Recyclers wrestle with making waste pay

Updated 2018-02-07 10:15:02

Browsing my phone, an app's advertisement caught my eye as it promised a door-to-door collection service for used goods. I was glad I could wait at home to have my used appliances and furniture recycled rather than hunting for an agent to help.

But tracing the link to visit the app, I was told its services had been suspended "as the company needs to adjust its business."

"We have to find some other work which can make profits, planning to put forward new services such as clothing and book recycling later this month," said founder Xu Liang, general manager at Shanghai Tianying Environmental Technology Co. "We can't hold on after four months' losses."

Unfortunately, that scenario might be common with China's online recycling startups.

Before Xu's Shanghai-based app, named Duansheli — a Chinese transliteration of the Japanese word Danshari, which means to separate from useless goods — suspended its services at the end of last year, its rivals such as 9beike in Hangzhou went bankrupt in 2016 after one year's operation, while Zaishenghuo in Beijing had struggled into an online housekeeping service provider from a recycling business to stop losses.

"We haven't seen a successful case by now," said Zhang Chu, vice president at Leading Capital who is specialized in environmental industry investment. After five years' work there, Zhang has not invested in any project relevant to recycling, "as there hasn't been a practical profitable model, let alone trials among startups."

Two to three years ago, the Internet seemed to be a savior for China's stagnating waste sorting and collecting industry, with online service providers emerging across the country in line with the soaring number of computer users.

Tan Biao, founder of 9beike.com, the "poster child" winning US million of angel investment when it was created three years ago, said: "We've met the right time for recycling and waste sorting" after the fundraising.

Misread or too early?

But after falling apart in such a short time, did those recycling "geeks" misread China or were they just too early?

Xu would disagree he misread China.

Teaming up with five colleagues six months ago to work on waste sorting and recycling, they were sure "our products need to adopt digital technologies as a way to reach young people," said Lu Jingxuan, Xu's partner specialized in marketing and communications.

They do have some reason, given that their platform attracted 15,000 users in two months.

9beike was also applauded for attracting 100,000 users in three months when it started.

"Because it helped me treat my used goods in an easy way with some rewards, both materially and spiritually, rather than throwing it away," said one of its users in an interview.

While in the old days junkmen had to stay in one spot at a fixed time to collect used goods, "nowadays we can gather enough orders before sending workers to pick up goods at different communities," Xu said. "And it turns out they like this way."

Apart from being able to place orders anytime at any place rather than looking for a waste collecting station, smartphone apps also made users more interested as they could be repaid either in cash or "credits" to exchange for goods such as movie tickets and supermarket coupons.

Meanwhile, they broke with the traditional publicity which the government has used for a long time to educate residents, normally in collaboration with local communities to put up some posters or to broadcast some videos.

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