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09/05/2020

Xinhua Headlines: World’s factory turns to domestic market amid global coronavirus recession

— As the continued global spread of COVID-19 is weighing on the world economy, China’s foreign trade is under considerable downward pressure.

— Many export-oriented companies in China are turning to the domestic market for a lifeline while grappling with dropping overseas orders as major markets remain in the grip of the pandemic.

by Xinhua writers Zhang Yizhi, Li Huiying, Hu Guanghe, Xu Ruiqing

FUZHOU, May 9 (Xinhua) — Walking back and forth between shelves of neatly stacked shoes, some 20 live streamers dashed at the instructions of their followers on the phone, grabbing a shoe now and then from the shelves for a close-up in front of the camera.

At around eight o’clock every night, the supply chain platform 0594 in the city of Putian, east China’s Fujian Province, springs to life as live streamers flock to the exhibition area to sell shoes produced by the local manufacturers, many of which are troubled by the cancellations or delays of overseas orders amid the global coronavirus pandemic.

“To get rid of the excess inventory, many manufacturers in Putian are turning to live streaming to explore the domestic market,” said Chen Xing, general manager of 0594. “We are now cooperating with over 40 manufacturers and there will be more of them joining us in the future.”

The platform is also building an internet celebrity incubator and has so far organized seven rounds of influencer training courses enrolling more than 200 attendees.

Huang Huafang, 39, signed up for the two-day crash course in late March and soon after started her first live streaming session. She works from around 2 p.m. to 10 p.m., attracting over 500 followers and selling more than 20 pairs of shoes every day.

Though she is not a well-known live streamer, she is optimistic about the future. “There is a long way to go, but I believe live streaming is a trend. It is an essential skill for anyone who wants to market online,” said Huang.

A staff sells shoes through live streaming at an e-commerce warehouse in Putian, southeast China’s Fujian Province, May 7, 2020. (Xinhua/Lin Shanchuan)

According to Chen, the platform 0594 sold almost 130,000 pairs of shoes in April alone. As the domestic economic outlook continues to pick up, the sales target of May has been set at 200,000 pairs.

Like manufacturers in Putian, a city with a large number of export-oriented enterprises, many Chinese factories are turning to the domestic market for a lifeline, while grappling with dropping overseas orders as major markets remain in the grip of the pandemic.

ADAPT OR DIE

With decades of experience in manufacturing and developing products for overseas clients, some export-oriented companies in China are rolling out products catering to the domestic market.

After months of gloomy business, Wu Songlin, general manager of Putian-based Hsieh Shun Footwear Co., Ltd., heaved a sigh of relief as trucks loaded with therapeutic shoes tailored to the home market left his factory.

It was the first shipment for the domestic market since Wu and his partners started the company in 2010. In the past, his company only had two clients, one from Europe and the other from Japan. Business used to run smoothly and life was good.

But his factory was on the brink of a shutdown in March when the coronavirus pandemic started to ravage the global economy. No new orders came in and shipments of existing orders were requested to be delayed until June.

People work in a footwear workshop in Putian, southeast China’s Fujian Province, April 27, 2020. (Xinhua/Lin Shanchuan)

“Orders were canceled after completion of production, and our capital flow is stuck in our inventory. The pressure is mounting to keep the factory running,” Wu said. “By the end of June, workers would be left with no work to do as soon as we complete the existing orders.”

After losing almost all their orders from overseas clients, the desperate shoemaker turned to the domestic market. He called one of his old business partners and secured an order for massage footwear, which is selling like hot cakes in the domestic market as health tops the agenda in the time of the novel coronavirus.

The factory produced 10,000 pairs of massage shoes in April, and the number is expected to reach 30,000 in May, enough to keep the production lines running.

Thanks to the company’s quick adaptation, about 200 workers kept their jobs in the factory, while 20 percent were furloughed and the remaining workers were arranged to work in other companies as part of the city’s employee sharing program.

“If domestic orders keep coming in, our operation will hopefully get back to normal by September when the monthly output of massage shoes will reach 90,000,” Wu said. “By then the company will live and thrive without any orders from overseas customers.”

A woman works in a workshop of Hsieh Shun Footwear Co., Ltd. in Putian, southeast China’s Fujian Province, May 7, 2020. (Xinhua/Lin Shanchuan)

But switching to another market is not easy, explained Wu. In the past, export-oriented factories were only in charge of manufacturing, while brands would take care of sales, promotion as well as customer support.

“If you are selling to the domestic market, you need to have your own brand and marketing capacity,” he said. “Working with e-commerce platforms could be one way out, but it’s more important to understand domestic consumers and meet their needs.”

CUSTOMIZE THE FUTURE

For years, many export-focused manufactures have been trying to climb up the value chain and tap the uncharted waters of the domestic market. As the pandemic continues to spread, there is a strong push for them to embrace customized manufacturing.

In an experience store located in downtown Putian, customers line up waiting to have their feet measured on a smart device. After a few seconds, they get their readings on the phone, and a few swipes and clicks later, they place their orders with unique features, colors, and shapes.

Adjacent to the experience store, there is a flexible manufacturing workshop, which gives quick responses to orders and produces shoes following the customized demands of individual buyers.

SEMS, a longstanding sports footwear manufacturer that has established a partnership with several international brands, started to adopt flexible manufacturing years ago in an effort to adapt to the evolving domestic market.

A customer has her feet measured on a smart device in sports footwear manufacturer SEMS in Putian, southeast China’s Fujian Province, May 8, 2020. (Xinhua/Lin Shanchuan)

Customization gives consumers the benefit of products that fit their needs, and at the same time allows factories to utilize improved workflows and technology to maintain high output and omit the process of inventory and distribution, said Zhu Yizhen, the executive vice president of the company.

“Currently we only sell over 100 pairs of customized shoes a day, but we are at the dawn of a new era,” Zhu said. “We hope more companies awaken to the developing trend and join in the practice of mass customization.”

Customer to manufacturer, or C2M, which allows consumers to place orders directly to factories for customized products, has become a buzzword among export-oriented manufacturers hoping to reach domestic consumers amid the pandemic.

Li Junjie, who runs a ceramic flowerpot plant in Fujian’s Dehua County, one of the manufacturing centers of ceramics in China, did not sell a single pot to his overseas customers since the coronavirus outbreak in late January.

The factory used to export 30 percent of its flowerpots to the United States and Spain, but Li managed to make up for the lost deals by selling on domestic e-commerce platforms. Instead of bulk orders placed by foreign clients, domestic consumers tend to purchase customized products in small amounts.

Photo shows the automatic production line of a customized workshop in sports footwear manufacturer SEMS in Putian, southeast China’s Fujian Province, May 8, 2020. (Xinhua/Lin Shanchuan)

With the big data provided by e-commerce platforms, Li can tell which items will be a hit so as to increase their production and develop new products based on a thorough analysis of different consumer groups.

“Our online sales almost doubled over the past year, and we have sold over 100,000 customized pots this year, thanks to the C2M business model,” Li said.

Li’s company is one of many Chinese small and medium-sized enterprises (SMEs) that have benefited from the e-commerce giant Alibaba’s Spring Thunder Initiative, which is aimed at helping export-focused SMEs expand into new markets.

The initiative will also help some SMEs to transform and develop their business in the Chinese market through measures such as resource support, fee reductions, and fast-track processing.

Source: Xinhua

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28/04/2020

China’s April factory activity seen expanding as lockdowns ease – Reuters poll

BEIJING (Reuters) – China’s factory activity likely rose for a second straight month in April as more businesses re-opened from strict lockdowns implemented to contain the coronavirus outbreak, which has now paralysed the global economy.

The official manufacturing Purchasing Manager’s Index (PMI), due for release on Thursday, is forecast to fall to 51 in April, from 52 in March, according to the median forecast of 32 economists polled by Reuters. A reading above the 50-point mark indicates an expansion in activity.

While the forecast PMI would show a slight moderation in China’s factory activity growth, it would be a stark contrast to recent PMIs in other economies, which plummeted to previously unimaginable lows.

That global slump, caused by heavy government-ordered lockdowns, as well as the cautious resumption of business in China, suggests any recovery in the world’s second-largest economy is likely to be some way off.

“The recovery so far has been led by a bounce-back in production, however, the growth bottleneck has decisively shifted to the demand side, as global growth has weakened and consumption recovery has lagged amid continued social distancing,” Morgan Stanley said in a note.

“The expected slump in external demand has likely capped further recovery in industrial production.”

The latest official data showed 84% of mid-sized and small business had reopened as of April 15, compared with 71.7% on March 24.

Hobbled by the coronavirus, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began.

That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts.

A China-based brokerage Zhongtai Securities estimated that the country’s real unemployment rate, measured using international standards, could exceed 20%, equal to more than 70 million job losses and much higher than March’s official reading of 5.9%.

Sheng Laiyun, deputy head at the statistics bureau, said on Sunday migrant workers and college graduates are facing increasing pressures to secure jobs, while official jobless surveys show nearly 20% of employed workers not working in March.

Chinese authorities have rolled out more support to revive the economy. The People’s Bank of China earlier in April cut the amount of cash banks must hold as reserves and reduced the interest rate on lenders’ excess reserves.

Source: Reuters

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04/04/2020

Coronavirus: China’s deserted shops and restaurants show that even as lockdown ends, scars remain

Lockdown may have been lifted, but shops, bars and restaurants remain empty in Beijing, showing struggle facing economic recovery
Controls have been returning in other parts of China, where cinemas and tourist attractions shut amid fears of new wave of infections

The nearly two month-long lockdown has changed the consumption behaviour of Chinese residents, many of whom have turned to home cooking to cut their spending. Photo: AFP

China’s urban lockdown may have eased, but deserted streets and stores in the capital Beijing this week suggest that for the services sector, the impact of the coronavirus outbreak could be deeper and longer than expected.

Many restaurants, cafes and pubs remained closed in the city, where vigilance remains high about a second wave of infections. Among those that were open, there were few customers to be seen.

The usually crowded Wangfujing shopping street was quiet on Wednesday, with just a few shoppers patronising what is usually the heartbeat of the city’s commerce and tourism. There were more staff than consumers at the Apple store, while everyone wore a mask. Shops along the pedestrianised zone closed their doors before sunset, but many did not open at all.

In a downtown food court, a handful of people dined during what would usually be the lunch rush hour, each restricted to their own small table to maintain social distancing, in great contrast with the usual frantic dash for seats.

Coronavirus: What impact will the economic fallout from the Covid-19 pandemic have on you?

While China has largely stemmed the domestic spread of Covid-19, threats of imported cases, with the virus having infected over one million people worldwide, and asymptomatic carriers continue to hamper the recovery in China’s

service sector

A survey published on Friday showed that in March, sentiment among small service sector firms remained depressed. The Caixin / Markit services purchasing managers’ index (PMI) was 43.0 for last month, with a number below 50 meaning the sector is shrinking. “There are too few people now. We only sold about a hundred bowls of noodles, that was just half of our normal level,” said one Beijing street vendor, who had also cut many items from the menu due to insufficient demand.

A bookstore in the city centre held an official opening ceremony after a soft opening followed by a two and a half month-long forced shutdown, but received only four visitors on a morning, one of which was the South China Morning Post reporter. All four were required to go through a body temperature check and write down their personal contact details before entering.

Service sector workers said the situation was surreal and that they were worried that there was no end in sight.

“I have never seen KFC look like this,” said an employee of the fast food chain restaurant at Wangfujing, pointing to the virtually empty dining hall.

A grocer at a nearby food market continually shook her head when talking about the decline in customers, but said she felt lucky that she could come back to Beijing from her hometown before the 14-day mandatory quarantine requirement was imposed on February 14.

This situation is not restricted to Beijing. When the Chinese government reopened around 500 cinemas nationwide in March, each one attracted on average

only two customers

per day.

Now, many places across China are reimposing controls amid fears of a new spike in infections, the same fear leading people to stay home instead of going to those venues which have reopened.

Shanghai has closed tourist attractions while Sichuan has again closed karaoke lounges. Cinemas have also been reclosed across the country.

President Xi Jinping said during a visit to Hangzhou last Sunday that China must remain alert. “If you want to watch a movie, rather than going to a cinema, you can watch it online,” Xi said.

Services account for 60 per cent of China’s economy and the majority of employment. The slowness of the sector’s recovery is placing huge pressure on the world’s second

largest economy

at a time when manufacturers are seeing export orders nosedive.

Liang Zhonghua, chief macro analyst at Zhongtai Securities, a brokerage, said that China’s damaged consumption alone could drag economic growth down by 4.5 per cent in the second quarter.

“(Chinese) residents’ fear of the epidemic is not over,” he wrote in a note this week.

Beijing’s malls still empty after coronavirus lockdown lifted

In Beijing all travellers entering the city are required to undergo a 14-day quarantine, while mass gatherings are still forbidden.

The containment measures have stopped many migrant workers from getting back to

their jobs

, if they still exist. Many local residents still choose to work from home, even though authorities had been trying to encourage people to go out and spend money.

On April 1, the traffic flow on Beijing’s subway system was 3.05 million passengers a day, less than a third of the level a year ago, according to the operator, while car traffic was still about 15 per cent less than it was last year, government data showed.

I will keep cooking for myself, even when everything goes back to normal, it is much healthier and cheaper – Beijing resident

The nearly two month-long lockdown has changed the consumption behaviour of Chinese residents, many of whom have turned to home cooking to cut their spending.

“I will keep cooking for myself, even when everything goes back to normal, it is much healthier and cheaper,” said a Beijing lawyer whose family name is Li.

The effect of this behavioural shift is borne out in the 17.9 per cent drop in retail sales in the capital over the first two months of the year, only slightly better than the nationwide drop of 20.5 per cent.

Beijing businesses have clubbed together to issue some 150 million yuan in

vouchers

to lure customers in since March 18. But with more economic hardship ahead, businesses and consumers alike are hunkering down for the storm.

Source: SCMP

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28/08/2019

China’s navy ‘set to pick J-20 stealth jets for its next generation carriers’

Military insiders say the aircraft appears to have beaten the FC-31 in the race to become the PLA Navy’s fighter of the future
A military source close said it would be almost impossible to develop both aircraft over the next few years given the risk of an economic downturn

The J-20 stealth fighter is likely to be modified to serve on China’s next generation aircraft carriers. Photo: Xinhua

China’s military is likely to pick the country’s first active stealth fighter, the J-20, for its next generation aircraft carriers, according to military sources and a recent report on state media.

The J-20, made by the Chengdu Aerospace Corporation (CAC), appears to have a won a head-to-head contest with the FC-31, a fighter made by another company which is still undergoing testing.

A military insider told the South China Morning Post that the Central Military Commission, the People’s Liberation Army’s top decision-making body, now favoured adapting the J-20 for its new carriers.

“The Chengdu Aerospace Corporation will announce some new products, which will include a new version of their J-20. You can guess what type it will be,” the military insider, who requested anonymity because of the sensitivity of the subject, said.

The FC-31 was independently developed by CAC’s sister company Shenyang Aircraft Corporation (SAC), which also produced the J-15 – the jets currently in use on the country’s only active aircraft carrier, the Liaoning.

Both aerospace firms are subsidiaries of the state-owned giant Aviation Industry Corporation of China, which specialises in designing and developing military aircraft, and were set up to ensure benign competition between manufacturers.

However, the SAC has faced criticism from some military leaders and experts for being too conservative and failing to innovate because of its bureaucratic structure.

A recent programme aired by the state broadcaster China Central Television also suggests the J-20 will be chosen.

An episode of Military Documentary shown on August 16 reported how the PLA Navy was selecting candidates for pilot training and illustrated the feature with a mock-up of jets that looked like J-20s taking off from a carrier.

Ground-based J-20s – also known as Powerful Dragons – entered service with the PLA Air Force in 2017.

Mass production of the stealth fighters began late last year

as China stepped up its efforts to counter the deployment of American F-22s and F-35s in the Asia-Pacific region.

A J-15 fighter lands on the Liaoning. Photo: AFP

If the selection of the J-20 is confirmed it will mark the end of a lengthy debate between its supporters and advocates of the FC-31 as to which would make a better carrier-based fighter.

Those who favoured the J-20 said it was more advanced and reliable than the FC-31, but its supporters said it was more light and nimble.

“Both the J-20 and FC-31 have their advantages. The size of the J-20 is similar to the J-15 since both are powerful heavy fighters,” Song Zhongping, a military commentator for Hong Kong-based Phoenix Television, said.

Song said the lighter FC-31 could be developed into a medium-sized carrier fighter that would complement the J-20 in future.

But another military source close to the PLA Navy said it would be almost impossible to develop both aircraft over the next few years given the risk of an economic downturn as the trade war with the US continues to escalate.

A video simulation broadcast on state television earlier this month showed fighters that resembled the J-20 taking off from a carrier. Photo: CCTV

The source said China’s next generation aircraft carriers would be with equipped electromagnetic catapults similar to those used on the US Navy’s Ford-class supercarriers.

These enable the use of heavier fighters because they are more powerful than the older diesel systems used on older carriers.

“The key problem of the J-20 is not weight, but length. If it wants to be a carrier-based fighter jet, it needs to be made shorter.”

Military insiders have previously said that CAC engineers are working to produce a shorter version of the J-20 that will work with the new launch system.

At present both the J-20 and F-31 still rely on Russian engines. The WS-15 engine that has been purpose built for the J-20 has undergone hundreds of hours of testing but has yet to meet reliability targets while the F-31 prototype does not have a purpose-built engine.

China’s navy plans to build at least four carrier battle groups by 2030, three of which will be active at any given time.

Military analysts say China will need at least a decade to develop its new generation carrier-based fighters, so the J-15 will remain in service for at least a decade, if not two.

The J-15 made its maiden flight in 2009 and has been in service since 2012. They are the only fighters based on the Liaoning and will be used by its sister ship the Type 001A when it enters service, probably later this year.

Source: SCMP

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27/08/2019

Viewpoint: How serious is India’s economic slowdown?

Indian factory worker — Image caption Private sector investment is at a 15-year low

Top Indian government officials are engaged in a vociferous public debate over the state of the country’s economy.

Rajiv Kumar, the head of the government’s think tank Niti Aayog, recently claimed that the current slowdown was unprecedented in 70 years of independent India and called for immediate policy interventions in specific industries.

The Chief Economic Adviser, K Subramanian, disagreed with the idea of industry-specific incentives and argued for structural reforms in land and labour markets. Members of Prime Minister Narendra Modi’s economic advisory council sound inchoate, resorting to social media and opinion editorials to counter one another.

In essence, the quibble among the members of the economic team of Mr Modi and his government is not about whether India is facing an economic slowdown or not, but about how grave the current economic crisis is.

This is a remarkable reversal in stance of the same group of economists who, until a few months ago, waxed eloquent about how India was the fastest growing economy in the world, generating seven million jobs a year.

To put all this in context, it was less than just two years ago, in November 2017, that the global ratings agency Moody’s upgraded India’s sovereign ratings – an independent assessment of the creditworthiness of a country – for the first time in 14 years.

Gurgaon — Image captionSales of cars and SUVs have slumped to a seven-year low

Justifying the upgrade, Moody’s had then argued that the economy was undergoing dramatic “structural” reforms under Mr Modi.

In the two years since, Moody’s has downgraded its 2019 GDP growth forecast for India thrice – from 7.5% to 7.4% to 6.8% to 6.2%.

The immediate questions that arise now are: is India’s economic condition really that grim and, if yes, how did it deteriorate so rapidly?

Not easy

The wobbly state of the economy has also thrown government finances in disarray: tax revenues are much below expectations.

On Monday, the government got a much-needed breather when India’s central bank announced a $24bn (£19bn) one-time payout for the cash-starved government. (This amount is more than the dividend paid by the central bank to the government in all five years of the Congress rule between 2009 and 2014.)

The solutions to the economic crisis are not easy.

Indian industry, fed and fattened with government protection through decades, is once again clamouring for tax cuts and financial incentives.

But it is not clear that such benefits will revive private sector investment and domestic consumption immediately.

For all the hype about the Make in India programme, hailed as the harbinger of the country’s emergence as a manufacturing power, India’s dependence on China for goods has only doubled in the past five years.

India today imports from China the equivalent of 6,000 rupees ($83; £68) worth of goods for every Indian, which has doubled from 3,000 rupees in 2014.

India’s exports have remained stuck at 2011 levels and not grown.

So, India is neither making goods for itself nor for the world.

An Indian farmer carries sugarcane to load on a tractor to sell it at a nearby sugar mill in Modinagar in Ghaziabad, some 45km east of New Delhi, on January 31, 2018 — Image caption India’s agrarian crisis is a major stumbling block

Ornamental tax and other fiscal incentives to specific industries are not suddenly going to make Indian manufacturers competitive and stop India’s addiction for affordable Chinese goods. If any, the trade spat between China and the United States only saw countries such as Vietnam and Bangladesh benefit and not India.

More currency or trade tariffs are not the solutions either. The central bank has lowered interest rates and there is some push to lowering the cost of capital for industry. But again, Indian industry will invest more only when demand for goods and services increases. And demand will increase only when wages increase, or there is money in the hands of people.

So, the only immediate solution for India seems to be to boost consumption through a stimulus given directly to people, in the classical Keynesian mould.

Of course, such a stimulus should be combined with reforms to boost business morale and confidence.

In sum, India’s economic picture is not pretty.

It is important for India’s political leadership to see this not-so-pretty picture and not hide behind rose tinted glasses. Prime Minister Modi has a unique electoral mandate to embark on bold moves to truly transform the economy and pull India out of the woods.

Source: The BBC

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19/05/2019

China’s ban on scrap imports revitalises US recycling industry

US paper mills are expanding capacity to take advantage of a glut of cheap waste materials
Some facilities that previously exported plastic or metal to China have retooled so they can process it themselves

China phased in import restrictions on scrap paper and plastics in January last year. Photo: AP

The halt on China’s imports of waste paper and plastic that has disrupted US recycling programmes has also spurred investment in American plants that process recyclables.

US paper mills are expanding capacity to take advantage of a glut of cheap scrap. Some facilities that previously exported plastic or metal to China have retooled so they can process it themselves.

And in a twist, the investors include Chinese companies that are still interested in having access to waste paper or flattened bottles as raw material for manufacturing.

“It’s a very good moment for recycling in the United States,” said Neil Seldman, co-founder of the Institute for Local Self-Reliance, a Washington-based organisation that helps cities improve recycling programmes.

Global scrap prices plummeted in the wake of China’s ban. Photo: AP

China, which had long been the world’s largest destination for paper, plastic and other recyclables, phased in import restrictions in January last year.

Global scrap prices plummeted, prompting waste-hauling companies to pass the cost of sorting and baling recyclables on to municipalities. With no market for the waste paper and plastic in their blue bins, some communities scaled back or suspended kerbside recycling programmes. But new domestic markets offer a glimmer of hope.

How China’s ban on plastic waste imports became an ‘earthquake’

About US$1 billion in investment in US paper processing plants has been announced in the past six months, according to Dylan de Thomas, a vice-president at The Recycling Partnership, a non-profit organisation that tracks and works with the industry.

Hong Kong-based Nine Dragons, one of the world’s largest producers of cardboard boxes, has invested US$500 million over the past year to buy and expand or restart production at paper mills in Maine, Wisconsin and West Virginia.

Brian Boland, vice-president of government affairs and corporate initiatives for ND Paper, Nine Dragons’ US affiliate, said that as well as making paper from wood fibre, the mills would add production lines turning more than a million tonnes of scrap into pulp to make boxes.

“The paper industry has been in contraction since the early 2000s,” he said. “To see this kind of change is frankly amazing. Even though it’s a Chinese-owned company, it’s creating US jobs and revitalising communities like Old Town, Maine, where the old mill was shuttered.”

Hong Kong-based Nine Dragons has invested US$500 million in paper mills in Maine, Wisconsin and West Virginia. Photo: Handout

The Northeast Recycling Council said in a report last autumn that 17 North American paper mills had announced increased capacity to handle recyclable paper since the Chinese cut-off.

Another Chinese company, Global Win Wickliffe, is reopening a closed paper mill in Kentucky. Georgia-based Pratt Industries is constructing a mill in Wapakoneta, Ohio that will turn 425,000 tonnes of recycled paper per year into shipping boxes.

Plastics also had a lot of capacity coming online, de Thomas said, noting new or expanded plants in Texas, Pennsylvania, California and North Carolina that turned recycled plastic bottles into new bottles.

Chinese companies were investing in plastic and scrap metal recycling plants in Georgia, Indiana and North Carolina to make feedstocks for manufacturers in China, he said.

GDB International processes bales of scrap plastic film into pellets to make garbage bags and plastic pipe. Photo: AP

In New Brunswick, New Jersey, the recycling company GDB International exported bales of scrap plastic film such as pallet wrap and grocery bags for years. But when China started restricting imports, company president Sunil Bagaria installed new machinery to process it into pellets he sells profitably to manufacturers of garbage bags and plastic pipe.

The imports cut-off that China called “National Sword” was a much-needed wake-up call to his industry, he said.

“The export of plastic scrap played a big role in easing recycling in our country,” Bagaria said. “The downside is that infrastructure to do our own domestic recycling didn’t develop.”

China to suspend checks on US scrap metal shipments, halting imports

That was now changing, but he said far more domestic processing capacity would be needed as a growing number of countries restricted scrap imports.

“Ultimately, sooner or later, the society that produces plastic scrap will become responsible for recycling it,” he said.

It has also yet to be seen whether the new plants coming on line can quickly fix the problems for municipal recycling programmes that relied heavily on sales to China to get rid of piles of scrap.

About US$1 billion in investment in US paper processing plants has been announced in the past six months, according to a non-profit group that tracks the industry. Photo: AP

“Chinese companies are investing in mills, but until we see what the demand is going to be at those mills, we’re stuck in this rut,” said Ben Harvey, whose company in Westborough, Massachusetts, collects trash and recyclables for about 30 communities.

He had a car park filled with stockpiled paper a year ago after China closed its doors, but eventually found buyers in India, Korea and Indonesia.

China to collect applications for scrap metal import licences from May

Keith Ristau, chief executive of Far West Recycling in Portland, Oregon, said most of the recyclable plastic his company collected used to go to China but now most of it went to processors in Canada or California.

To meet their standards, Far West invested in better equipment and more workers at its material recovery facility to reduce contamination.

In Sarepta, Louisiana, IntegriCo Composites is turning bales of hard-to-recycle mixed plastics into railroad ties. It expanded operations in 2017 with funding from New York-based Closed Loop Partners.

“As investors in domestic recycling and circular economy infrastructure in the US, we see what China has decided to do as very positive,” said Closed Loop founder Ron Gonen.

Source: SCMP

Posted in advantage, bales, boxes, California, capacity, cardboard boxes, cheap, Chief Executive, China’s ba, China’s ban, Closed Loop Partners, Dylan de Thomas, expanding, exported plastic, Far West Recycling, feedstocks, garbage bags, GDB International, Georgia, Georgia-based, Global Win Wickliffe, glut, grocery bags, Hong Kong, import restrictions, India alert, Indiana, Indonesia, Institute for Local Self-Reliance, IntegriCo Composites, Keith Ristau, Kentucky, Korea, Louisiana, Maine, manufacturers, metal, National Sword, Neil Seldman, New Brunswick, New Jersey, New York, Nine Dragons, non-profit organisation, North Carolina, Northeast Recycling Council, Ohio, old mill, Old Town, Maine, Oregon, pallet wrap, paper mills, pellets, Pennsylvania, plastic pipe, Plastics, Portland, Pratt Industries, process, producers, pulp, recycling industry, retooled, revitalises, Ron Gonen, Sarepta, scrap import, scrap metal import licences, scrap metal shipments, scrap plastic film, shuttered, Sunil Bagaria, Texas, The Recycling Partnership, Uncategorized, US, vice-president, Wapakoneta, waste materials, West Virginia, Wisconsin, wood fibre | Leave a Comment »

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