Policy Innovations Digital Magazine (2006-2016): Innovations: Zhang Yue: A Call for Discipline in a World Out of Control

Mar 28, 2011

It is late afternoon and I am outside the city of Changsha, in Hunan province in southern China. I am at the headquarters of Broad, a manufacturer of air conditioning, ventilation, and air purification products—a company increasingly recognized for its green business leadership. The one-square-kilometer campus is quiet and clean and known as Broadtown. The company feeds roughly 1,200 resident employees (of its 2,000 total) from on-site organic farms and fish ponds.

I am here to interview Zhang Yue, the founder, chairman, and CEO of Broad, but I soon realize this will not be a conventional interview, as "Chairman Zhang" defies easy categorization. Standing about 168 cm, Zhang projects a larger than life energy, though he gets by on only four to five hours of sleep per day. An airplane pilot and essayist, Zhang first trained as an artist, and one of his staff proudly shows me a plausible likeness he painted of the Mona Lisa.

When we finally sit down in his office, Zhang asks the first question. "So, you have been here for several hours. What is your impression?" I answer that Broad appears to be encouraging its employees to pursue wholesale lifestyle changes in support of environmental issues. He agrees. I ask him whether he thinks the world can make the kind of shift he is asking his employees to make. Zhang answers that he wants to inspire the whole world with the idea that we are all citizens of the planet. "But I wanted to start with my employees first," he says.

Modest Beginnings, Phenomenal Growth

When Zhang founded Broad in 1988, the company was a long way from looking to inspire global citizens. Registered in Chenzhou, Hunan, it had $3,000 set aside to develop industrial boilers based on a design patented by Zhang's brother. Most boilers manufactured domestically at the time were of poor quality and had a habit of exploding; Broad's boilers would not explode.

A few years later, the company moved to Changsha to start producing non-electric central air conditioning chillers and equipment. Sales in the 1990s grew rapidly with the economy, thanks in part to government incentives that were meant to mitigate strains on the national electricity grid. In 1998, Broad non-electric air conditioners entered the international market, and a year after that the company began producing central air conditioning systems. By 2005 the company was also making air purifiers, now sold in more than 60 countries.

Broad's non-electric chillers still represent its largest source of revenue, with sales split almost evenly between domestic and international markets. It has been the global leader in sales of non-electric chillers since 1996, now boasting more than 25,000 installations around the world. Although Broad does not disclose its financials, the company is clearly thriving, and Chairman Zhang is said to have a personal fortune of $850 million—enough to rank him 216th according to a 2010 survey of China's wealthiest people.

CREDIT: The Broad company campus. Courtesy of Broad.

Zhang's Green Epiphany

In 2000, demand for cooling equipment of all kinds was huge in China. A number of people inside and outside the company were urging Zhang to enter the much larger market for electric air conditioners alongside his existing non-electric product. He refused. In a 2004 Peking University–Richard Ivey Business School case study [PDF] on his decision, the authors argue that Broad would likely have gained "a significant market share" and earned "10 times" its production cost in this product area—but in doing so it would not have been able to "stay true to the company's environmental protection principles."

As Zhang later explained, "When I earned much more money than I could spend all my life, I realized at the same time that excessive energy consumption [had] resulted in… global warming and threatened the survival of our offspring." Thereafter, he had "only one motive: to save energy and reduce greenhouse emissions."

So Broad held its ground. With a renewed focus on its core business, the company pursued and found a number of energy efficiency gains for the non-electric air conditioners—gains that also made the product more attractive for its customers. As James Fallows comments in an excellent portrait of Zhang in the Atlantic, "Broad did not invent the technology on which its business is based, but it did take the risk of investing heavily in an approach that companies in Japan, Korea, Europe, and North America had looked at and neglected."

As of today [PDF], Broad's air conditioners are twice as energy efficient as conventional electric chillers of comparable size, and their CO2 emissions are four times lower.

From Air Conditioning to Buildings

In the late 1990s, Zhang visited air conditioning installations all over the world on the hunt for innovations. These trips led him to see that advances in energy efficiency from better air conditioning were quite limited: To make big improvements, it would be necessary to improve the building itself. He was inspired by communities in Germany and Japan that were making strides in creating energy efficient buildings and sustainable communities. Zhang returned from these travels and set his engineers to work on designing such a building.

During my visit, I watched Zhang describe the advantages of his new buildings to a group of Chinese visitors, and we walked through a prototype on the campus. Broad Sustainable Buildings are not yet commercialized, but so far the demonstration models are low cost, use simple technology, and are flexible and adaptable, with movable walls in some cases. In addition, they have achieved the highest level of earthquake resistance for Chinese buildings from Beijing's national earthquake center. This point has special resonance in China after the Sichuan earthquake.

The buildings are also easy to install. To prove this, Broad employees constructed a two-story demonstration building in less than two days at the Cancun climate talks in December 2010.

CREDIT: Shanghai Puxi Skyline, by Gabriel Jorby (CC).

Most importantly, the buildings are also energy efficient—with CO2 savings on the order of 300 kg per square meter from materials, and automation of the production process [PDF]. (Broad's even more ambitious Sky City One project, a sustainable skyscraper, is still in the conceptual stage. [PDF])

The green point is critical: Every year roughly 13 million newly urbanized Chinese need homes, while the vast majority of new homes built in China are still highly energy and carbon inefficient. The same is true for other types of buildings, like offices. By one count, some 25 percent of China's energy use comes from the building sector [PDF].

It is imperative that China find practical, quickly scalable ways to reduce emissions from this massive national construction project before a lot of avoidable energy demand gets locked in the urban infrastructure.

A Call for Self-Discipline

It is hard not to notice the 40-meter pyramid Zhang built for his employees at the Broad facility (an exhibition center that remains largely unused).

It occurs to me that the profile of Zhang's personal consumption has followed the shape of that building. As Zhang's fortune skyrocketed, he indulged in many of the trappings of extreme wealth: at one point owning luxury cars, six private jets, and two helicopters. He has clearly enjoyed his good fortune. But his lifestyle is sloping earthward once again as he rethinks his life, and the lives of others, in relation to his environmental concerns.

In one essay on the Broad website, Zhang confesses that he abandoned the luxury of flying his $10 million private jet when he reflected on the CO2 emissions generated by a typical flight; the New York Times reports that his other jets and helicopters are grounded as well. In another essay, "Life Attitude of an Earth Citizen," he offers 22 ideas for what citizens can do to resist pollution and climate change.

Zhang knows that his example matters. But the evolution in his lifestyle also reflects a deepening worry that the planet is heading in the wrong direction, and fast: "We are now in a world out of control, in terms of resource protection and health. We need a change in the direction of development for governments, corporations, and people."

He details the many aspects of the environmental crisis confronting us: not only greenhouse gases, but also forms of ocean pollution and health-related pollution that "break the natural balance." When this balance is broken, says Zhang, "there could be diseases and disorders of human reproductive functions."

CREDIT: A Broad employee presents company equipment. Courtesy of Broad.

Zhang takes a machine from his desk, explaining that it measures formaldehyde. He pulls a pear from a drawer and digs beneath the skin with his nail, holding the machine to the exposed inside. The measurement jumps immediately to 0.66 parts per million (ppm) and keeps climbing to 2.33 ppm. He explains that some fruit producers in China use formaldehyde (as part of the packaging and shipping process) so that fruit will keep longer without spoiling, and he claims that the average Chinese may be exposed to many times what is thought to be the safe level of formaldehyde.

Next he produces a machine that measures particulates in the air. Inside his office, with an air filter and closed windows, the machine registers low levels (but not zero) for particulates of all sizes. He then opens the window and asks me to hold the machine outside. Immediately the numbers begin climbing rapidly. Larger sizes of pollutants (0.5, 1.0 μm) increase by an average of 500-fold. More disturbingly, the smallest size pollutant measured, 0.3 μm, jumps from a reading of just above 5,000 indoors to more than 428,000 outdoors—a more than 800-fold increase. The smaller the particle, the more dangerous it is to human health.

Zhang explains that Germany's outdoor particulates at the 0.3 μm level would be only two to six times the reading in his filtered office—not 800 times. The vast majority of this air pollution, he says, comes from power plants, steel production, and cars. And Changsha is not the worst of it, I ask? "Changsha's pollution," he says, "is around the middle level of cities in China—better than Shanghai, Beijing, Guangzhou, or Chengdu."

Sustainability Requires Sacrifice

For Zhang, we cannot continue like this. We face a binary choice: "There are only two ways to regain balance for the planet: humanity's self-discipline in its activities or mass scale death of the population." Moving beyond the typically sanitized rhetoric of companies known for green technologies, Zhang continues: "In my opinion, if the consumption pattern does not change, humanity will be destroyed sooner or later, maybe in 100 or 200 years. Disasters will kill most of the people, and the planet will gain balance again."

I ask Zhang what can be done—and in particular, what governments can do. He answers that "there should be policies and standards to tell people how much they should consume." Technologies alone cannot save us, he argues. Even a proliferation of companies like Broad will not be enough to save the planet. We need to become "a low-carbon society," he says, but even if green technologies become much more advanced, the current direction is something the world "cannot sustain."

What we need, says Zhang, is "a revolution in peoples' attitudes towards life." This revolution must include a global imperative to minimize carbon emissions per person: "If we are moving towards a planet of 10 billion people, we should reduce emissions to 0.5 tons per person, to meet the hypothesis of limiting temperature increase to another two degrees—and even then we will already be suffering."

And then Zhang uses a word that politicians take pains to avoid, no matter whether they are Chinese or Western: "There should be sacrifice. If there is no sacrifice among people in developed countries, especially wealthy people in developed countries, the world has no hope."

CREDIT: The Broad motto: "We preserve life." Courtesy of Broad.

Zhang singles out the West not only because its emissions are much higher per capita, but also because people from developing countries "want to live like people from developed countries." But he is no less concerned about attitudes and trends in China. The fundamental problem everywhere, he says, including China, is the blind pursuit of economic development. "All the standards the governments are looking for are about GDP, or public income," but these measures, he says, only capture part of the story of human needs and wants.

I ask Zhang whether he is optimistic or pessimistic that such a revolution is possible, and his response is instructive: "I don't have an attitude towards this. I just try my best to promote my understanding." He predicts that more and more people will come to share this view, "but for now we don't have many." He acknowledges that he is both awed by and fearful of the pace of change in his country: "I see from changes in China that humanity has infinite power to create. But infinite creative ability," he says, "can also lead to infinite destructive power."

We talk about the sweep of Chinese history, of how Chinese attitudes toward nature have changed. I point out that whereas Mao regarded nature as a hostile force to be controlled, earlier conceptions placed human beings within the natural order. I ask whether China could rediscover this older view, and whether it would help. Zhang seems to brighten at this: "If foreigners can understand this aspect of Chinese culture, then we have a chance. This is a very central problem." He mentions the Tang Dynasty, and goes back even further: "This concept of people living in harmony with nature comes from 2,000 years ago. The other Chinese traditional concept is to be satisfied with what you have."

Zhang sums up his philosophy: "The most important change that people can make in their lives is to understand the internal meaning of these ideas. Technologies can be refined to save the environment, but without these ideas of life, we will not solve these problems."

Thanks to Bob Zhou for his assistance with translation and transcription.

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