Barriers to the implementation of cleaner production in Chinese SMEs: government, industry and expert stakeholders' perspectives

Abstract

This paper applies an analytic hierarchy process (AHP) to examine and prioritize underlying barriers to adoption of cleaner production (CP) by small- and medium-sized enterprises (SMEs) in China from the perspectives of government, industry and expert stakeholder groups. First, on the basis of the findings of previous research and literature review, 20 barriers are identified and grouped into four categories: (1) policy and market barriers; (2) financial and economic barriers; (3) technical and information barriers; and (4) managerial and organizational barriers. Second, an AHP model is developed and a survey questionnaire was designed, tested, and refined. Third, the questionnaire was distributed to the representatives of three stakeholders of CP, i.e. enterprise managers, government officials, and experts. The returned questionnaires were validated in terms of consistency and in some cases followed up for verification. Fourth, the 20 barriers were rated by analyzing the valid questionnaires through the AHP model. The top three barriers to CP adoption by Chinese SMEs were found to be: (a) lack of economic incentive policies; (b) lax environmental enforcement, and (c) high initial capital cost. The researches conclude that current governmental policy should give higher priority to lessening those external policy and financial barriers rather than internal technical and managerial barriers. The findings shed some new light on readjusting public policy in order to help to facilitate widespread CP implementation in SMEs in China.

Introduction

Chinese industrial small- and medium-sized enterprises (SMEs) have been growing rapidly in terms of the total number and their contribution to the gross industrial output values. This is due to the booming of township and village enterprises (TVEs) since the early 1980s. According to the Provisional Regulation on Small and Medium Enterprises in China (2003), SMEs are the enterprises that have either less than 2000 employees, or 300 million RMB¹ annual sales, or 400 million RMB fixed assets. SMEs generally accounted for 99.88% of the total number of manufacturing establishments in China on 2002, and they contribute significantly to Chinese social, economic and industrial development [1].

However, most SMEs are currently confronted with difficulties such as obsolete equipment and technology, untrained and inexperienced laborers, and insufficient financial resources. Their production has caused significant negative environmental impacts [2]. SMEs in the printing and dying, foundry, tannery, food processing, pulp and paper, electroplating and chemical industries are the most energy-intensive and polluting industries in China, and have impacted the surrounding environment and harmed the neighbouring residents' health [3], [4].

In order to reverse the worrisome trends of heavy energy consumption and environmental pollution, the Chinese government has had more than 150,000 small polluting enterprises closed, suspended, merged or transformed since 1996 [5]. However, these tough measures only temporarily mitigate the problem of industrial pollution caused by SMEs without removing the root cause. Since 1990s, China's environmental protection strategy has embarked on a gradual transition from end-of-pipe (EOP) pollution treatment to pollution prevention. Cleaner production (CP) has been recognized and promoted by the Chinese government because it prevents pollution at the source and may prove a more cost-effective alternative to a conventional EOP control approach [2]. On 1 January 2003, the Cleaner Production Promotion Law (CPPL) of China took effect. The new law is the highlight of a number of initiatives that the Chinese government has taken to establish CP as one of China's strategies for sustainable development. It is also unprecedented as the first national law specializing in promotion of CP in developing countries. This law became an indication of normative and legal management for CP and the milestone for a new pathway to industrialisation in China [6].

However, the CP Promotion Law is only newly adopted. The widespread adoption of CP on the ground is far from satisfactory [7]. A number of barriers exist in the introduction, development and application of CP in Chinese SMEs. Shortly after CP was first introduced in China in 1993, some prominent barriers were identified in relation to awareness, financial and managerial aspects [8], [9], [10]. With the gradual improvement of policy and institution of CP, some barriers have been removed, but many others continue to exist and some new barriers have emerged.

To effectively reduce existing barriers and to create a favourable environment for CP adoption in SMEs, the research was designed to quantitatively identify, rank and prioritize the barriers. There are a number of features that differentiate this research from the previous studies of CP barriers. First, the research was designed to prioritize the barriers in a quantitative way based on a questionnaire survey while previous ones were primarily based on qualitative case studies. Previous studies of CP barriers tended to take stock of a range of barriers without prioritizing and ranking them.

Secondly, the research was focused on SMEs while the previous ones targeted all scales of industry. According to Shi [11], SMEs face special challenges in adopting CP because they are mostly confronted with punitive measures rather than supportive and inducing policies.

Thirdly, this research focused upon comparing and contrasting the perspectives of government, industry and experts on the same issue – CP barriers. Any substantial difference in stakeholders' perspectives may shed some new light on the underlying reasons for ineffective CP policies and on the possible improvements in future policy improvements.

Fourthly, this research utilized the analytic hierarchy process (AHP) methodology for prioritizing the barriers to CP implementation for the first time. AHP is a quantitative and normative analytic method, which can significantly reduce inherent subjectivity for both the interviewees who participate in the survey and the researchers who conduct the research.

The remainder of this paper is structured as follows. Section 2 examines the barriers to implementation of CP in Chinese SMEs. Section 3 explains the AHP methodology for prioritizing CP barriers. Section 4 presents the quantitative results from AHP analysis. Section 5 concludes the paper with the top three barriers for CP implementation in Chinese SMEs and also sheds some new light on priorities for future policy development to promote CP in SMEs.