Are Chinese Recyclers getting the best recycling prices?
The Chinese government is working towards the development of an environmentally responsible and sustainable society. They have been working to attain this aim by stabilizing the recycling industry and making it more profitable. The country is known for recycling the business waste of nations all around the world, at varying recycling prices, through a huge re-processing industry and international shipping trade. Some sources claim that the government makes over £70bn each year from recycling!
The Current Status of the Recycling Market in China
Currently, the recycling market in China works on reprocessing different types of business and domestic waste, including plastic, metals, electronic scrap, paper, ship dismantling, scrap tires, and end-of-life vehicles. The recycling prices charged for different materials varies massively. The higher the complexity associated with the recycling of the material, the higher the recycling prices (there are exceptions). Apart from the aim of the development of a sustainable society, the economic benefits gained from the recycling market have triggered the Chinese government to putting more focus on this market. The government has made this market the focus of its new agenda, and in addition to that, it has also taken various initiatives to enhance the operations and management of this market.
China has the world’s largest recycling industry, but when compared to the markets of United States of America and Western Europe, the operational processes, and the recycling prices in China are still in the formative stages of development. This is supported by the fact that the current market is dominated by a large number of small players. These small recycling companies do not use highly automated procedures for recycling. This also hinders them from abiding with the modern environmentally friendly recycling procedures. For example, ‘freelance recyclers’ are often relied upon to collect waste recyclables themselves and sell them to the factories, rather than the factories sourcing the material from other businesses.
Apart from this, the small, family run recycling businesses, find it very difficult to survive in the Chinese recycling industry, as the market went through major shifts caused by overcapacity. The business themselves lack the ability of deploying the right recycling prices and cost strategies, so as to sustain the shifts and growths in the market.
As mentioned above, the market is very large, but is divided into smaller fragments; this has increased the competition within the Chinese recycling market to a great extent. As a result, the businesses within these markets cannot charge high recycling prices. If they do, they lose a major chunk of their customers. Therefore, it can be said that despite its large size, the market provides the businesses with a very low profit margin. In Western Europe, you’ll find a handful of huge recycling companies.
Future of Recycling Market in China
The government of China has put the recycling market through intense reshuffling and shifting, and as a result, the market is now expected to be dominated by medium and large size organizations. This is because these organizations quickly shifted to modern means of recycling to aid their operations, and take benefit of the large scale of the Chinese recycling market. The companies will be able to charge effective recycling prices as well. This is because the elimination of a large number of small players from this market will reduce the intensity of competition.
By reducing the number of players, the government will be able to better integrate and manage the operations of this market. In addition to that, it will also be able to modernize it and provide it with a new strategic outlook. This will enable the recycling market in China to compete with other global players, such as the United States of America. If the government of China succeeds in implementing its plans effectively, then it is estimated that this market will be valued at £110 billion by the year 2018.
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