The demand for green products and services appears to be skyrocketing in China, but businesses are underestimating consumer interest and awareness in environmental issues, according to TUV SUD Asia Pacific, the fourth-largest global provider of testing, inspection and certification services.

According to independent research by the company, 83 percent of the Chinese respondents in first-tier cities, including Beijing and Shanghai, claim that they want to purchase environmentally friendly consumer products, showing China has higher interest in and demand for green products than do India and Singapore, the other countries included in the research.

Among Chinese consumers, 94 percent are willing to pay up to 45 percent more for products and services that are clearly certified as environmentally friendly, according to the research.

Companies, on the other hand, expect just 60 percent of urban consumers to be willing to pay more for certified green products, and they believe that those who are willing would only pay a maximum premium of 13 percent.

"We have reached an era where green products and services not only help tackle the pertinent environment issues but also make genuine business sense. Over the next five years, this is only going to intensify," said Dirk von Wahl, president and chief executive officer of TUV SUD in China.

He said companies that act quickly to capitalize on the growing trend will reap significant rewards because green products and services are still in limited supply in the Chinese market.

According to the research, both businesses and urban consumers expressed a high level of interest in green issues. However, businesses appear to be unaware of the intensity of interest among urban consumers and how this translates into demand for green products and a willingness to pay a premium of almost 50 percent for them.

"This shows a large and potentially lucrative opportunity in the market, especially in industries such as home electronics, food and beverages, and clothing and footwear in which consumers make the direct purchasing decision," said Wahl.

Most Chinese companies said the industry and government regulations are the main reasons why they implement corporate social responsibility and sustainability policies and guidelines. As a result, they are not aware of the business opportunities when it comes to making a profit from environmentally friendly products.

Furthermore, there are many different types of green industry standards regarding production procedures and products in China. As a result, it is sometimes hard for companies to decide which standard can bring them the highest profit, said Wahl.

As many as 94 percent of Chinese urban consumers declared that independent green certifications play a bigger role in their purchasing decisions than price, because they provide independent documentation, and therefore add credibility to the product.

The government has been making efforts on setting standards for different types of industries and is in talks with other committees to set global green standards.

"It will help the companies in the export business in addition to the domestic market," said Wahl.

He added Chinese consumer awareness of green products is similar to that of European consumers a few years ago. However, choosing green products has already become a part of European daily life while Chinese consumers in large cities are at an early stage in their development.

"Urban consumers in China have become increasingly sophisticated when it comes to green issues. They understand the importance of action, and therefore only look to purchase green products and services that are independently certified to green standards. Businesses, on the other hand, appear to be slow on the uptake. This is surprising, especially considering that the demand is there."

(China Daily January 13 2011)