After decades serving as the earth’s trash can, China made good on its promise to close its doors to literally tons of waste at the start of 2018. However it’s still fighting an uphill battle to control its own domestic waste management, and young entrepreneurs are turning the country’s trash into a financial treasure.
PAYING FOR THE WORLD’S WASTE
Up until one decade ago, China was hungry for the rubbage that had been discarded by wealthier, and let’s face it — more squandering countries. Since the 1980s, China used garbage from developed countries like the US, Ireland, Germany, and England, and harnessed the power of its labor-intensive market to sort through discarded leftovers, finding value in paper waste, copper wiring, scrap metal, and more. It all went towards decreasing costs in China’s manufacturing, infrastructure, housing industries.
China’s desire for second-hand materials created revenue spanning continents. Recycling companies like those in the US were able to encourage the domestic clean up of their waste management while being paid to sell these products to China. China, on the other hand, was able to truly create treasure out of another man’s trash, rooting out supplies that reduced its base costs of production. The market was dealing in billions, with the United States alone selling more than $5.2 billion worth of waste to the Middle Kingdom, weighing in at about 16 million tons. Britain, for its part, was sending enough recyclables to fill 10,000 Olympic-size swimming pools. In 2016, China paid to import roughly 45 million tons of scrap metal, waste paper, and plastic from across the globe, valuing more than $18 billion.
MODERN SOCIETY LOSES ITS TRASH COLLECTOR
However, the clever economic gains that were garnered both in China and more developed countries came to an abrupt halt at the start of this year when China blocked the importation of two dozen waste categories at its borders, upending the recycling market in several countries across the world that had come to rely on China’s demand for its refuse.
The motivation was manifold, but the main push was monetary; China’s cheap labor, which was employed to sift through (literally) tons of trash, was becoming more and more expensive each year. As the minimum wage increased, and the demand for raw materials fell, the country’s reasons to play the role of trash collector diminished.
Ironically, as China was cleaning up the world’s waste, it was gradually becoming one of the world’s largest producers of it. As the country transitions away from cheap manufacturing towards a more services-based economy, and its widening middle class continues to consume more than ever before, domestic waste is evolving into an issue too large for the government to dodge.
One can easily point the finger at well-known, growing industries like e-commerce, a booming sector in China and the world around, thanks in particular to notable Chinese based companies like Alibaba and Taobao. Between purchasing online products and packaging them to be shipped domestically and internationally, the creation of plastic waste in China has become absolutely rampant. In fact, China is the chief global culprit of mismanaged plastic waste polluting the world’s oceans.
TURNING RAGS INTO RICHES: ENTER THE ENTREPRENEURS
This is where some of the world’s brightest and most business savvy have stepped in to fill the large gap in government regulations of domestic waste disposal. Both homegrown and international entrepreneurs have created several startups within China to tackle the country’s waste management, especially in large metropolises where recycling is nearly an unheard of practice.
Beijing, with a population of more than 20 million people, creates more than a fair amount of waste each year. So much, in fact, that more than 300,000 people make their livings collecting recyclables and selling them to manufacturing companies, the majority of whom are officially unemployed and making a buck off the lack of an existing system. But that is changing, and not so slowly.
OTEC AND BGG RECYCLING
OTEC, a platform focused on supporting startups operating in China, has teamed up with the capital city’s Chaoyang district, where just over eight million of the city’s residents live. Together, they have hosted six back-to-back annual competitions for thousands of international entrepreneurs who hope to break ground in the world’s largest market. They offer support in the form of funding, policy advice, and office space, and last year they turned their attention towards startups who are making a difference in the country’s environmental battle against waste.
Last year, entrepreneur and overseas Chinese Anna Gui was awarded 2017’s “Honorable Mention” award in OTEC’s Entrepreneurship Competition Global Final for her company BGG Recycling, a promising business venture that brought her back to her home country in 2016.
“Because I work in e-commerce, I see so many over-packing problems in China, and that is why I started my company, BGG Recycling,” Gui told BON Cloud News. Working in the world of Wall Street in New York, Gui witnessed the amount of plastic consumption that was going on in her home country. She decided to fuse technology with recycling to create an app which connects office buildings and companies with waste collectors. Collectors then sell reusable resources that they collect to factories as raw materials. Connecting these two actors, BGG Recycling’s technology has streamlined the waste management process, cut out the middleman, and generated a nice slice of revenue for itself. Even more impressive is its increase in efficiency of waste sorting and processing, which has made a statistical impact in nine Chinese cities, raising the recycling rate in each from 10 to 20 percent.
BGG Recycling was growing steadily since its birth two years ago, but it was not until Gui discovered the opportunities available through OTEC that she really saw things take off. “After joining OTEC, I received a lot of resources, such as policy information, services, and also talent and capital help, so it has been very useful for me.”
Thanks to the support for expansion that the organization has provided, Gui has set her sights high for BGG Recycling’s future. “I’m optimistic about our business reaching more than 50 cities within three years. We will be providing services to more than 50,000 small businesses and collaborating with more than 100,000 collectors,” she told BON. The entrepreneur’s startup generated an annual revenue of 100 million yuan ($15.5 million) in its first year of operation and is expected generate to increase that ten-fold by the end of the year.
Organizations like OTEC are helping startups just like Gui’s to improve the status quo of the capital city and the nation writ large. So far, OTEC has attracted more than 18,000 foreign and Chinese entrepreneurs, supported nearly 4,000 projects, and 100 investment organizations spanning two dozen countries.
POSITIVE DOMINO EFFECT?
This type of positive change in China is having a direct impact at home, but also more indirectly abroad. It is no coincidence that China’s refusal to collect the world’s rubbish has translated into concrete legislation in other areas of the globe. Just six months after China stopped taking in the EU’s waste, the European Commission proposed new rules to ban all single-use plastics and produce only reusable packaging as early as 2030. The UK, for its part, has recently announced efforts to eliminate all avoidable plastic waste within the next quarter-century.
With the help of creative entrepreneurs and organizations like OTEC to support them, the market for waste management will change, not just domestically in China but the world over. Until then, the country will continue to turn its rubble into riches, one pile of trash at a time.