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From east to west, a chain collapses

Millions of people are losing their jobs as China, the world’s largest importer of waste, is hit by a collapse in the demand for recycled packaging. Tania Branigan reports.

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The scrap trader was immovable, despite Wu Wenxiu's pleas. She would pay one yuan -- roughly 15 US cents -- for a kilogram of plastic. Around the corner in Shi Yuhai's yard, the offer was no better. Wu shrugged his shoulders and began to heave bags from his tricycle on to the scales. "One kuai [yuan] here, one kuai there -- everywhere's the same these days. This industry has broken down," he grumbled.

Wu is one of 160,000 collectors in Beijing who make a living from the detritus of urban life: plastic sheeting, office printouts, bottles, radiators and scraps of cardboard. Recycling has become a global industry and China is the largest importer of the world's waste materials, taking in – for example -- as much as a third of Britain's recyclables. Then came the global economic slump, decimating the Chinese recycling industry and leaving Britain, the United States and other developed countries to grapple with growing volumes of recycled waste and nowhere to send it.

"It's a canary in the coalmine: it's the front and back end of industry," said Adam Minter, who runs the Shanghai Scrap blog and specialises in the metal trade. "Until about eight weeks ago, for example, the entire [US] west coast paper market was sent to China and most of it was sent south. It was processed and made into packaging for products that then shipped back to the US ... But when US consumer demand dropped off, that broke the cycle."

Across the scrap trade, prices have halved or worse in a matter of months. Each link in the chain is disintegrating, from factories to scrap yards to collectors such as Wu, 56, a former farmer who now plans to return to Hubei province.

Official media reported that four-fifths of China's recycling units had closed and that millions of people will eventually be left without employment. 

Dongxiaokou, on the outskirts of Beijing, is a village composed of scrap: blocks of crushed metal are stacked in a tower, heaps of plastic bottles glint in the sunshine and piles of newspapers and rags fill yards. But the merchants all have the same story: they have lost tens of thousands of dollars in a few months, wiping out years of hard work.

Shi puffed on a cigarette as he counted out notes for Wu. "I've been in this business for 15 years and it's been bad before, but never this severe. Everyone's lost a huge amount of money and some can't sell their stock," he said. "Usually we sell to factories and they recycle items into plastic chips. But the price of chips has dropped, so it's had a knock-on effect on us."

This area deals in domestic waste rather than imports, but Shi said every part of the industry had been affected. 

Beijing dealers have been particularly hard hit. They stockpiled large quantities of recyclables because prices were soaring, but as the market began to soften, the Olympics security clampdown prevented trucks from entering the capital. The merchants could only watch as the value of their holdings plummeted.

"In a good year, we can earn about 50,000 yuan [US$7,300] but this year we lost 200,000 [nearly US$300,000]," said Gong Rongchuan, 45, whose yard lies across the rutted alley from Shi's. "We came here more than 10 years ago and at the beginning we collected ourselves. Then we managed to start the business. We were too poor to get loans but we managed to borrow 100,000 to 200,000 from friends and relatives and we work from morning to night every day. But we haven't paid them all back because of our losses."

Minter says the predicament is typical of the trade. "People would borrow money from relatives and buy a container of scrap,” he said, “and then throw all that money back in and reinvest it. Great if it goes up -- but the moment it starts slipping, especially if it's slipping 20 to 30%, you're finished.”

Gong said: "Once we have sold all this stock, we'll leave. My son's sorting it because we can't afford workers any more. We haven't figured out what to do next. We have seven people in the family and only 2.5 to 3 mu [less than one-fifth of a hectare] of farmland. It's too many people and too little land, so even if we go home there's not much we can do. We have both old and young to support."

The effects can be felt across China. Most of Gong's customers were plastics recyclers in Wen'an, Hebei, where -- by one estimate -- 93% of income depends on the trade. Some are bankrupt already. Wen'an Dongdu Jiacheng Recycling Resources is clinging on. But Miss Han, a materials buyer, said all but three of the 26 production-line workers had been sent home for their new year holiday more than a month early.

There is no longer demand for plastic granules from nearby companies such as Hongkai Plastic Products, which made items such as bicycle handlebars. Its owner, Mr Zheng, has sent 20 workers home. "My factory was hit by the economic crisis -- it's been closed for two months already," he said in early January. "We usually sell our products to a dealer and most of his business is exports. He didn't give us any more orders."

At a factory down the road, the response to queries was more brusque. "We've already gone bust," said a man, and hung up.


Homepage photo by sheilaz413


Copyright Guardian News and Media Limited 2009



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Default avatar
匿名 | Anonymous




Don’t be too pessimistic

The scrap collectors are one of the most important components in the recycling economy. They realized the recycling economy by transforming rubbish into natural resources; they linked both ends of the industrial economy. In China, in the currently vigorously advocated environment of a recycling economy, their prospects must be much better than those in traditional industries. Economic crisis does have does have a tremendous influence on them, but this is because they used to rely too heavily on export-oriented enterprises. The problem they are confronted with and exported-oriented enterprises are one and the same. However, being a provider of raw materials, they only need to go through an appropriate change within the company, and create a balance in the groups of customers, and their enterprise will be able to profit more quickly and more directly from the economic stimulus created by the government. They will be able to complete the industrial chain again. Don’t forget, the Chinese that work in this business are the most hardworking and most able to endure hardships. For that reason, they are more able to overcome their difficulties than the export-oriented workers.
Wang Tao (Translated by Michelle Deeter)

Default avatar
匿名 | Anonymous



Agree with comment 1

In an economic crisis why are waste companies first to go into a slump? The reason for this is when there was high speed economic growth, the volume of imports was fairly high. An estimate for waste paper is that 60 - 80% of the paper used by paper making factories is imported waste paper. The proportion for plastics is also large, estimated to be around 40%. The impact on all export-orientated enterprises has been comparatively large and waste paper recycling companies are no exception, because in this industry, the waste products become a raw material. It would not be at all surprising if some of those who have gone bankrupt had stockpiled during the prosperous times. It seems that way for iron ore; imported ore has reached over 1600 yuan and there are many people within the industry who recklessly stockpiled (iron ore) and as a result, in the time of crisis have suffered heavy losses.
(Translated by Jodie Gardiner)

Default avatar
匿名 | Anonymous



A temporary downturn

I agree with Comment 1 & Comment 2. Now the industry of wastage recycle is really in a slump; you can’t even sell the plastics bottle at 1cent. However, energy-saving and protection of the environment is still the long term overall trend, and the waste recycling is a must-have industry. The current downturn should be a temporary situation; this industry will recover quickly after the financial crisis.

Translated by Fangfang CHEN

Default avatar
匿名 | Anonymous



Government participation

The participation and regulation of the government is necessary in the scrap trade. The government should protect legitimate recycling enterprises while administrate small-scale operators, stoping them from competing with formal enterprises at lower prices by doing recycle business without pollution treatment. There are serious pollution problems in the scrap trade, among which the biggest risk is invisible pollution such as heavy metals and chemicals in wastes.

(Translated by Xiaoyu Guan)

Default avatar
匿名 | Anonymous




It is all right if such a chain collapses

China is at the low end of global industry chain: it is the place where cheap manufacture causes pollution and where the wastes go back for recovery treatment which causes second pollution. Therefore, it is all right if such a chain collapses. The profits and employment opportunities of the recycle trade are nothing compared to the damage to people caused by pollution and long-term economic costs. In a word, we should get foreign wastes out of our door.

(Translated by Xiaoyu Guan)

Default avatar
匿名 | Anonymous




About comment no.4

It seems that one sentence in the English version of comment 4 is opposite to the Chinese version.

This comment has been corrected. Thanks very much for pointing out the mistake!

(Translated by Xiaoyu Guan)

Default avatar
匿名 | Anonymous




The downtown and resulting frugality and focus on efficiency by developed nations may create many more recycling companies in those countries instead of exporting the waste and importing the finished product. The rebound in oil prices will also assist this.

Default avatar
匿名 | Anonymous



It seems to be true

A few days ago I went to the recycling point to sell the bottles I've been saving for half a year. After asking the price I was shocked - for one bottle you only get 0.1 RMB! What could I do? Altogether my bottles were only sold for 3.5 RMB! Having read the article I realise that the waste industry is in such sluggish shape!

Default avatar
匿名 | Anonymous



Collectors disappeared

No wonder those young collectors on the streets of my community have recently disappeared ! In previous years,they even fought each other for scraps!