BEIJING — A PET bottle-collecting machine that pays users through their smart phones? An app that you can use to order pickup of recyclable items from your home?
One Beijing company is trying to bring recycling into the “smart” era — and make money at it.
In China, municipal governments do not generally engage in recycling efforts as they do in many other countries. An informal network of cargo-tricycle-riding scrap collectors who buy bottles from urban residents and then sell them to small recycling facilities has long dominated the recycling industry here.
But unregulated recycling practices can create water and soil pollution. Incom Resources Recovery Recycling Co. Ltd. was started by three business school classmates back in 2008. The trio is trying to modernize and put in place a more regulated recycling system in Beijing.
Their company manufactures and monitors smart PET bottle collecting machines, also known as reverse vending machines. Then they manage where those collected bottles are sent for recycling, partnering with government-approved facilities that pass environmental standards.
The company is a subsidiary of Incom Resources Recovery Co. Ltd., one of the only Chinese companies that can produce high-quality recyclable bottle-grade polyester chips and lists Coca-Cola Co. among its clients.
While official statistics show that consumers in Beijing use 150,000 to 200,000 tons of plastic bottles a year, Incom was struggling to source enough PET bottles to recycle because of competition from informal recyclers. Deputy General Manager Liu Xuesong said that their company was created to solve this problem.
“As we started out, we found the bottleneck. We just can't get enough raw materials. Our parent factory has the capacity to process 50,000 tons of PET bottles a year, but the facility wasn't working for more than a half of the year. We didn't have enough raw materials, and we couldn't purchase enough.”
Liu and her two cofounders, company President Yang Guangze and General Manager Chang Tao, started a company with the simple aim of trying to help their parent company source more bottles.
The three, all idealistic and entrepreneurial graduates of the China Europe International Business School's EMBA program had a goal: bring the recycling industry into the IT age. According to a profile in a CEIBS alumni publication, Yang wanted to use IT solutions to bring the manufacturing and environmental protection industries to the next level.
The three decided to place bottle-collecting machines in public spaces that informal scrap collectors could not access, like airports, subway stations, schools and hospitals. Originally they planned to source the machines from a supplier, but in the end they realized they needed to develop their own. By the end of the 2012, with support from a government subsidy from the National Development and Reform Commission, their first four machines were put into a subway station in downtown Beijing.
According to Liu, the first machines were definitely a work in progress.
“At the beginning, there were lots of problems with the machine. We had to stand right next to it to make sure it was working right.” Now the machine is in its fifth revision and 150,000 people are recycling bottles at 1,323 Incom machines that dot the Beijing landscape.
The machines attracted a lot of attention, with news reports by local and state media helping to promote the initiative. One of the most attractive aspects of Incom's recycling machines for consumers is that they pay almost double the price that informal scrap collectors do. For each PET bottle consumers are paid a steady rate of about 1.6 U.S. cents (RMB .10). Scrap collectors pay an average of 0.9 cents (RMB .06) per PET bottle, depending on the fluctuating price of petroleum.
The company has plans for rapid expansion. By the end of 2015, it plan to have 3,500 machines installed in Beijing and 5,000 by the end of next year.
“We want to focus on Beijing, so it is a great model that can be copied in other cities,” said Liu. By the end of this year Incom will bring 500 machines to cities in Guangdong, Shandong, Chongqing and Shanxi provinces.
Because the company is using the machines to monitor bottle collection, it will have access to a lot of valuable data.
Liu opens up an app on her smartphone and shows off detailed diagrams and charts. One shows the number of bottles collected so far by Incom's machines. As of early July, the company has collected and recycled 7,000,697 bottles since its first machine went into operation in late 2012. Another shows the figures for each day. The app shows data on who is recycling and where they are recycling. Some people use smart cards to get reimbursed, while others use their phone.
The data makes the system attractive not just to consumers, but to big brands and the government as well. The machines collect information from scanning bottle bar codes and can provide a picture of current trends in consumption and recycling. For example, there are statistics being collected of which brands are being consumed. For now, Liu said, Incom gives this data for free to the government and brands they sell advertising space to.
Incom can also use the system to track where the bottles are going for recycling.
“We use the Internet to monitor the recycled rubbish and make sure that it goes to legitimate factories where it is processed without [causing] pollution,” Liu said.
The challenges that Liu and her colleagues face are great, but they are banking on the hope that if they can crack the challenge, their success will bring great rewards.
“Not a single company of the recycling industry in China has a [integrated] recycling system. This is our biggest advantage at present,” she said. “It's really difficult to collect and to build a recycling system. But there also lies the most opportunity,” she added. “So we feel that if we can build up this system, it'll be really valuable for our company. It'll be our core value, because even governments can't really build such recycling systems in the cities [here].”
Liu and her team also plan to expand to recycle other materials, including other plastics, paper, glass, metal, consumer electronics and fabric. This month they will roll out a door-to-door service where users can use a smartphone app to call a collector to come to their home and pick up recyclable items.
“That will bring us the large amounts of the raw materials that we need. Recycling machines should help collect one part and door-to-door service another part, so I estimate that the [total] amount will be quite OK by 2016,” Liu said.
As its stock of raw material grows, the company is working to develop products made from recycled PET.
“Without added value, it's hard to make money in this line [of business],” she said. Incom is working with a Japanese designer on a line of stationery made from recycled PET.
The pressure is on for the trio to be successful. Liu said they want to be good models for other entrepreneurs.
“It's really difficult to make money in our line. We do want to do environmental protection. [But] if you don't make money, we won't be a good model, because people will think it's too hard to do environmental protection and won't go into it for their career.”