Mainland entrepreneurs gear up for the green revolution as profits beckon
If the speed at which mainland entrepreneurs jumped on to the internet bandwagon in the late 1990s is any benchmark, the biofuel investment craze sweeping through Guangxi Zhuang autonomous region will create a green revolution.
Kang Yongde, the 40-something co-founder of Guangxi Liuzhou Luzhai Bio-Energy, is one such investor who thinks this nascent but potentially lucrative industry is a road paved with riches. 'Look at these seeds. I am going to send them to the laboratory to assess their oil content,' he told fellow delegates on a train returning from a biofuel conference in Baise to Guangxi's capital Nanning, while urging them to take a few of the black pods as souvenirs. 'These are the best I have and I plan to mass produce them.'
The former web-learning content creator and Jiangxi province native last year joined several partners to set up a company to plant jatropha trees in Guangxi, home to about 80 per cent of the mainland's sugar-cane output.
'Guangxi, blessed with subtropical weather and abundant land resources, is the ideal place for jatropha plantation,' he said. 'Back home in Jiangxi, the occasional winter snow and frost could kill the plants.'
Many farmers were giving the hardy, drought-resistant jatropha a try as dry weather in recent years had resulted in low sugar content for their cane harvests, Mr Kang added.
Dissatisfied with his previous job of generating online education content, he is concentrating on his new-found career with a passion.
'I think the world's top three issues of interest and mega trends at the moment are healthcare, energy and environmental protection,' Mr Kang said. 'I figured that no matter what I do in business, it ought to be related to these three things.'
After learning about jatropha planting, Mr Kang invested in a fact-finding trip to Malaysia and decided to start investing after investigating the risks and returns. His company then joined forces with the Sichuan Changjiang Afforestation Bureau in planting jatropha trees.
The bureau supplies quality seeds and planting expertise to ensure a good harvest, while his company manages the plantations.
Mr Kang declined to reveal financial details of the co-operation, but said his company had planted about 500 mu (about 33 hectares) of seedling nurseries in Luzhai, about 100km southwest of the world-famous tourist destination, Guilin.
Leased for about 450 yuan per mu, the annual rent amounts to about 225,000 yuan.
Some 20,000 seedlings can be planted in each mu. The seedlings and fertilisers will be provided to independent farmers who will contribute land and labour, and will sign contracts with the company on harvest or profit sharing.
The income prospect appears attractive. The nondescript jatropha seeds can be sold for at least US$1.50 a kilogram in the international market, according to Chinese-Indonesian businessman Nurdin Purnomo, who is in talks to invest in jatropha plantation projects on the mainland.
Based on a yield of 400kg of seeds per mu, a 500-mu plantation could provide at least 2.26 million yuan of income annually, with a land rent of only 225,000 yuan. Labour is cheap in Guangxi. Mr Kang said labourers could be hired for 800 yuan a month, and eight workers were required to tend 100 mu of plantations, taking care of irrigation, fertilisation and other chores.
The biggest uncertainty is the selling price of the seeds.
Oil produced from jatropha seeds are prized overseas due to huge demand for high-yield plant oil that can be used as clean motor fuel as a replacement for crude oil-derived fuel.
In the domestic market, where fuel prices are capped, the industry will require government subsidies to be profitable, according to Guangxi Yifang New Energy Investment president Su Huihua.
Mr Su's company recently branched out from tourism into biofuel. 'I'm confident that the Chinese government, like other countries, will subsidise the industry,' Mr Su said.
So far the central government has yet to unveil subsidy policies on biodiesel sales. And it remains to be seen whether it will tolerate large-scale export of jatropha oil using the mainland's dwindling land resources without the industry contributing to environmental improvement.
