Workers in the recycling bin are sorting out plastic bottles.
Original Title: Waste Classification Shock Wave: The Era of Garbage Collection and Wealth Creation Far to the Spring of Internet Entrepreneurs
A variety of characters passed by. There are also rivers and lakes in the garbage classification and recycling industry.
If we follow the industrial chain of garbage disposal, all seemingly unrelated people in every link can be attributed to the theme of “recycling”: the bottom scavenger who earns 100 yuan one day, the scavenger owner who is known as “the ruined king of the capital” and the super-rich of 10 billion people, and even the self-proclaimed “second generation of waste” uses the Internet. Technology is a young entrepreneur of garbage recycling.
During the acceleration of China’s industrialization in the 1990s, selling scrap steel became a means of accumulating wealth. The scavengers constructed the initial rough skeleton of the industry and brought the earliest story of becoming rich. With the advent of the Internet and mobile Internet, young entrepreneurs have brought fresh ideas, Internet thinking and influx of capital to the industry.
Until this summer, the promotion of the compulsory waste classification policy has brought this group back to the spotlight. Under the new policy environment, their lives have either evolved into different versions or moved in different directions.
Gathering wastes: Some people make 100 yuan a day, others make “junk king”
At noon in August, a sanitation center on a street in Chaoyang District was busy clearing the first wave of garbage that day. Waste collector Tao Yu (pseudonym) skillfully searched in a bag of discharged garbage. In just an hour, he had a wealth of trophies: two bags piled up half a person’s tall plastic bottles and three bags of waste paper.
Tao Yu has been working in Beijing for three years. He sometimes picks up waste. He can earn about 100 yuan a day by picking up waste.
In the afternoon, Chen Yang (a pseudonym) parked his brown van at the roadside. Half a year ago, he also started picking up waste, riding three rounds, turning over the garbage cans from one neighborhood to another. Now he has saved money to play a similar role as a “intermediary” for picking up waste. The scavengers and neighboring residents sell the recyclables to him, and he then transports them to the Fifth Ring to the recycling station. He drives his truck to and fro the suburbs and urban areas of Beijing every day. He stops at a relatively fixed position on the roadside from 7 a.m. to 11 a.m. and from 2 p.m. to 6 p.m. and opens the side door of the truck.
Tao Yu sold seven yuan and seventy cents for an hour at noon. He took out a two-fold wallet from his pocket and stuffed the notes and several coins in it. Chen Yang teaches his business philosophy: “If you have a tricycle, you can pick up a hundred dollars every night from 5:00 to 10:00.”
After sending Tao Yu away, Chen Yang began to get busy, and people who came to sell waste lined up. His recycling business is run by his own family. My aunt is stacking stacks of waste cardboard in the carriage and simply sorting out other rubbish. My father rides three wheels to recycle around and stays to help when he is too busy.
Plastic bottles are six cents, easy-to-open cans are eight cents, Yanjing beer bottles are two cents, Chen Yang quickly lives the bottle in his hand, making simple additions and subtractions in his mouth, relying on the knitting bag specially used for plastics bottles on trees, and soon has been from half full to nearly full. For Chen Yang, the most valuable waste is iron. “Iron is like our gold.” Pricing varies according to different types of iron. He sold one kilogram of the most expensive waste iron for 30 yuan.
In the garbage sorting and recycling system built by the folk scavengers, Du Maozhou, formerly known as the “ruined king of the capital”, once became the big boss, and was the next level of Tao Yu and Chen Yang.
Du Maozhou was a substitute primary school teacher in Bazhong, Sichuan Province. He and his family depended on the monthly salary of 22 yuan to make ends meet. In 1989, Du Maozhou, 33, came to Beijing to pay off his family’s debts for many years. After spending his first days without relatives or job hunting, he asked his fellow countrymen to help him collect rubbish from a garbage dump.
It was the autumn of 1989, when Du Maozhou first entered a landfill in Jiaozhuang. Du Maozhou, who had done radio repairs in his hometown, was overwhelmed by the excitement of discarded radio, tape recorder and other electrical appliances in the garbage dump, which he could sell for repairs. “At that time, the garbage dump was like a treasure trough.”
After collecting garbage, Du Maozhou can earn a month’s salary back home in one day. What impresses him is that people had a weak idea of recycling, and they could also pick up large pieces of discarded copper and iron in the garbage dump. “If they only picked up copper, they could sell more than 100 yuan a day, which was equivalent to the monthly salary of university teachers in that year.”
After collecting garbage for two years, Du Maozhou is about to pay off the debts owed by his family of 6,000 yuan, which makes the people in Bazhong’s old home look very impressive. Later, with the permission of Wang Weiping, a worker in charge of garbage management in the environmental sanitation department at that time, Du Maozhou led hundreds of compatriots from Bazhong into the garbage dump in Beijing. They were able to collect 1500 yuan per month in the garbage hill, which was the high-income group at that time.
In 2005, Du Maozhou’s company, Beijing Maozhou Xueqiong Material Recycling Co., Ltd., was established in Tongzhou, and Du Maozhou was appraised as the first person in the company’s operation. In the same year, he appeared on CCTV’s “Press Conference Living Room” program, telling about his experience of collecting garbage for fifteen years.
The “richest people” in waste recycling
In fact, when Du Maozhou was on CCTV, some of his colleagues began to seek new opportunities using the raw capital accumulated by the garbage business.
In January 2004, the headquarters of Fujian Sanan Group, Xiamen’s richest man, Lin Xiucheng, moved to Xiamen to enter the electronics industry. In his early years, Lin Xiucheng engaged in iron and steel trade, reselling scrap iron and steel scraps, and earned the first barrel of gold in his life relying on the considerable profits of iron and steel trade.
Wang Guoqing, director of Langer Iron and Steel Research Center, told Beijing News that scrap steel acquisition is a common phenomenon in scrap acquisition, which began in the market economy.
Lin Xiucheng later in an interview revealed: “Originally I started as a hardware factory, steel plant, these are very clumsy industries. The original production of a ton of steel requires 10 tons of import and export transportation, energy consumption is too large, I feel that the prospects for such industries are not very good.
Nowadays, Sanan Group has become a diversified enterprise group that integrates optoelectronic high-tech, optoelectronic biotechnology and III-V compound semiconductor integrated circuits. According to the annual report of 2018, the total revenue of Sanan Group during the reporting period was 31.158 billion yuan.
In 2018, Lin Xiucheng and Lin Zhiqiang, father and son of Sanan Group, ranked 79 with a wealth of 33 billion yuan.
A few years before Lin Xiucheng began to cooperate with Sanming Iron and Steel Works, Fang Wei was born in Wangjiazhen, east of Shenyang City, in 1973. The young wealthy man who founded Liaoning Fangda Department in the future, who was constantly controversial and concerned about, started his own business and was also related to the resale of scrap steel.
During the interview with reporters of Beijing News, many employees of Fangda Group Shenyang Coking Gas Co., Ltd. and Fushun Carbon Co., Ltd. confirmed to reporters that Fangwei initially purchased scrap iron in Fushun, Liaoning Province, and then sold it to the local iron and steel plant.
According to employees, Fangwei’s chance to change his fate was that in his early twenties, the local steel mill, Fushun Xingang (now Fushun Xingang Co., Ltd.), used an iron ore to offset the arrears of Fangwei’s loans. Fangwei’s iron ore price has doubled in about half a year, and it has been rising in the following years. As a result, Fangwei has entered the core of the iron and steel industry, and set foot in the rhythm of China’s high-speed industrialization.
Nowadays, FangDa Group controlled by FangWei is a large enterprise group with carbon, iron and steel, medicine as its main industry, mining, real estate and other industries. It owns four listed companies: Fangda Carbon, Fangda Special Steel, Northeast Pharmaceutical and ZTE Commerce.
In 2018, Fangda Iron and Steel completed its annual business income of 63.398 billion yuan, with a total profit of 13.595 billion yuan. In 2018, Fangwei ranked first in the steel industry with a wealth of 45 billion yuan and became the “richest man in steel industry”.
For Lin Xiucheng and Fangwei, the reselling of scrap steel is the initial lever to leverage the wealth code under certain historical conditions, and is also the initial link of the industry chain.
However, with the change of industrial policy of waste disposal, the narrative of making fortune relying on scrap iron and steel business may not be repeated.
Where is garbage collection going? Somebody hesitated, somebody left.
On August 7, volunteers were on duty at the garbage bin in a small district of Shanghai. B06-B07 layout (except signature)/Visual China
Since July 1, Shanghai Municipal Domestic Waste Management Regulations, known as “the most stringent in history”, have been formally implemented, and waste classification has entered a “compulsory era”. Beijing, Hangzhou, Guangzhou and other 46 cities in China will also promote waste classification as key cities. The general trend of garbage classification, where will the scavengers go?
One idea is that traditional garbage collectors will be replaced by more standardized and efficient businesses.
Huachuang Securities recently released a research report analysis pointed out that the upstream and downstream recycling channels are expected to be further standardized, provinces and municipalities will intensify efforts to rectify “small, scattered, chaotic”, the upstream, middle and downstream industries at the same time, and various enterprises are expected to strengthen the infiltration of terminal channels through the implementation of waste classification policy, recycling efficiency, recycled goods. The level of disposal regulation is expected to be greatly improved.
On January 13, residents of a residential district in Yongfeng, Haidian District, Beijing, were using an intelligent garbage collection system.
When it comes to the classification of garbage that Beijing will begin, Chen Yangton gave a meal. “It’s definitely not easy to do (garbage recycling). It’s really impossible to do something else.”
Liu Yuanju, a researcher at the Shanghai Institute of Finance and Law, told Beijing News that in front of the rubbish sorting outlet, scavengers should not be forgotten: “China’s original market-oriented and mature waste recycling system should not be absent or excluded in this wave of rubbish sorting.”
With the closure of garbage buildings around 2009 and stricter management of landfills in Beijing, hundreds of recycling companies are facing relocation. Du Maozhou was impressed by the demolition of recycling companies in the Fifth Ring Road in 2013, and the demolition became more common in 2017. According to Wang Weiping’s statistics, the number of scavengers in Beijing reached a peak of 150,000 in 2009, and then began to shrink.
Maozhou Xueqiong Company ended in September 2017. Du Maozhou heard the news that a wetland park was to be built in the location of the plant. Before the demolition, Maozhou Xueqiong was still operating normally, but the number of workers in the factory area has dropped from 1000 to more than 100 people during the peak period. They still do the sorting, sorting and packing of garbage. The finished glass, plastic, metal and so on are transported by the follow-up buyers. The monthly salary of this job is 56,000 yuan. Maozhou Xueqiong maintains a monthly income of 2 million gross profit and more than 100,000 net profit, which has remained unchanged for many years.
After the factory was demolished, Du Maozhou spent more than a month to pay and compensate good workers, and then left Beijing, where he chose to retire.
Speaking of the current garbage classification, Du Maozhou, who has dealt with garbage for 30 years, is doubtful. He worries that the residents do not know enough about the classification at present, and that the pressure of collection and disposal may lead to problems.
Du Maozhou classifies himself as the kind of person who has realized his dream in Beijing. He remembers that when he first arrived in Beijing, he was impressed by the impression that “people of insight in Beijing can make great achievements”. “Beijing is my second home of entrepreneurship. It has changed my destiny and life here.” Du Maozhou repeated what he said on CCTV many years ago.
Internet Gene Access: Former Microsoft Engineer and Second Generation Waste
At a time when the big billionaires and small people in the garbage disposal industry chain are hesitant due to policy changes, a group of young people born in the Internet era are sniffing new business opportunities.
Back 12 years ago, Wang Jianchao, the founder of Aubei Environmental Protection, worked for Microsoft in Beijing. Wang Jianchao recalled to reporters that the opportunity to throw himself into garbage disposal was created by a photographer named Wang Jiuliang, who spent three years searching for and visiting more than 400 garbage dumps around Beijing, taking pictures and marking the location on the map, and finally forming the work of “Garbage Besieged City”.
Later, Wang Jianchao left Microsoft for Chengdu to serve as the CEO of Green Earth, the first enterprise in China to provide all-ecological services for waste management, taking advantage of the favorable environment of the Chengdu government’s garbage classification policy.
This is Wang Jianchao’s first venture. In March 2017, Wang Jianchao started his second venture, or environmental protection industry, this time as a waste classification and recycling platform Austria North environmental protection. After reflecting on the green earth model, Aubei Environmental Protection abandoned door-to-door recycling and setting up recycling boxes in residential areas, and chose a lighter model – cooperating with recycling points, residents buy recycling bags on their own, fill them and put them in recycling points.
Besides the importance of business model, Wang Jianchao has changed from green earth to Austria-North environmental protection, and his thinking about cooperation between enterprises and the government. Government purchases of services once accounted for more than 50% of green earth income. Wang Jianchao wondered whether such a model would be sustainable.
So Wang Jianchao made what he considered to be the most difficult decision since he started his business: not to invest in the government, but to “do it alone”. On the other hand, both entrepreneurship focuses on garbage classification with strong natural public welfare. The new Austrian environmental protection is inevitably labeled as “social enterprise”, but Wang Jianchao said at the beginning of the second entrepreneurship: “We think we are a commercial enterprise, and we should strive to improve our ability to make money.”
Investment is coming soon. At the end of 2017, Aubei Environmental Protection received seed financing from Fengrui Capital. In January 2019, Aubei Environmental Protection received tens of millions of dollars in Angel round financing from Beijing East and Fengrui Capital. Ma Rui, Vice President of Fengrui Capital, told Beijing News that investing in Austria-North environmental protection is not to catch up with the wind, but based on long-term value judgment.
Like Aubei Environmental Protection, Xu Yuanhong’s company Love Classification was also listed in 2017. Unlike Wang Jianchao, Xu Yuanhong’s classification of love is inherited from his father, who laughs that he is “the second generation of waste”.
In the late 1980s, Xu Yuanhong’s father went to Beijing from Henan Province to work hard. After changing jobs, he chose to collect waste products. The most direct consideration was the income. “My father found that when his travel tool was a motorcycle, his fellow countrymen who collected waste goods in Beijing had started a minivan.”
Xu’s income from collecting waste products has brought a relatively stable life to his family, which is also enough for Xu Yuanhong to study. Later, as the city moved out, Xu’s business covered the whole Changping District from the waste recycling market of Dongxiaokou Town, Changping District, Beijing, and obtained full license qualification in this field.
Around 2014, most of the waste recycling markets in Dongxiaokou Town, where Xu has worked for nearly 20 years, have been demolished and relocated. Xu Yuanhong, who has graduated from Master’s degree and worked in an investment company, accidentally chose to take over his father’s class and became what he called “the second generation of waste”.
“I have found more social value in it, and garbage sorting and recycling is a meaningful thing.” Thanks to the background of Xu Yuanhong’s graduation from computer specialty, Ai Classification, as an Internet company born out of the traditional garbage sorting and recycling enterprise, is doing garbage sorting in a more Internet way.
At the end of 2017, Ai Classification was introduced into Chengbei Street of Changping District to carry out the pilot work of garbage classification. According to the People’s Daily report in March this year, the report card submitted by Ai Classification showed that since Dongguan Nanli District launched a year of fixed-point delivery of wet garbage and free door-to-door collection of small pieces of dry garbage for half a year, the total amount of garbage has been reduced by 40%, the utilization rate of resources has increased from 40% to 95%, and the accuracy rate of residential garbage using Ai Classification is 95%. The expenditure on fine garbage management can be saved by 30%.
Garbage entrepreneurship is not always successful
Under the policy background of garbage classification and recycling promotion, Wang Jianchao and Xu Yuanhong felt the pursuit of capital. Wang Jianchao receives contacts from 34 investment institutions every week. Xu Yuanhong says that more than a dozen investors from Shanghai have approached him this year.
However, not all entrepreneurs have come down in the “garbage classification + internet” arena. Small Yellow Dog, an intelligent waste sorting and recycling enterprise born in the same year as Austria North Environmental Protection and Love Classification, was a pioneer in the industry, but has declared bankruptcy and reorganization.
Tang Jun, the founder of Little Yellow Dog, was born in 1987. According to Xu Yuanhong’s definition, it is also “the second generation of waste”. In his early years, he did waste recycling business at home. According to Tang Jun’s version to the media, when he was about 9 years old, his family went to the factory to clean up iron slag, dismantle machinery, motors and other scrap iron and sold it to the scrap station, earning 430 yuan. “From then on, I knew the value of all kinds of scrap such as copper, aluminum, stainless steel, alloy and so on.”
Before the founding of Little Yellow Dog, Tang Jun had been in the capital market and capital circle for several years. In 2012, he launched the group lending network of P2P online lending platform. In the same year, he photographed “Shi Yuzhu for three hours” at a price of 2.13 million yuan, and then entered Shi Yuzhu’s circle of friends. In 2015, Tang Jun held the new third board listed company Guangying Xia, and then borrowed Shell Hongte Precision (now referred to as “derivative technology”).
Little Yellow Dog was once favored by capital and public opinion. In June 2018, Little Yellow Dog received a round A financing of 1.05 billion yuan from Zhongzhi Group, with a valuation of 6 billion yuan. At that time, Tang Jun said in an interview with the media that he had “no feeling at all” about the valuation. He also said that he had nothing, but through nine years of business accumulation, the group now has a good revenue margin, and more than 20,000 employees. “We will take fewer detours in the future.”
Only four months after the A round of financing, in October 2018, Little Yellow Dog received another 150 million yuan of strategic financing from Easy Shit, with a valuation of 15 billion yuan. It’s almost the last highlight of the puppy’s appearance in the media.
The Yellow Dog uses the heavy asset model, deploys the intelligent garbage sorting and recycling machine in the community, and recruits franchisees in the operation. However, after the actual launch, the investment situation of Yellow Dog is not ideal, and at the same time, the equipment is gradually damaged and can not be used.
Tang Jun himself became the last straw to crush the little yellow dog. In March 2019, Dongguan police disclosed that the group lending network was investigated for suspected illegal absorption of public deposits, and Tang Jun, who is also the head of the group lending network, had voluntarily surrendered the case.
On June 6, 2019, the Derivative Science and Technology Bulletin said that the money owed by the Yellow Dog to the suppliers could not be paid normally for the time being, and the amount of the debt payable by the Yellow Dog was large. If the Yellow Dog could not eventually resume normal operation and pay the goods, the bankruptcy reorganization procedure might be initiated.
Zhu Yueyi Liangyuan, a reporter of the New Beijing News