Palisades China Groups Blogs

A New Approach to Funding the Maintenance and Development of American Infrastructure

Nathan Keyes — Wed, 17 Mar 2010 06:23:40 +0000

The state of poor repair of American infrastructure is evident to anyone who spends time navigating pothole-ridden highways and roads that are crowded well beyond their designed capacity. This bleak state of affairs is upon us at a time when the current level of infrastructure funding is wholly insufficient. According to the American Society of Civil Engineers in their 2009 Report Card for America’s Infrastructure, “The current spending level of $70.3 billion for highway capital improvements is well below the estimated $186 billion needed annually to substantially improve the nation’s highways.” The problem is projected to get much worse in the near future: “Usually built to last 50 years, the average bridge in our country is now 43 years old.”

In light of these massive challenges, we are in need of creative solutions to close the funding gaps that are already significant and will only get worse. One possible solution comes by adapting an idea proposed by Gordon Wu et. al. in their 1995 paper, “A Modified Highway Interchange Design for Improved Land Use and Transportation Efficiency: Case Study of the Guangzhou-Shenzhen Superhighway in Guangdong, China.” Similar to our situation today, Wu’s company, Hopewell Holdings, was faced with a funding gap between the cost of the highway it was constructing and the expected toll revenues. Wu’s proposal centers on the observation that in a typical “clover-leaf” highway interchange, large tracts of land enclosed by the loops are underutilized. By designing a more efficient means of highway access and egress, Wu was able to free land for more constructive purposes. Furthermore, he envisioned elevating the highway at these interchanges and filling the space underneath with commercial and residential development.

There are numerous advantages to concentrating development around highway interchanges, further details of which I will flesh out in future posts:

- Facilitates public transit. Buses can simply pull off the main highway and then re-enter directly, without having to navigate clover-leaf exits and turn around on local roads in order to continue in the same direction. Local feeder busses can stop at the same platform and pick up or drop off commuters as well.

- Improves access. Having a commercial center integrated into the highway interchange eliminates the distance and travel time for shoppers, and mitigates suburban sprawl.

- Pays for itself. The government can be a shareholder in the development company (utilizing the land at interchanges which it already owns) and thereby generate revenue from property leasing and sales, rather than depending only on tolls and taxes to cover the costs of highway construction, maintenance and improvement.

- Promotes sustainable development and operation. The scale of an interchange development is perfectly suited for implementing the latest advances in sustainable construction and operation techniques, such as low-carbon concrete, highly effective insulation, and energy-efficient district heating and cooling systems.

If successful, this model could be implemented throughout America in order to help fund the massive infrastructure improvement projects which are direly needed. Further feasibility and technical studies are needed to iron out implementation details and determine whether this model really can deliver on its theoretical potential.

Entrepreneurship in China and America: Key to Our Global Economic Recovery

Eva Lerner-Lam — Mon, 15 Mar 2010 03:11:02 +0000

Most savvy China watchers know that in today’s China, the top-down governance system depends on entrepreneurship within its state-owned enterprises (SOEs) to grow its economy. As the United States struggles to turn its flagging economy around, it, too, is looking to entrepreneurs to lead the way.

What makes a successful entrepreneur? In his July 7, 2009 article, “Anatomy of an Entrepreneur: Family Background and Motivation,” published by the Kauffman Foundation Small Research Projects Research, Vivek Wadhwa concludes that most new company founders in America came from middle-class or upper-lower-class backgrounds, are well-educated and married with children. The strongest motivation for starting a company was to “build wealth”. Other popular motivators included capitalizing on a business idea; the appeal of a startup culture; a desire to own a company; and a lack of interest in working for someone else. From what we see in today’s China, these are the very same motivators for young Chinese all over the nation.

That’s what makes these times so extraordinary and so exciting for venture capital investors. With the prospect of Yuan convertibility around the corner, the opportunities for bilateral investment in start-up enterprises in both countries will be a much-needed shot in the arm for global economic recovery. Watch for it…it’s coming.

“Where there is a challenge, there is a market opportunity.”

Eva Lerner-Lam — Mon, 01 Feb 2010 22:09:53 +0000

My father said these words to me more than 35 years ago, and they ring in my ears today.

Both China and America now face enormous challenges in economic recovery and sustainable development. Yet, from these daunting challenges spring a multitude of market opportunities for innovators and investors.

In America, “green tech,” education services and health care are providing entrepreneurs and investors with many ways to innovate and grow new markets, while in China, high speed rail, “3-screen convergence” (mobile phones, televisions and computers) and consumer markets are leading the way.

The market opportunities are everywhere in the heartlands of both countries; at universities and research institutes, on factory floors and construction sites, in music studios and movie soundstages.

The key to success is understanding the challenges and assembling the human and physical resources to address them in a financially justifiable and meaningful way.

Beyond that, nothing but the limits of our imaginations and willingness to work hard stands in the way between where we are today and where we want to be.

A Sustainable Building Revolution

Michael P. Collins — Thu, 10 Dec 2009 16:02:54 +0000

Changsha, a provincial capital and another Chinese city of 6 million that few westerners can pick out on the map, is on the move. A local manufacturing hotbed with, Sany, China’s version of Caterpillar, and a spate of domestic car and truck companies, the city is pushing to become more international. The doubling in size of the Huanghua International Airport and ground breaking of the RMB 5billion Fiat-Guangzhou Automotive Industry Group plant, to churn out a quarter million cars a year when complete, are bellwethers of Changsha’s opening up and going out.

But countless Chinese cities can tell this story. What is Changsha doing that the Dalian’s, Chengdu’s and Wuhan’s aren’t?

Broad Town rests on the eastern outskirts of Changsha. Founded in 1988 with RMB 30,000 as a non-electric central air conditioning manufacturer, Broad has grown into a company dedicated to “Preserving Life.” Energy efficient, low emission, Broad central air conditioners operate in over 60 countries around the world. Broad air purifiers help maintain healthy indoor environments in offices and residences – a serious challenge in a country with 16 of the world’s 20 most worst-air quality cities. Fresh air heat exchange systems maintain indoor temperatures while ensuring proper ventilation and reducing heating and cooling loads.

These building energy efficiency systems combined with knowledge gained first hand from Freiburg, Germany and other sustainable building centers around the world, led to the creation of the Broad Sustainable Building (BSB). Factory-built, energy efficient, no-construction waste, low cost, this building system draws on the sustainability work that Broad has done of the past 20 years. The Chairman and CEO of Broad, Zhang Yue, began designing the BSB after the Wenchuan Earthquake, so it is also earthquake resistant, earning the highest earthquake resistance rating of any building in China in its recent test in Beijing at the China Academy of Building Research. As a building system, the BSB can be adjusted to fit local conditions and available materials while maintaining high levels of energy efficiency and safety.

Following, or, more accurately, continuing to lead Changsha’s international growth, Broad will use the BSB as a building block for sustainable communities across China and throughout the world.

Buildings account for 40% of world wide energy use, and over 30% of GHG emissions. Sustainable buildings need to be one of the focal points of COP15. The use of the BSB and similar sustainable building systems around the world will create the sustainable building revolution that we need.

I work for Broad, and although this blog had no relationship to the company, I am talking my book in this post. And I hope that you’ll do the same with your company, your profession, your passion.

Here at Palisades China Group, I hope that we can identify and discuss companies like Broad. I hope that we can share ideas about industry trends. And I hope that although we will have interests in different sectors and types of work, we will collect our discussions under the framework of how to foster bilateral investment, and entrepreneurship, in the heartlands of China and America

Warm regards,

Mike

Welcome to the Economic Powerhouses of the Future: The Heartlands of China and America

Eva Lerner-Lam — Wed, 25 Nov 2009 23:59:50 +0000

As we enter the second decade of the 21st Century, it is evident that the heartlands of China and America are inextricably connected by their economic futures. The people in both heartlands also share a ‘hard work ethic’ and a ‘can-do’ spirit that bode well for joint venture collaborations and free enterprise across rapidly diminishing political and cultural boundaries.

The excitement is real. Promising start-ups are percolating around both heartlands, and venture capitalists from both nations are fanning out, seeking smart, innovative enterprises to incubate and grow into tomorrow’s profitable–and sustainable– economic powerhouses.

We here at Palisades China Group have been in China since 1992, facilitating the process of incubation, investment and sustainable growth. With the launch of this website, we now intend to become the “go-to” resource for venture capitalists and entrepreneurs alike, providing pertinent and timely news, information and contacts for those who understand the potential that lies in the Chinese and American heartlands.

Along the way, we will facilitate the dialogue between and among the people who are needed to make Heartland ventures successful. We’ll also be putting our money to work building sustainable companies whose objectives align closely with ours.

Visit this website often for news and information about investment opportunities and challenges in the Chinese and American heartlands. Try out our powerful search engine that provides instant, free access to our extensive database of news and information about investors and ventures. Add us to your Google or other news reader for up-to-the-minute updates and sign up for our upcoming e-Newsletter that will debut in early 2010.

We at Palisades China Group are optimistic and excited about the sustainable growth opportunities that are emerging in the Chinese and American heartlands. Join us as we enter this new era of cross-border investment, and drop us a line to share your thoughts and suggestions on how we can make this website more helpful to you.

Eva Lerner-Lam, F.ITE, M.ASCE
Founder and Chief Executive Officer