The Chinese ‘Green Fence’ initiative in 2013 was a shock to the system for exporters of recycled material who had never had to worry much before about the quality of what was sent to China. It lasted only 10 months but the effects are still being felt in the UK.
Green Fence involved implementing a set of regulations enacted nearly two years earlier but had laid dormant. It took many by surprise and companies had to come to terms with Chinese officials getting tough, particularly for plastic imports.
In 2013, as many as 70% of containers with recyclates arriving at their ports were inspected. It is estimated that the percentage rejected was as low as 0.04%, but it still meant that there were around 22,000 rejected containers in the first 12 months while scores of import licences were withdrawn from Chinese operators.
Bloomberg journalist Adam Minter, who grew up in a US scrap family business, documented the Chinese import industry at this time in a well-received book, Junkyard Planet. MRW interviewed him in early 2014 about the supply chain, when he said: “Green Fence really scared people… I don’t think we are ever going to return to the situation we had in, say, January 2013.”
He has now given this update to MRW: “Chinese demand for imported secondary materials is going to continue to weaken in coming years, primarily due to the development of robust domestic supplies of recyclables. This isn’t any great surprise. As Chinese incomes have risen, solid waste generation has risen in parallel and that trend will continue.
“Environmental and tax regulations targeting imported recyclables will also have an effect. The biggest impact will be on mixed and lower grades of recyclables, and smart importers will figure out economical ways to upgrade their products to get around these restrictions.”
That is the challenge for today’s exporters to China: delivering higher quality products into a country that insists on higher import standards while growing its own domestic recycling market.
The alarm bells have been ringing in Daventry, headquarters of the Recycling Association (RA), which developed out of the Independent Waste Paper Processors Association. The RA was launched in 2009 and has more than 80 members with a combined turnover in excess of £2bn, representing businesses dealing with materials other than paper.
Chief executive Simon Ellin has recently visited China to see the arrival of his members’ products at first hand. He told MRW: “China now has more choice of where they can buy material from. People from a mill group I met there said their preferred supply was from Japan because the material is very clean and Japan is close. The quality is fantastic.
“The second tier is US, UK and Europe. China is increasingly using its own domestic supplies but the fibre quality is not as good as western material: western cardboard has a longer fibre and a better yield.
“We know they like our material: fibre quality is generally good, we have an established port infrastructure and an established industry. The key challenge is that we need to be seen by China as la creme de la creme.”
It is not only an issue for paper recyclers. Damien van Leuven, director of Northern Ireland plastic business Vanden Recycling, says China is demanding cleaner materials.
“They are inspecting all of the factories that have import licences,” he told MRW. “I don’t know what parameters they are getting tight on, but they are certainly getting strict on which factories are going to get a renewed import licence in 2017. They check what quality of processing they have and their ability to deal with pollutants and waste water treatment, for example. It’s not necessarily about importing – they do this to prevent onward trade to factories that are not at the same standards.”
The uncertainty over imports has a knock-on effect for the UK market, and China is issuing fewer licences. It can mean lower volumes going to China temporarily, with shipments having to be sent to alternative markets in Europe, Malaysia, Taiwan or Vietnam.
Ellin observed the regime at Chinese ports during his Far Eastern visit: “They said they inspected 60% of all con-tainers that arrive and put them through an x-ray machine to see what is in them.
“Ten percent of that, about 30 containers a day, are checked by hand. Everything is taken out to see if it meets the specification. If it looks like it doesn’t, they will take the material to another area and break it down to see if there is anything untoward in there.”
As our monthly paper report indicates (page 51), the sector is hugely dependent on exports – and therefore the ability to send into China. The biggest UK operator is Mark Lyndon, and it is estimated that no other UK business sends as many containers from British ports than this Nottingham-based concern.
Managing director Colin Clarke says his company places great emphasis on maintaining standards at home and accepts obligations imposed by the Chinese: “We have four quality inspecinspectors travelling the UK looking at our shipments to measure the moisture in the material before it gets shipped. It’s the law, and the end result will be that it will improve the quality of the material that mills receive.”
Mark Lyndon’s operation is of a scale and reputation that permits self-inspection. But a residential street in the East Finchley area of London is home to the UK division of the China Certification & Inspection Group (CCIC) which oversees pre-inspections for accreditation of secondary materials for export to China – including Mark Lyndon’s.
It is an independent business set up by the Chinese in 1991 and has sole responsibility for pre-inspection in the UK and Ireland. Without CCIC approval, no consignments will be accepted at Chinese ports, although MRW understands from other sources that alternative agencies could be introduced by Beijing to increase competition.
CCIC London managing director Shouyun Huang says the company works with other exporting industries, including food and manufacturing, offering services and advice in terms of market access and safety standards.
“We provide only inspection services but, when the consignment arrives in China, the receiving port authority has a supervision role. Our data will be transferred to theirs to check everything is in order. So, on top of our inspections, there are other checks.”
So far this year, the authorities in China have rejected 11 containers from the UK for various reasons while, at home, 173 have been rejected by CCIC The company sees this as evidence that the pre-inspection regime is strong.
The CCIC signed up to Ellin’s association in August in a move seen as demonstrating “the increasingly close working relationship” between exporters to China and regulatory agencies. The link was backed at the time by exporter Cycle Link International, whose holding president, Lai En, said stronger links between China and the UK were vital.
“By improving quality, we are also protecting the future of the UK recycling sector by ensuring that Chinese mills will always look to the UK as a key market, especially because it increasingly has a number of different countries to choose from, as well as its own growing domestic market,” Lai said.
The RA launched its ‘Quality First’ campaign in September (see box) in a bid to hit illegal and irresponsible exporters while proving to the Chinese that UK can be a ‘premium’ trading partner. Ellin said. “We are trying to weed out those who deliberately try to bypass the system. We need to make sure that no material is rejected in China and to work alongside the CCIC to make sure there is no defrauding going on.”
China is not alone in requiring pre-inspection. Indonesia has a similar system and MRW understands the Indian government, which has been tightening up regulations around secondary materials, is considering licensed pre-inspections. Insiders say it can only be a question of time.
The challenge to deliver high-quality, legal exports is set to intensify.
Quality first goals
- Eliminate the deliberate trade of sub-standard and illegal-quality materials for reprocessing
- Highlight the positive work of members to improve quality
- Raise awareness of the importance of material quality
- Educate the supply chain on its part in improving material quality
- Act as a hub and facilitator, working with regulators worldwide to improve quality
- Promote 1.5% maximum out-throw for paper, as detailed in EN643 and accepted in China and throughout Europe (with other material standards to follow)