HONG KONG — In a nondescript building shaded by palm trees in semirural Hong Kong, you can get a glimpse of the future of the recycling business.
Here, far from downtown's gleaming skyscrapers, is longtime scrap broker Fukutomi Co. Ltd.'s latest initiative to become a vertically integrated plastics company — and cope with tough environmental regulations from the mainland.
On the concrete floor inside, employees feed “Wal-Mart film” — industry jargon for the low density polyethylene bags and film used to wrap shipped goods — into a state-of-the-art shredder from Austria's Lindner Recyclingtech GmbH. Once shredded, the plastic passes on a conveyor belt beneath powerful magnets that snatch up twist ties and other bits of embedded metal.
Another pair of employees shovel the shreds into an extruder from Erema Engineering Recycling Maschinen und Anlagen Ges.m.b.H, also of Austria. The machine's $2,000 filter removes wood, dirt and even water; this waste is used in asphalt paving. The purified plastic is extruded, cooled, cut into pellets and bagged for shipment across the border into the heavily industrialized Pearl River Delta.
Fukutomi director Udo Wong, who is in charge of mainland sales, said that while the machinery can be modified to handle just about any type of plastic, the facility focuses on turning out LDPE pellets.
Until a few years ago, Wong explains, closely held Fukutomi (2014 sales: HK$1.06 billion, about US$137 million) would have shipped the scrap directly to Chinese buyers, primarily in the Pearl River Delta. But in 2013, Beijing instituted tough new controls — popularly known as the “Green Fence” — on importing mixed and unclean scrap.
“In the long run, [the Green Fence] is good for the country and also for business. In the short term, it's a real challenge,” Wong says. “This is part of our solution.”
The high cost of doing business in Hong Kong — even here, in Yuen Long village — prompted Fukutomi to invest in the costly European machinery. That filter may be pricey, but it needs to be cleaned only three or four times a year, saving on labor.