From 1st July (2019) SH introduced a mandatory sorting scheme meaning that residents have to sort their trash into 4 categories: 1) recyclable 2) hazardous 3) wet & 4) dry. The problem is that the category definition isn’t that clear: eg chicken bones count as wet but pork bones are classified as dry waste. Throwing things into the wrong bin can mean fines of up to 200RMB (€26) for individuals or 50000 RMB (€6500) for companies, and repeat offenders risk having their social credit score lowered. Because of this, the Guardian described the scheme as a kind of eco-dictatorship. The government is pushing hard to be seen to be taking actions on environmental issues and after seeing the results from the SH pilot clearly is expecting to roll out the scheme nationwide. So where are the opportunities for exporters? Obviously, firstly in waste management. China has tried and failed to introduce schemes in the past but seems determined to follow up their refusal to deal with international waste with domestic programmes. There are already signs though that they will struggle to implement this law due to a lack of infrastructure.
Secondly in waste reduction. The Chinese public (especially in lower tier cities) have little or no knowledge about avoiding waste, nor are they presently incentivised to learn. However, once this scheme is rolled out across the country western manufacturers may be able to cut back on the more elaborate packaging often used for China, making it more convenient for consumers to dispose of. In SH food delivery services have seen a 60% rise in consumers checking the box for “no cutlery needed” as it’s so inconvenient for them to consider how to dispose of it correctly. Traditionally Chinese consumers have perceived more packaging as a sign of product quality, however a change in mindset might be about to begin. Of course, reducing packaging isn’t only better for the environment, it also brings cost reductions for you as a manufacturer.
Thirdly there are opportunities to be had in the sector of education, but also convenience. If you as a brand owner can assist your consumers to more easily comply with the law then this can lead to more sales. Promotions with an educational element, or gasified approach to recycling could be effective marketing measures in the future. As an example Alibaba’s Alipay has introduced an AI scanning tool to help recognise which bin garbage should be placed in and according to their statement 12 million users have tried it already.
Key to success, as in all opportunities in China, will be speed to market. The earlier you can take action the better your chances of success, although for sure it will take some time to really implement these laws across the whole country.
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