Startups prove there's a lot of money in muck

Recycling industry expands in Beijing as residents demand a door-to-door pickup service

In the morning on the first weekend of each month, 28-year-old programmer Liang Tianlong waits patiently for the recycling man to collect his household waste, including paper and bottles.

Liang says he's gotten used to the routine after more than six months.

Nowadays, a growing number of Chinese can enjoy services like this, thanks to the development of the online-to-offline waste recycling industry.

A woman scans and installs an application for the collection of waste in Shanghai. Recycling services using apps are popular in big cities such as Shanghai and Beijing. Yang Yi / For China Daily

New Living (Beijing) Information Technology Co is a startup at the heart of the sector, which was established two years ago. It has developed an application that provides a regular door-to-door recycling service for waste - including plastic bottles, cans, paper and old electronic appliances.

Having won itself a solid customer base in the capital, New Living is striving to carve out a self-sustaining business model, according to Xia Fan, its CEO.

"As scrap prices are declining, the company's innovative business model is showing advantages in dealing with the challenge," Xia says.

Besides recycling, the app also provides e-commerce services, enabling its users to purchase fruit and vegetables online and to hire housekeeping or repair services.

Such services are not uncommon on other O2O platforms. But Xia says his company's increasingly mature logistics system gives it an advantage over competitors.

"When collecting the waste, the worker can also deliver what the clients ordered online. That's how we reduce costs and improve logistics efficiency," Xia adds.

Xia says he believes such "reverse logistics" represent a sustainable business model and will add to the returns in the recycling business.

To date, New Living has built up a recycling team of more than 300 workers who serve more than 200,000 families in 800 communities in Beijing.

The amount of wastepaper New Living recycled in 2016 more than doubled to 6,500 metric tons from the same period the year before. In the same period, the number of plastic bottles and cans processed totaled 36 million, up 38.5 percent from a year earlier.

In the past few years, many startups have begun to compete in the industry, especially after the government released a six-year plan on building up a recycling system for renewable resources starting in January 2015.

According to statistics from the Ministry of Commerce, China's top 10 categories of recycling renewable resources in 2015 were worth 514.9 billion yuan ($74 billion; 71.2 billion euros; 60.5 billion).

Li Yinan, an analyst at China Co-Harmony Investment Fund Management Co, says companies need to establish a sound and sustainable strategy.

"A door-to-door waste recycling service is demanded by many individuals. That means tremendous market potential ahead," Li says.

"For household waste, however, the profit margin is relatively low. O2O startups in this sector need large-scale operations."

Tian Yuanyuan contributed to this story.

jingshuiyu@chinadaily.com.cn

(China Daily Africa Weekly 01/06/2017 page29)