To what extent is China's supply chain going "green'' is a big question right now as economic growth steams ahead, energy demands increase and pressure on the country's logistics infrastructure mounts.

A combination of factors, such as greater public awareness of green issues, resource scarcity, international pressure, the upcoming Beijing Olympics and increasing concern over global warming appear to be driving manufacturers, 3PLs and other members of China's supply chain to pay greater attention to green supply chain initiatives.

"From both a cost and an environmental sustainability point of view, implementing green supply chain practices in China is a no-brainer," said Mark Skipper, Asia Pacific managing director of supply chain software developer, Red Prairie.

Red Prairie, recently put out a white paper, entitled "Greenlighting Efficiency: Seven Easy Steps to Reduce the Environmental Impact of Today's Supply Chains", which highlights better fleet and routing management, energy reduction and more sustainable warehouse management as a few suggestions.

According to Skipper, "The white paper came about because we were approached by the Chinese government about 18 months ago to see if we could develop more sustainable supply chain solutions from a government perspective."

Transportation is one key part of the green supply chain equation. Since rail and shipping have a reputation for being less reliable and more damage-prone than trucking or air freight, the latter transport modes are much more popular, even though they mean higher fuel costs and greater environmental impact. In China, where rail is heavily under-utilised, trucking handles over 60 percent of intra-China freight.

With foreign 3PLs such as Werner, Schneider and YRC Worldwide entering the market and gaining operation licences mostly through acquisitions of existing players, green supply chain initiatives relating to trucking might improve.

"We are trying to find the best suppliers, who are doing good things for the environment whether in the US or here in China," said Juan Bautista, general manager of Werner Trucking, which entered the market only a year ago with two employees and now employs more than 20 in China.

Bautista acknowledges though, that since a good part of their trucking is subcontracted, it is difficult to monitor their supplier's environmental practices. Express operators such as UPS, however, are stepping up their green initiatives with the use of hybrid electric trucks.

According to Trent Iliffe, director of industrial property at Jones Lange Lasalle, Beijing is also looking at the environmental impact of warehousing. "Right now the Chinese government is taking steps towards encouraging sustainable buildings - buildings that reduce energy and water consumption, encourage recycling," said Iliffe. "A new thing we are seeing is the government encouraging a reduction in 'knocked down material' by refurbishing of old buildings to make them more sustainable rather than knocking down existing ones."

Other positive measures from a green perspective include Beijing's recent cut to the export VAT (value added tax) refund, designed to both reduce the country's export surplus and at the same time reduce the impact of high energy consumption sectors. The new rule governing the labelling, marking and testing requirements for electronic products should also be positive from an environmental perspective.

With vast coal resources - a new coal-fired power plant opens in China almost every week to meet energy demands - coal emissions are unlikely to decrease though, even if China commits to the Kyoto Protocol commitment to reducing emissions. While coal is a relatively cheaper form of energy, it is also a great polluter. Alternatives to coal power include wind and nuclear power, but these are more costly and longer term.

According to Tony Wu, an analyst with Martin Currie Investment Management in Shanghai, wind power is playing an increasing role in China, though it still provides only a fraction of the energy consumption needed in China.

Another new development is that Chinese companies seem to be buying into the idea of green supply chain management. "The green supply chain topic is quite unknown in China," said Li Jian Dong, vice-president of marketing for IT company DCMS. "DCMS is providing consulting and increasing awareness among its customers.''