Seizing China's energy-efficiency opportunity: A case study

Energy efficiency and conservation have rocketed up China's corporate agenda, particularly for heavy-industry players such as power plants, steelmakers, chemical companies, and automakers. Energy is the largest expense for some of these industries, and since variable costs represent a larger sh...

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Bibliographic Details
Published in:The McKinsey quarterly 2013-07 (3), p.94
Main Authors: Chen, Steve, Fu, Maxine, Wang, Arthur
Format: Magazinearticle
Language:English
Subjects:
Economic crisis
Energy efficiency
Profits
Variable costs
Online Access:Get full text
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Summary:Energy efficiency and conservation have rocketed up China's corporate agenda, particularly for heavy-industry players such as power plants, steelmakers, chemical companies, and automakers. Energy is the largest expense for some of these industries, and since variable costs represent a larger share of total costs in China than in more developed countries, where fixed labor outlays are higher, volatile commodity prices hit China's core industrials much harder. These economic fundamentals apply to multinationals and local players alike, so efforts to secure the benefits of improved energy efficiency are important for a wide cross-section of companies. As consumer demand plummeted at the start of the global economic downturn, the company's leaders watched as prices for its goods fell by more than 50% in a matter of weeks. Within four months, the group's record figure for profits was followed by a comparable loss.
ISSN:0047-5394