Thursday, 2024 July 18

This company focuses on cleaner air for the next generation: Inside China’s Startups

Could it be possible for a sensor, similar to the one used to detect particle pollution (PM2.5, PM10), to be able to spot the SARS-CoV-2, the virus responsible for the COVID-19 pandemic?

It could be.

Researchers including Jing Wang from EMPA (the Swiss Federal Laboratories for Materials Science and Technology) and Zurich University Hospital have developed the first version of a biosensor for measuring the novel coronavirus in the air. However, a number of developmental steps are still needed to fully prepare the device for mass production, according to a post on the EMPA’s website.

This is also a question that Liu Sitan, founder and CEO of Shanghai-based air monitoring solution firm DST Technology (DST stands for both Do Some Thing and Don’t Stop Trying), listed by Forbes in 2018 as one of the most promising private companies in China, has been wondering since the pandemic first broke out in the country in January.

Liu Sitan, born in 1982, founder and CEO of DST Technology. Photo provided to KrASIA

He mentioned to KrASIA that the primary results coming from Switzerland have tempted him to discuss the possibility of developing such sensors for the virus, although he has given up the idea for the time being, after concluding that such sensors, developed inside the laboratory, are less likely to fare well in real-world conditions.

The ability to say no in making business decisions, which he has mastered during his entrepreneurial life, has allowed him to avoid possible pitfalls and to stay afloat even during hard times, such as in this particular moment, when the entire economy is affected by COVID-19.

Liu revealed that in the first five months of the year, DST booked RMB 46 million (USD 6.5 million) in revenue, up 12% year-on-year, even while the firm was unable to conduct offline sales activities amid the outbreak.

KrASIA recently sat down with Liu to learn how he has developed his company focusing on the air quality monitoring sector in China, a country severely affected by air pollution. Beijing, the Chinese capital, is the world’s ninth most polluted city in the world, according to IQAir AirVisual 2019 World Air Quality Report, as reported by Bloomberg.

Air monitoring solution for corporate and governmental clients

DST Technology, set up in 2012, started by developing hazardous gas detection systems for Chinese petrochemical companies, manufacturing, and mining firms, by integrating sensors imported from US-based Honeywell, where Liu previously served as sales manager.

In 2014, the company started to build air monitor networks by deploying multiple sensors in selected geographical areas. The firm had several local departments of environmental protection as clients, such as the department of Tonglu county, Shaoxing city, and Lanxi city in Zhejiang province, according to the company’s website.

A DST air monitoring device in Guiyang, Southwest China’s Guizhou province. Photo provided by the firm to KrASIA

In 2016, DST ventured into the indoor air monitoring market. Liu noted that several reports from Chinese media about how kids had started to suffer from leukemia due to polluted air in newly decorated homes.

He considered it was the right time to enter a new market, as the company had already acquired enough supply chain management expertise to lower its production costs.

DST later rolled out a slew of products, including a device called air sns NANO, which is priced between RMB 1,000 (USD 141) and RMB 8,000 (USD 1,128) depending on the versions. Several such devices are needed to monitor the levels of PM2.5, carbon dioxide, formaldehyde, the humidity, and other matter inside a certain indoor area. Honeywell’s similar products could be priced between USD 900 and USD 2000, according to a source familiar with the market.

“Better air means better productivity for companies,” said Liu, adding that employees are more willing to work under a clean environment.

E-commerce giant Alibaba, and other large commercial properties operators such as Savills, state-owned industrial park developers Lingang Group, and home developer Vanke, quickly became the company’s customers, Liu revealed.

The company also commercializes a system that allows his clients to optimize their air-purifying instalments, Liu explained. The system activates offices’ air purifying devices after collecting data via the firm’s air monitoring system, also calculating exactly how many air purifiers are needed to avoid unnecessary use and save electric power.

Clients can also manually input their preferred air quality parameters, to drive the system to maintain the desired air quality level, Liu said. “Hotels or office operators can even have the option to differentiate their space by air quality to meet clients who have stricter requirements,” he added.

“We are like a doctor who can diagnose the air to know where problems are. We are also teaming up with air purifying suppliers, which are like pharmaceutic companies, to offer integrated air quality management solutions,” Liu said, adding that the company is also soon to launch its in-house developed air purifiers and ventilation systems.

Growing with the increasing desire for cleaner air in China

DST Technology is a latecomer in the air monitoring sector, where large players such as Honeywell, Thermo Fisher Scientific, and New Zealand-based Aeroqual occupy significant market share.

In China, companies such as Hebei Sailhero Environmental Protection High Tech Co. Ltd (SHZ: 300137) and Shenzhen Jufei Optoelectronics Co., Ltd. (SHZ: 300303) have also entered the market much earlier than DST Technology.

However, as China continues to face severe pollution problems, the market for air monitoring systems, both indoor and outdoor, is large.

The government is also doing its part to address some problems related to air pollution. The Ministry of Ecology and Environment of China announced in 2018 that the country has made progress, including lowering the nationwide PM10 level by 22.7% in 2017, while also lowering the PM2.5 level in the Beijing, Tianjin, and Hebei region, by 39.6% compared with 2013.

However, environmental issues are still present in China. Data from the Centre for Research on Energy and Clean Air (Crea), shows that the concentrations of PM2.5 and nitrogen dioxide (NO2) went up again following the country’s economic revival after the first wave of COVID-19. According to the Crea, as reported by The Guardian, such levels of PM2.5, after diminishing by 34% in early March 2019, went back to the same levels as one year earlier.

Liu said he estimated the air monitoring sector targeting enterprises and government offices is currently worth around RMB 5 billion (USD 705 million).

He expects his company to generate RMB 400 million (USD 56.5 million) in revenue and RMB 50 million in net profit in the next three years, up from RMB 110 million (USD 15.5 million) in revenue in 2019.

DST turned profitable in 2016, a requirement from Forbes to be included on its list of most promising private companies in China, according to Forbes China’s official WeChat account.

“We have grown at a rather healthy way, although we have also fallen into various pits, such as tapping the consumer-facing sector, only to give up later after trials failed. We have learned to say no to distractions, which seem to be a promising path,” said Liu.

A DST air monitoring device in an office in China. Photo provided to KrASIA

As the company has been making money from its early days, DST has been reinvesting about 10% of revenue into research and development annually. As a result, the firm has built its own cloud-based, real-time air quality monitoring software, enabled by internet-connected sensors and detectors. In addition, DST has also developed its own sensors to lower costs and reduce reliance on the United States’ technologies, considering the backdrop of the Sino-US trade war.

“Our products are moving upward in technological density step by step, while also entering more and more markets,” said Liu.

DST does not resemble a typical startup that relies heavily on venture capital funding to survive and grow. “We are a typical trade-to-technology company, going through a growth track similar to that of Lenovo and Huawei,” he added.

Although DST has never raised money from venture capital firms, Liu said his firm is now open to investors. They could bring resources to help the company to grow and to launch an initial public offering by 2023, he revealed.

“We prefer investors who have connections in real estate, education, and environmental protection. I hope that in the long run, when people think of smart air, they think of us,” Liu added.

This article is part of KrASIA’s “Inside China’s Startups” series, where the writers of KrASIA speak with founders of tech companies in the country

Jingli Song
Jingli Song
I believe Chinese innovation at various level needs to be known by the world.

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