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Summary and Forecast of the Development Characteristics of China's Recycled Resource Recovery Industry in 2015
Release time:
22 Oct,2015
In 2014, China's economic development entered a new normal. Affected by the domestic and international market environment, the prices of major recycled materials continued to fall. Coupled with the rapid increase in raw material and labor costs, the economic benefits of recycled resource recovery enterprises were sluggish, and the industry's development environment became increasingly severe.
I. Basic Development Status of China's Recycled Resource Recycling Industry
In 2014, China's economic development entered a new normal. Affected by the domestic and international market environment, the prices of major recycled resources continued to fall. Coupled with the rapid increase in the cost of raw materials and labor, the economic benefits of recycled resource recycling enterprises were sluggish, and the industry's development environment became increasingly severe.
II. Development Characteristics of China's Recycled Resource Recycling Industry
1. Innovative recycling models continue to emerge
In recent years, with the rapid development of the recycled resource recycling industry, enterprises have focused on innovating recycling models and improving recycling levels. For example, Hangzhou Furen Ecological Technology Co., Ltd. cooperated with the train station to recycle composite paper packaging waste from discarded materials, achieving a win-win innovative recycling model for recyclers, train stations, and utilizing enterprises; Shenzhen Tyler Waste Battery Recycling Technology Co., Ltd. cooperated with notebook computer and mobile phone manufacturers to recycle through courier companies, implementing a waste battery recycling certification scheme model; Shanghai Yanlongji Recycled Resource Utilization Co., Ltd.'s three-level recycling network for waste glass; Wuhan Greenmei Resource Recycling Co., Ltd.'s multi-channel recycling model for waste batteries combining recycling boxes and recycling supermarkets; Shanghai Senlan Environmental Resources Co., Ltd.'s "5H" recycling model for waste electrical and electronic products; Beijing Yingchuang Recycled Resource Recycling Co., Ltd. combined Internet of Things technology with the recycled resource recycling system, using independently developed intelligent beverage bottle recycling machines to create the first case in China of combining Internet of Things technology with the recycled resource recycling system.
2. "Internet" thinking is increasingly permeating
Recently, "Internet" thinking has become a hot topic of public discussion. The traditional recycled resource recycling industry, by grafting the Internet to upgrade and transform, can not only effectively reduce the intermediate links in the industry and make information more transparent, but also help reduce enterprise operating costs and improve capital use efficiency. With the continuous development of the recycled resource industry, industrial transformation and upgrading are imminent. In the process of the evolution of various recycling and trading models, a number of Internet enterprises have emerged and are at the forefront of the times. For example, Shenzhen Taolu Information Technology Co., Ltd. integrated Internet thinking into the traditional recycling industry, building the first recycling service platform focusing on the recycled resource industry (waste mobile phones), integrating online recycling trading platform, second-hand mall platform, dismantling goods trading platform, and points system into three platforms and one system.
3. Mergers and acquisitions are intensifying, and the industry concentration is further increasing
The recycled resource capital market is booming, and mergers and acquisitions are taking place one after another. After Dongjiang Environmental Protection Co., Ltd. announced the acquisition and capital increase of Hubei Tianyin Circular Economy Development Co., Ltd., China Recycled Resource Development Co., Ltd.'s restructuring of Qinling Cement has also been approved by the China Securities Regulatory Commission. Sander Environmental Resources Co., Ltd. announced that it would acquire 70% of the equity of Hunan Tongli Electronic Waste Recycling and Dismantling Utilization Co., Ltd., a high-quality electronic waste disposal enterprise. Shenzhen Greenmei High-tech Co., Ltd., a leading enterprise in the electronic waste disposal industry, as well as Shougang Environmental Holdings Co., Ltd. and Zhuhai Gree Electric Appliances Co., Ltd., have integrated through capital strength, currently forming a total of 6 listed companies related to the electronic waste disposal industry. Currently, the recycled resource enterprises listed in Shanghai, Shenzhen and Hong Kong mainly include Greenmei, Sander Environment, Dongjiang Environmental Protection, Huahong Technology, and Shanying Paper, totaling 15 enterprises. With the intensification of mergers and acquisitions, the industry concentration is further increasing, promoting the industry to develop in a standardized and orderly manner.
4. Prices of recycled resources have generally fallen, and corporate profits are declining
Affected by the continued sluggishness of the domestic and international economic environment and market demand, the prices of major recycled resources showed a downward trend throughout 2014. Taking the average purchase price of heavy scrap steel as an example, the average price in the first quarter was 2470 yuan/ton, the average price in the second quarter was 2360 yuan/ton, a decrease of 110 yuan/ton month-on-month, a decrease of 4.5%; the average price in the third quarter was 2260 yuan/ton, a decrease of 100 yuan/ton month-on-month, a decrease of 4.2%; the average price in the fourth quarter was 2050 yuan/ton, a decrease of 210 yuan/ton month-on-month, a decrease of 9.3%. The average price for the whole year of 2014 was 2290 yuan/ton, down 350 yuan/ton from 2013, a decrease of 13.3%.
In addition, affected by the downward pressure on the economy, production enterprises reduced the consumption of recycled resources, causing the operating scale of recycled resource recycling and processing enterprises with tens of millions or hundreds of millions of yuan in initial investment to shrink, and production capacity could not be fully released, resulting in a decline in economic benefits and a reduction in the amount of recycled resource recycling and processing. A large number of small and medium-sized enterprises are in a state of shutdown or semi-shutdown, and the operating rate of some large enterprises is less than 60%. According to a survey, the recycling and processing volume of 17 large scrap steel processing enterprises in the Beijing-Tianjin-Hebei region decreased significantly in 2014, with four enterprises completely halting scrap steel business for the whole year. Currently, the profitability of recycled resource recycling enterprises is continuously deteriorating, and the recycled resource recycling industry is operating in a difficult environment.
5. Changes in the structure of employees, increase in the number of itinerant scavengers
In 2014, with the construction of new urbanization, the continuous improvement of human-based urbanization and ecological environment urbanization levels, the increase in labor costs and environmental protection costs of industrial development led to a significant increase in labor costs, making it difficult for formal recycling businesses to operate. Some recycling enterprises invested in and introduced mechanized recycling and sorting lines to replace manual labor by workers, causing some workers on the sorting lines to be laid off. In addition, some recycling enterprises switched to other industries, also causing some employees to be laid off. However, with the continuous increase in the amount of waste generated, a large number of informal recycled resource recyclers (scavengers) are active in the recycled resource recycling field, causing changes in the structure of recycled resource employees. According to incomplete statistics, the number of employees decreased from about 18 million last year to about 15 million, while the number of urban scavengers increased by more than 2 million.
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