The owner is not the user
By Adam Lane
This is a major problem that society is still trying to overcome -and a tremendous problem in China. A typical example is that when a building company builds an apartment complex in China it wants to build the complex that it can make the most profit on, through selling the apartments or offices in it. It has an incentive to source cheap materials, if this does not effect the value of the house -or it might want to source energy inefficient materials, because there is no incentive for it to use energy efficient materials. Why? Because the person who buys the units will be the one who will be paying the energy costs!
A possible solution to this is PSS -Product Service Systems, which sounds complicated, but is really just the idea of not selling someone a product that, once sold, no longer is related to the seller; but instead, selling a service which includes that product plus extra services. The seller can make more money on an ongoing basis from the extra services related to the product and, as will be attached to the product for longer will have an incentive to ensure its performance is, well in this case, environmentally friendly, as this will affect its service revenue/contract. It also means that the seller can easily retrieve the product afterwards and re-use it in some way; and the seller is motivated to do this, and can easily do this.
PSS seems to be a win-win, but is not as easy as it sounds; leading to extra complexity, extra costs (although potentially, extra value) and greater risk (for the seller to have to support an ongoing commitment) but it can really motivate the seller to be more sustainable. I am not aware yet of many PSS in China that are B2C [business to customer] (like apartment complexes) though of course there are many B2B [business to business] services which are ongoing contract commitments. If anyone has more insights into this in China, feel free to comment.
Adam Lane, Crossroads
September 26th, 2007 at 1:35 am
This article is very good, it tells the truth in china. In fact, more Chinese didn’t owe house than which owe one or many houses.