Factory bosses in China are looking at ways to cut costs through greater energy efficiency. A recent article in Bloomberg Businessweek reports that for decades after China started trading with the United States in 1979, most factory managers didn’t focus on electricity prices. During those years, demand from abroad was expanding, labour was cheap and the exchange rate favored China’s exporters. But in the wake of the 2008 global financial crisis, conditions have changed.

Kevin Chang, general manager of Concord Ceramics, based in Dongguan in Guangdong province, told Businessweek that his labour costs have doubled and the exchange rate is less favourable. He sees increasing energy efficiency as one way to shore up the bottom line.

Workers at the Seagate Technology International (Wuxi) factory. Photo: Robert Scoble

Workers at the Seagate Technology International (Wuxi) factory. Photo: Robert Scoble

The work at Concord Ceramics requires constant air conditioning and, in the summer, electricity accounts for as much as 15% of operating costs. Chang installed a high-volume air-conditioning system to cut expenses, but once the system was up and running, his electricity bill went up. He brought in an engineer from the China Academy of Building Research, a government think-tank, who deduced that the cooling system was more powerful than the factory needed. The air conditioning was constantly cycled between maximum cooling and powering down, therefore wasting energy. The solution was to run just half of the unit. The air remains at a steady temperature and Chang says he will save about 40% on electricity bills.

Another company, Shenzhen Black-Cloud Packaging, which makes packaging material for clients, including Apple, installed four giant ceiling fans imported from the US. Each one replaced 40 desk fans, using a tenth of the energy. “The problem is not usually lack of technology, but lack of expertise to operate energy systems,” Samuel Zhou, an energy consultant in Shanghai, told Businessweek. “With pollution, you can see it or smell it. Energy is invisible. You cannot tell a motor is running inefficiently without data intelligence.”

Taryn Sullivan, CEO of global supply-chain analytics company, Efficiency Exchange, has spotted energy waste at every factory in China she has visited. She estimates an average potential savings of 13%. At Circle Furniture, also based in Guangdong, her firm analyzed the electricity bills and concluded that the company was paying the local utility a monthly fine for drawing more current than needed, which increased the amount of energy lost in transmission. A simple mechanical adjustment resolved the issue.

In a related story, the US Institute for Industrial Productivity has started a new project with the Dezhou Energy Conservation and Supervision Centre (ECSC) to drive the adoption of energy management systems in some of China’s biggest industrial enterprises. The ECSC is the Chinese government organization responsible for reducing energy use in Dezhou city in Shandong province, one of the country’s most industrialized areas.

Through the partnership, 52 industrial enterprises in Dezhou will receive assistance to adopt an energy management system (EnMS) by June 2014. EnMSs are widely considered to be one of the single, most important factors in reducing the energy use of industrial operations.

Wang Shiyan, Director of Dezhou ECSC, said the government is promoting EnMS across China, and implementation has now started with the pilot in Dezhou. “The Chinese government is determined to cut energy use across the country. If this scheme is successful, it will be rolled out in other cities in China. This could lead to huge cuts in energy use and greenhouse gas emissions countrywide,” he said.