China's electronics recycling achieves significant growth

BEIJING (Scrap Monster): The recent report published by China Business News suggests that electronics waste recycling sector has made significant progress in the country as a result of the e-waste policy introduced by the Chinese administration in 2011. However, the sector as a whole faces numerous challenges to expand further.

The report states that electronics recyclers across the country had a total processing capacity to handle up to 133 million electronic items per year. However, the facilities are operating just above 50% of their capacities, with a total of around 70 million electronic items handled every year.

The government had granted subsidies to as many as 106 electronic recyclers from the government fund set up in 2012, under the 12^th five-year plan. The country had allocated 2.81 billion yuan (US$453 million) in its budget towards the subsidy fund. Also, 629 million yuan (US$101.2 million) was allotted to various waste processing companies as subsidies in 2013.

Several e-waste recyclers have witnessed sudden boom in their business. For instance, Shenzhen-based Gem Co, engaged in electronics recycling, posted gross profits of 311 million yuan (US$50 million) in 2014. The company has formed strategic partnerships with online recycling sites, which has resulted in higher procurement volumes of e-waste. The company has also laid out plans to acquire a metal company, whereby the recycled metal can be used to create new products.

However, electronics recycling sector still faces major challenges, said industry experts. The average gross margin of e-waste processors in the country is around 10%. The 17% VAT on scrap purchases is one of the major reasons for the low margin. However, despite all these challenges, the Chinese electronics recycling industry has continued to witness major acquisitions during 2014.