For Now, Green Materials Make For Tough Selling
Long-time political and business figure Anatoly Chubais, the head of state nanotechnology corporation Rusnano, was there. So was Mikhail Prokhorov, the billionaire entrepreneur who heads Onexim Group. And Deputy Prime Minister Sergei Ivanov also was on hand for the November event: the launch of a major new manufacturing facility in St. Petersburg for high-tech, energy-efficient lighting. It was an impressive array of faces for a company that had officially started just five years earlier.
In fact, the company, Optogan, which designs and manufactures light-emitting diodes, a type of energy-saving semiconductor, has an equally impressive list of trial customers and investors. Onexim, Rusnano and RIK, an investment vehicle for the Sakha Republic in East Siberia, are shareholders. Its customer and trial customer list includes oil refineries, oil pipelines, universities, retailers, municipal offices and the metals and mining industry, its marketing chief told REQ. Among its 200 Russian clients, there are few inroads that the company hasn`t made.
The consumer market is still one of them. Optogan plans to begin selling its LEDs to apartment-dwellers and home owners within the next year, and it wants to rev up consumer sales by 2014, said Georgy Gogolev, marketing head for Optogan. By that year, Optogan expects, LEDs will be more convenient and cheaper. Currently, Optogan works in the business-to-business market, selling its LEDs directly to large office buildings, large retailers and industrial sites.
But conquering the consumer market, by reducing the price and skepticism associated with green products, is a prime goal for Optogan. "The big thing here is the B2C market," Gogolev said, referring to the business-to-consumer segment. Optogan expects that market to develop in two to three years, he said.
And that`s the rub for many companies selling ecological alternatives to traditional construction products and services: There is a psychological barrier that has to be torn down before green materials can go up.
"Green buildings are a myth," said Pavel Yanshevsky, a partner with commercial real estate firm S.A. Ricci/King Sturge. Today, "they don`t exist," he said by e-mail.
In fact, green building advocates tell of cases of developers who failed to convince a single contractor to put up their green building.
"They couldn`t find a contractor, they couldn`t find a consulting firm, and they went with the old building," Gogolev said of situations that he is familiar with. He said he has heard of such cases happening in Moscow and in St. Petersburg, the site of Optogan`s Russian office.
The director of Green Standards, an ecological nonprofit founded just over a year ago, had a similar account. When it comes to contractors and builders often not wanting green tenders, "unfortunately, that is the case," Rashid Ismailov wrote in an e-mail interview with REQ.
"But that`s not so much about the desire of builders and developers, but rather about the motivation they are given," he added.
"Green building has only begun to develop in our country, and unfortunately, we still lack the legal and economic mechanisms that would stimulate managers to design and construct buildings with green technologies," Ismailov said.
Green, ecological, sustainable: These terms typically mean that a building and its internal systems conserve heat, electricity, cooling and water as much as possible.
They also refer to efforts to use materials that come from renewable resources, local factories or demolition sites, and they usually include stipulations about the naturalness and, of course, the nontoxicity of materials.
When construction of such a building is under way, it is important to interest the developer and involve the contractors in the green efforts, a number of analysts said: It is the advice of green experts as far-flung as a material reuse program in the United States and the Green Standards office in Moscow.
Optogan`s Gogolev said that only an increase in consumer demand and the education of contractors will change the situation. "As long as they don`t understand what`s happening, they`re going to do things the old way," he said of Russian contractors.
When it comes to final customers, the project`s budget — or the material`s price tag — is key.
For Optogan`s Gogolev, one of his selling points is that the prospective customer can save on maintenance by purchasing Optogan`s LED lighting rather than regular incandescent lights or compact fluorescent bulbs. He also sells the company`s LED technology by telling potential buyers that Optogan`s unconventional lighting will be a "show point" for them.
In addition, the sales pitch includes the idea that Optogan`s LEDs are the environmentally friendly choice. (The company calls LEDs safer and healthier than compact fluorescents. Those contain mercury, and theoretically a person can be exposed if the bulb is broken.)
Contractors also need information. ‘As long as they don’t understand what’s happening, they’re going to do things the old way.’
Optogan Marketing Head Georgy Gogolev
During a typical sales approach — which means trying to sell to a business — Optogan will send its engineers to the prospective customer`s building. The engineers evaluate the current lighting system, build a computer model of an LED configuration and lay out the costs.
"We show the client the [savings] and the payback period," Gogolev explained. "Sometimes the payback periods are long."
Businesses with budgets and accountants can analyze the long-term benefits and drawbacks of a material or a whole building with relative ease.
"As the global experience has shown, a green business is not only ecological and socially responsible, but fiscally advantageous," Natalya Chistyakova, a development director with consulting firm GVA Sawyer, said in an e-mailed comment.
The cost that`s added to a project by making it green is moderate, she said. The increase ranges from 0.8 percent to 8 percent in comparison with a standard construction, Chistyakova estimated.
She added that the market price of a green building grows by 10 percent to 50 percent, increasing the asset value of the building and improving the economics for stakeholders, as well as the rental rates and even sale price that the building can command.
Most green organizations, such as the Green Building Council Russia, argue that ecological buildings can generate a profit for the companies that construct them.
But it`s tougher to convince a contractor, who has years of experience of not building sustainable buildings, or a consumer, who has bought many products and services without giving thought to their ecological rating.
"We`re not that crazy about the environmental stuff in Russia," Optogan`s Gogolev said.
People care about the quality and the cost of the materials in question, he said. Customers are looking for green companies to "provide similar material cheaper."
Автор: Rachel Nielsen
The Moscow Times Real Estate, March, 03 2011
