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By Nina Ying Sun PLASTICS NEWS STAFF
Lam talks about the state of plastics recycling in China

How would you quantify the current state of China’s plastics recycling industry?

Lam: China is the final destination of 70 percent of the world’s plastic waste. According to my estimate, China recycled about 8 million metric tons of plastic waste in the year of 2007. We also know that in every 100 metric tons of plastic products made in China, close to 30 metric tons of regrind is used. We don’t have an accurate count of all the players in the industry, because many of them are very small, and also because the industry is very dynamic. The players, including leaders, are undergoing changes.

What specifically do you mean by ‘changes’?

Lam: First, the ban of imported post-consumer plastic bag and film waste will disrupt the supply of materials and drive up prices. The lack of steady supply [of waste] is a major challenge. In this market condition, the industry is completely controlled by waste suppliers. Processors have no choice but accept waste price hikes. Second, China’s latest labor law will force the labor cost up at least 20 percent. Since plastic recycling in China is essentially labor-intensive, the impact will be substantial, especially to mid-to large-size companies. You know, tiny companies don’t abide by the rules anyway. Meantime, other environmental policies are also tightening. Therefore, the overall operating costs of running a recycling plant in China will keep rising.

Where do you see the recycling sector headed?

Lam: Let’s first take a look at where the industry has come from. Plastic recycling started in mainland China in the 1980s, when some recyclers from Hong Kong started factories in Dongguan, Guangdong province. However, decades later, China’s recycling industry still uses little [of the] latest technologies, relying on manual sorting. But as labor costs go up, labor-intensive treatment will be replaced by machines. It’s predictable that as the industry upgrades and standardizes, many companies will phaseout.

Will the sector see a slowdown?

Lam: After many years of exponential growth, the industry has entered the stage of stable growth.

Your company, Humble, Texas-based T&T Group Inc., makes wood-composite products in China but markets them worldwide. How’s business going?

Lam: We make wood-composite decking, fence, railing, pallets, etc. To give you an idea, we ship 1,000 metric tons of products every month outside of China, and about half comes to the United States.

Another speaker pointed out that freight could be a barrier for your business model. What’s your take on that?

Lam: Many don’t realize that freight cost from China to Los Angeles is very similar to the cost from the East Coast [of the United States] to the West Coast. So in terms of the West Coast market, U.S. manufacturers with production in the east don’t really have an advantage over Chinese companies when it comes to logistics. But of course, they still have huge advantage on the East Coast.