Sustainability-driven innovation in China: The case of Windoor

1978 marked the start of a new era in China’s history - a period of new reforms and opening up with significant implications for both China and the world. In the past three decades, the country has experienced tremendous economic growth and transformation which was initially driven by manufacturing and China becoming the ‘factory of the world’ and the largest exporter of manufactured goods. However, China’s ascendancy in global manufacturing is now coming under increased pressure. The array of drivers behind this drop-off is extensive and includes a domestic rise in labour costs, a deceleration in economic growth and an improvement in the supply base in low cost South East Asia economies and elsewhere. Furthermore, Chinese government policy incentives centred on innovation, competitiveness and strengthening of domestic brands have encouraged many Chinese companies to look at the opportunities that innovation offer.

The vision of the Chinese Government is encapsulated in the words of president Xi Jin-ping, delivered at the 18th Meeting of the Academicians of the Chinese Academy of Sciences: ‘Seeking innovation-driven development is a natural choice if we are to adopt to changing developmental conditions... We must seize the time, because wait-and-see produces nothing and imitation gets us nowhere...’ (Xi 2017). What are the distinctive strategies that Chinese companies pursue when exploring innovation in general and in sectors where energy and sustainability issues particularly loom large? What are the implications of their efforts? How well are we equipped theoretically to understand and explain these processes? These are some of the questions that this chapter tackles.

The study employs an in-depth single case study of Orient Sundar Group, a manufacturing company from Gaobeidian in China’s Hebei province. The company, whose current activities are predicated on the slogan “Making building more energy efficient, making life better!”, is at the centre of the Gaobeidian Passive House project. This project is one of the largest Passive House initiatives in the world. The project brings together technology and expertise from a range of best-in-class specialized suppliers from all over the world and helps to advance our understanding of how to scale energy efficient building. Our study chronicles the transition of the company from a low-cost manufacturer to an advanced Passive House system integrator and reveals new paths to innovation that are supported by the unique context of China’s ecological modernization (Stubbs and Cocklin 2008; Bohnsack 2018). Drawing on a multidisciplinary approach and borrowing perspectives from business model innovation (Ches-brough 2010; Zott et al. 2011), global innovation networks (Dicken et al. 2001; Mudambi 2008; Haakonsson and Kirkegaard 2016) and sustainable development (Hart and Milstein 1999; Bansal and Roth 2000; Kirin et al. 2013; Yang and Jiang 2019), we investigate a case of local sustainability-driven innovation. This drive to innovate emerged in response to Chinese government policies for developing sustainable buildings and features business model innovation based on network orchestration capabilities. This chapter heeds the calls for new conceptual perspectives as well as more empirical cases on business models for sustainability (e.g. Schaltegger et al. 2016).

The chapter comprises three main parts. First, the theoretical background section introduces the conceptual basis of the paper. Second, we examine empirical insights into the case study. Finally, we present an analysis and discussion, and conclude with the key lessons and implications for future research.