saving technology could
become an important player in bringing knowledge
about the business case to the SMEs. This implies that
they need to identify new market opportunities and
design commercially attractive business packages for
SMEs.
SMEs not only have to be informed about their possibili-
ties of saving energy and water; once they are tempted
to make improvements, they stand for investments that
may exceed their present budget. Local and interna-
tional financial institutions would have to develop suit-
able products for SMEs. The ambition of the project was
thus to incorporate a financial solution into the business
package.
The project intervention strategy is based on scaling up
THE ANSWERS
After analysing existing initiatives, MEET-BIS opted for a risky approach: activating supply
chain partners. This is risky, because at the outset not much is known about the openness
of the players in the field to invest in energy and water efficiency. Nevertheless, it was
considered worth taking the chance, as building capacity with market players guarantees
a high spin-off; by their very nature, they continually seek opportunities and will keep in-
novating, also after termination of the project.
However, developing commercial markets takes time, and requires flexibility of the project
(and its donors) to adapt to local economic circumstances.
A RISKY
APPROACH
initiatives that have been piloted in the past few years, introducing them into the market, and ensuring their commercial
viability. As many solutions for saving energy and water have a proven commercial rationale, it is foreseen that the created
supply chains will continue after expiration of the MEET-BIS project.
Targeted SMEs
In Vietnam, SMEs are defined as independent production and business establishments with a registered capital
less than VND 10 billion (USD 0.5 million) or with less than 300 employees.
After preliminary research, it was decided to concentrate on the following SMEs:
• Hotels and office buildings
• Textile, shoes, leather and apparel manufacturers
• Food processing enterprises
• Restaurants
• Steel producers (water only)
• Paper producers (water only)
“We save energy because saving energy not only helps save cost for our business, but also keep our clients
and staff in a good environment when they stay at our hotel. Besides that, saving energy help us to build
up a green, environmental friendly hotel.
Mr. Nguyen Van Ut
Vice Director - Saigon Halong Hotel
”
4

THE TECHNOLOGY
SUPPLIERS
THE GOVERNMENT
The Vietnamese clean technology sector was in need of cost-effective
business models and suitable sales strategies to serve SME markets.
MEET-BIS made itself known among the suppliers through seminars and
business meetings, emphasizing the potential of these markets. Building
relations with the suppliers, however, proved to be time consuming, but
finally the project managed to convince them of the profitability of pro-
viding to SMEs.
Eventually, formal cooperation was established with eleven suppliers of
energy and water saving products complemented with a wider network
of over 250 suppliers. One international firm and a local supplier were
matched to introduce innovative water saving products on the Vietnam-
ese market.
Training and capacity building sessions were organized for technology
suppliers and relevant associations. Together with the technology part-
ners, innovative sales approached where piloted. When developing such
a new sales activity, the project aimed to come up with potentially cost-ef-
fective approaches that could be taken over by the suppliers themselves.
This resulted in a toolkit of sales and marketing activities.
Initially, the involvement of the government was limited. The project focused on building relationships with the business
sector, and underestimated the importance of the Vietnamese government institutions in facilitating and supporting com-
mercialization. Many trade-related organizations, vital to promoting business opportunities, are in fact government bodies.
Realizing this, the project linked to government initiatives, such as a new energy law, the promotion of green tourism and
ambitions on corporate social responsibility. This collaboration proved to be mutually beneficial: the project assisted in real-
izing the government’s aims, while the government assisted in promoting the project.
“As a small technology supplier, we lack the
know-how in sales and marketing. MEET-BIS
helps us to approach the market in a different
way. We used to depend mainly on our relation-
ships to win projects. Now we approach a wider
group of potential customers. My staff learns
a lot on how to reach out to the SME and to
network with other suppliers.
Mr. Vu Ngoc Tuyen
Director - Systech Eco Company
”
THE SME-MARKETS
Generally, SMEs are run by an individual or a small team. This makes them flexible and decisive. On the other hand, their
technical expertise and budget for investments with a longer payback period are limited.
But costs appeared not to be the main obstacle to invest in saving energy and water. According to a survey of MEET-BIS
among 172 SMEs, the main reasons are: too busy (69%), lack of authoritative information (43%) and too much information
to make a choice (41%).
In the course of the project, saving energy and water was promoted among some 4,000 SMEs, of which about 1,000 showed
interest in events like seminars, mini-markets and business meetings. Such events were shaped in co-operation with Cham-
bers of Commerce and relevant associations.
By 2013, over 420 SMEs had started investing in clean technologies, mainly in saving energy. Introducing water efficiency was
only materialized in the last two years of the project, and waste water treatment has not been successful at all. The price of
water is low, and especially investments in waste water treatment are high. Suitable plug-and-play technologies for SMEs
hardly exist. And apart from the lack of awareness on the benefits of water efficiency, there is no nation-wide implementa-
tion of waste water standards.
However, water saving measures have been well established in some sectors, especially hotels, office buildings and the gar-
ment industry. The project decided not to focus any longer on waste water management, as insufficient demand from SME’s
and a lack of standardized solutions make promoting sustainable production in the textile and garment industry a standalone
project.
5

“We have installed a solar hot water system. It works very fine. There is always enough hot water
for customers, also during outages. We no longer pay monthly bills for electric water heaters
that consume a lot of power. And the solar system is safer; we don’t have to worry about electric
shocks.”
Mrs. Do Thi Hiep Dang
Owner of Old Home Hotel with 45 rooms Save 60 - 90% energy
EXAMPLES OF INSTALLED ENERGY & WATER SAVING PRODUCTS
• In the garment industry, old lighting systems were substituted by TL8 with electrical ballast or even TL5 technology. The
food sector also invested in more efficient lighting.
• Hotels, restaurants and office buildings invested in Compact and LED lights.
• Buildings and especially hotels confronted with high consumption of hot water, were particularly interested in solar water
heaters and heat pump systems.
• Variable Speed Drivers were installed for the industrial fan of the boiler / ventilation system. Hotels / Buildings installed/
integrated VSDs in elevators, or used it with water pimping system, chiller.
• Hotels, offices and factories have installed energy consumption monitoring software.
• Especially medium-sized companies were interested in energy audits that advice on increasing efficiency.
• Double button toilet and efficient showerheads/tape for hotels and commercial buildings.
Naturally, this list is not exhaustive. Window film, for example, is an easy and cheap solution to reduce heat and thus the costs
of air-conditioning. It is ‘low-hanging fruit’. Although partnership agreements with suppliers were drafted, they eventually
pulled out, mainly because presently SMEs are not their priority.
“We found that investing in the T5 lightings is very effective. This lighting brings the best light to
our workers, help them make more precise stitches. Moreover, T5 lighting saves a lot of energy for
our company, about energy reduction in average.”
Mr. Tran Huy Tuc
Director - Nam Dinh Textile Company
15%
“We are satisfied with the energy saving result after investing in some energy efficiency solutions,
especially in the heatpump. After using the heatpump we could save more than 15 million vietnam
dong per month on oil. The heatpump does not create a polluted environment and it helps to
reduce cost for staff to operate the machine like the boiler.”
Ms. Vu Thi Lan
Director - Blue Sky Hotel Halong
Save 60% energy
“I think energy audits are very necessary for every company. They help enterprises to evaluate the
real situation of energy uses within the company and review how its equipment work. After that,
energy audit experts will analysis, evaluate and advice to invest in new solutions or improve the
current working situation of equipment to save energy, increase production effect for company”
Mr. Pham Ngoc Vinh
Director - Tien Hung Garment Company
Save up to 15% energy
6

Innovative technologies are often generated by large, multina-
tional companies. To gain access to these new technologies,
the project has called in the expertise of companies like Philips
Lighting, Schneider Electric and Neoperl water solutions.
Schneider and Philips brought their marketing directors into
action during workshops for local technology suppliers on how
to expand their market to SMEs. Conversely, both companies
capitalized on the training material of MEET-BIS to provide
their local retailers with Vietnamese examples of sales and
marketing.
The cooperation with the Swiss-German company Neoperl in
the last year of the project provided a renewed focus on saving
water: their innovative faucets for water saving and improving
water flow are easy to install and affordable for a typical SME.
Neoperl is matched with a local technology supplier.
MULTINATIONAL TECHNOLOGY PROVIDERS
ACCESS TO
FINANCE
At the outset, the project envisioned specific loan products for SMEs to invest in energy and wa-
ter saving, in concert with banks and the partnering technology suppliers. This approach proved
unrealistic. Vietnamese banks do not consider equipment finance to SMEs as an attractive busi-
ness, and they are currently extra conservative in their risk assumption. From their side, SMEs
are reluctant to borrow from banks, for fear of cumbersome procedures and unattractive condi-
tions.
Linking lease firms and technology firms then appeared to be a more effective solution. Lease
firms are specialized equipment financiers that also target medium enterprises. During the lease
term, the suppliers assure the proper maintenance of the equipment.
It is now up to the lease and technology firms to come to a basic co-operation model. If this
works out, project like MEET-BIS can come in to push the effort forward by liaising with providers
of medium- to long-term funding, with international financial institutions or with government
agencies that provide incentives or subsidies.
“Of the six solutions in which my company invested, I have been most impressed with the Variable
Speed Drive (VSD) for the fan provide-heat 7.5Kw. Despite the high budget needed to investing, the
VSD will help to save a lot of energy for our company, calculated it up to energy saving”
Mr. Nguyen Duc Sy
Vice Director/ Technical Manager
Hanoi Textile Company
10 - 20%
* This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of MEET-BIS Project team and
its implementing partners and can in no way be taken to reflect the views of the European Union
“From my experience with several hotels, I see Grohe
products integrated NEOPERL water saving technology
as much more water saving than other products of the
same types. Grohe products help save about
of water usage in my hotel.”
Mr. Dao Xuan Hung
Head of Technical Department - Angel Palace’s Hotel
50%
7
The momentum for starting co-operations, and asking banks to venture into fairly new terrain
like EE finance, and develop new products with medium term maturities is not the best. The
Vietnamese banking sector is going through a difficult period.
The Economist: “The souring debts of state-owned enterprises, together with a burst property
bubble, have left the country’s ill-managed and secretive banks in a mess.” The Economist fur-
ther notes that the banking sector trouble has resulted in a credit squeeze, which has prompted
a record number of business failures over the past two years, and that the banking crisis “risks
constraining growth for a serious amount of time unless it’s dealt with”.
The Economist, 2 February 2013, page 60: “Vietnam’s banks, Tiger tamed, The good times
won’t return until the country’s stricken banks are dealt with”
“
”

ETC Energy (www.etc-energy.org)
AdaPPPt (www.triodosfacet.nl)
Aidenvironment (www.aidenvironment.org)
Research Center for Energy and Environment (www.rcee.org.vn)
Vietnam Chamber of Commerce and Industries
For more information, please visit the MEET-BIS Vietnam project website:
www.meet-bis.vn and www.meet-bis.org
or contact:
ETC Foundation, e-mail: info@etcnl.nl, phone: +31 33 4326000,
http://www.etc-international.org/
FACTS AND FIGURES
Duration and funding
• The MEET-BIS project originally ran from 2009 to March 2013, but was extended with 6 months in order
to enhance the sales of the technology suppliers.
• The total budget of the project was EUR 1.9 million, of which 80 per cent was funded by the European
Union. The remainder came from the project partners; local technology suppliers have shared in some
costs of promotional events.
Stakeholder engagement
• Formal cooperation is established with 11 local technology suppliers.
• By July 2013, 9 of those suppliers successfully generated sales.
• Some 70 Technology suppliers participated in events or activities of MEET-BIS.
• A database of approximately 278 local suppliers of energy and water saving products has been created.
• An international firm and a local supplier are matched to introduce water saving products.
• Two international companies performed capacity building on marketing and sales.
• Close relations are built with the relevant Vietnamese government bodies.
Research conducted
• Relevant product-market combinations are selected.
• Market research is done on the SME challenges and bottlenecks.
• Research is performed on access to finance for SMEs and potential solutions.
• A toolkit of sales & marketing practices and support packages with tested Vietnamese illustrations is
made.
Financial and environmental impact
• Energy and water saving technologies have been promoted among 3,852 SMEs.
• 1364 SME’s showed their interest in EE/WS products & services by visiting our events or attending indi-
vidual meetings with our project staff. 423 SMEs of these SME’s have invested in those technologies.
• Total value of energy and water saving products sold since 2011 is EUR 2.43 million (VND 65.66 billion).
• The reduction of CO2 emission is an estimated 9,842,559 kgCO2e between the first sales in January 2011
and end of June 2013. This equals driving around the world 1,800 times with a new passenger car; or the
annual emission reduction of a 4 MW hydropower plant in Vietnam.
• The present investments in energy and water saving products & services will contribute to mitigating
climate change with an estimated annual emission reduction of 9,788,636 kgCO2e. This will last until
products reach their end of life and need to be replaced.
8

White paper - Business Development for Clean Tech

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to White paper - Business Development for Clean Tech

Similar to White paper - Business Development for Clean Tech (20)

White paper - Business Development for Clean Tech