Fortune - 04.2020

(Wang) #1
78 FORTUNE APRIL 2020

National Sword. The country had long allowed enormous
quantities of plastic-waste imports. But the vibrant
industry that sprang up to process that waste eventually
prompted complaints about the pollution it generated. To-
day, China will accept only waste that’s almost completely
uncontaminated— a threshold barely 1% of items can clear.
Globally, about 111 million tons of plastic waste will need
to find other destinations within the next decade, accord-
ing to the University of Georgia College of Engineering.
China’s actions shut the pipeline that had made Wong
rich. He estimates his business has plummeted more than
90% since National Sword, and he has closed all but five
of his factories. Now he makes most of his livelihood as a
middleman, brokering waste to the thousands of recyclers
that have opened in response to China’s drastic change.
Many have relocated from China to Thailand, Vietnam,
and Malaysia, drawn by cheap land—and even cheaper
labor, in the form of migrants from Bangladesh, Pakistan,
and Myanmar.
Venturing into the factories of Wong’s customers shows
just how labor-intensive the work can be and why com-
munities might not want the factories as neighbors.
Inside, workers comb through containerloads of plastic
waste. They sort through used plastic, separating materials
such as PET (polyethylene terephthalate), which is widely
used in drinking bottles and packaging, and LDPE (low-
density polyethylene), the plastic in throwaway shopping
bags. Each of the hundreds of polymers requires different
processing. Once sorted, the waste is machine-washed and
turned into yarn-like string. The string is then fed into a
grinder, which turns it into pellets the size of grains of rice,
known as nurdles. Recyclers pack the pellets into bales and
sell them back to manufacturers as raw material. Much of
the supply goes to factories in China, where it reenters the
consumerism bloodstream as material for car parts, toys,
water bottles, and thousands of other products.
The process is remarkable—but it has never been close
to 100% efficient. Many polymers that users try to recycle
are too low-grade for manufacturing. Soiled and damaged
plastics often can’t be repurposed. And the price pressures
created by the virgin plastic glut have only disrupted things
further. “At the moment, there is no economic value to

(On another afternoon, at another meeting,
a Chinese factory owner plied Wong with
homemade rice wine. As his wife cooked
up a spread of Chinese dishes for us, he and
Wong tested plastic samples in a rickety
toaster oven.)
In Ipoh, Yeong agrees to buy about 600
tons of the polypropylene each month, for
about $228,000 a month. But he fears being
stuck with depreciating stock—a common ex-
perience these days. “Producing new plastic
is so much cheaper than recycling,” Yeong
says. “It is a very big problem for us.”
In factories across Malaysia, we hear simi-
lar tales. “If you came to me now and asked
me to start this business, you had better just
kill me,” says Yap Koon Fatt, 59, managing
director of YB Enterprise, miming a gun to
his head. Yap’s 10-acre recycling factory is
set among oil palm trees in his hometown of
Padang Serai, where he started recycling at


  1. He currently recycles about 1,000 tons of
    plastic a month. But prices for his products
    have dropped 20% over the past six months,
    and Chinese orders have dropped by half.
    In the Fizlestari factory, in Nilai, south
    of Kuala Lumpur, enormous bales of used
    water and juice bottles from Australia, the
    U.S., and Britain sit stacked to the ceiling.
    The factory brought in about $10 million in
    revenue last year, but its finished product
    sells for 25% less than in 2017, when the fac-
    tory opened. “Prices have dropped a lot, a lot,
    a lot,” CEO Cecil Chan tells me. “And I don’t
    see them going back up anytime soon.”
    Wong, 62, has heard it all before, and he
    too is feeling the economic pain. He began
    as a boy in Hong Kong—“I was in primary
    school, not even teenage years,” he says—col-
    lecting trash for his father’s small recycling
    operation. He eventually grew the business
    into a profitable enterprise, and in 2000 he
    moved his wife and six children to Diamond
    Park, Calif. By then Wong operated more
    than 20 factories across the world, includ-
    ing in Germany, Britain, South Africa, and
    Australia. He says that most years he made
    $10 million in profit from his Hong Kong op-
    eration alone. Like most recyclers, his biggest
    market was China.
    That all came crashing down in 2018, when
    China launched the ban it calls Operation


“CUT THEIR WATER,

CUT EVERYTHING.

THEY ARE GANGSTERS.”

YEO BEE YIN, FORMER MALAYSIAN ENVIRONMENT MINISTER,
SPEAKING ABOUT LOCAL PLASTIC RECYCLERS WHO VIOLATE
POLLUTION LAWS

A PLANET IN CRISIS : THE PLASTIC FLOOD

PLA.W.0420.XMIT.indd 78 FINAL 3/10/2020 4:00:16 PM

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