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China jumps into e-waste initiative
By Li Weitao (Business Weekly)
Updated: 2004-12-01 14:30

China has taken a big step towards establishing a collection and recycling system for waste electrical and electronics equipment (WEEE).

That is expected to affect a wide-range of appliance and electronics equipment makers from around the world, as China is emerging as both a major manufacturing base and a big market for home appliances and electronics products.

The National Development and Reform Commission (NDRC), China's top economic planning body, has drafted a regulation to prevent the stockpiling of electrical and electronics cast-offs.

NDRC has sought public opinion about the draft, and will eventually submit it to the State Council, China's cabinet.

The regulation comes as the peak of e-waste is imminent in China.

China has experienced dazzling economic growth in recent years, but the stockpiling of WEEE items, most of which are filled with toxic chemicals, poses a severe threat to China's environment and future economic growth.

Chinese leaders, especially the new cabinet, are beginning to attach greater importance to sustainable economic growth.

According to NDRC, the combined production volume of computers, TV sets, refrigerators, washing machines and air-conditioners last year in China reached 182 million units.

NDRC estimates about 900 million units of such products are currently being used in China. Of those, about 28 million units are being discarded as useless.

If the regulation is implemented, manufacturers of computers, TV sets, refrigerators, washing machines and air-conditioners will be held responsible for recycling their products.

Those firms that refuse to participate in the recycling programme will face severe punishment, which can include a fine and/or revocation of their licences.

The draft does not indicate if the regulation will apply to cellphone manufacturers.

An executive with a China-based PC maker said the regulation will have the greatest impact on PC manufacturers.

"Due to the rapid upgrading of PCs, it takes much less time for consumers to discard their older computers and buy newer ones, compared with other products, like TVs," the executive said.

The regulation, he added, will increase cost of computers.

Due to intense competition, profit margins of computers in China have become razor thin.

According to the draft, NDRC and the Ministry of Finance plan to establish a special fund to defray some of the manufacturers' costs that arise from the programme.

The ministries will work out specific measures about how to collect, use and manage the fund.

The government will also "take proactive measures" to encourage manufacturers and other parties to invest in the establishment of companies that specialize in recycling of e-waste.

Industry professionals are also urging manufacturers to pay attention to "eco-design."

Such a scheme -- which takes receipt and recycling into account -- will actually help manufacturers cut costs over the long term, said Ab Stevels, a principal in the environmental design programme at Philips Electronics.

"Chinese companies should take an 'eco-design' approach," he said.

"You should design the product in such a way so you can easily take it back and recycle it."

Some experts estimate "taking-back, recycling and reusing" a TV set could cost about 20 euros (US$26.05).

The European Union last August instituted a law to tackle the recycling of e-waste. The legislation is scheduled to take effect on August 13, 2005.

The law will ban sales of products that cannot be recycled, as well as those filled with specific toxic chemicals.

The law will affect a wide range of products, not only those within the information technology (IT) and telecoms industries. The consumer electronics, lighting, toy, sports and medical equipment industries will also be affected.

Chinese law-makers are also drafting a similar law, and experts said NDRC's regulation will be the forerunner of the new legislation.

The EU's law will negatively affect China's exports to Europe, as most Chinese firms will fail to meet the new standards.

In the year's first quarter, China's exports to Europe that fall into the category stipulated in the law, were worth US$9.72 billion.

The law will not only affect Chinese companies, but also European firms that have established a number of manufacturing facilities, which export products to Europe, in China.

Philips believes there will be very little impact of the EU law on its business in China, as the firm has long been a believer in eco-design, Stevels said.

Philips is ready to transfer know-how about eco-design to China to help the country establish the take-back and recycling system, he said.

"We have been applying the sustainability principle in all dimensions in our China business," he said.

Philips has teamed with Tsinghua University, one of China's leading universities, to teach eco-design courses.

The firm is also holding a number of seminars for its suppliers in China to share the expertise in take-back and recycling of e-waste.

Philips' annual procurement in China reached US$3.83 billion last year. Its sales in China and exports from the country reached US$7.5 billion.

Philips last year established a recycling centre in China for discarded tubes so it could recover mercury.

The centre is capable of recycling 7 million tubes annually.

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