The used clothing recycling industry in China has formed a three-tier market structure: individual recyclers buy at about 600 yuan per ton and can resell for over 2,000 yuan; sorting plants can double or triple the price after secondary processing; export companies sell used clothing to overseas markets. Offline recycling accounts for about 80% of the industry total.

Key Points

  • Individual recyclers: recycling cost is about 600 yuan/ton, direct resale can fetch over 2,000 yuan/ton, and after dismantling and baling it can sell for up to over 6,000 yuan/ton.
  • Sorting plants purchase from individual recyclers at about 2,000 yuan/ton, and after sorting and packaging the selling price doubles or triples; some practitioners can earn annual income of over one million yuan.
  • Offline channels account for about 80% of the industry's total recycling volume; online models fall into two categories: entrances on large platforms and independent mini-programs/APPs.

Two Paths for Online Recycling

Online recycling is not just one form. One type is recycling entrances attached to large online platforms. The platforms bring their own traffic and high exposure, but for users, what they get after selling used clothes is mostly points rather than cash, and they must bear the postage themselves. The other type is independent used clothing recycling mini-programs or APPs. Promotion is more difficult, but users can directly receive cash returns, so they are more popular.

Offline Recycling Is the Mainstream

Offline recycling operates on a paid basis. Individual practitioners go into residential communities or residents' homes to collect clothes, and also set up points in communities or specific locations, usually settling with residents by weight. At present, this channel contributes about 80% of the industry's total recycling volume and is the most popular model in the used clothing recycling industry.

Three-Tier Market and Profit Distribution

The domestic used clothing recycling industry has not developed for a long time, but it has already formed a relatively stable industrial chain structure, and the market is roughly divided into three tiers.

Individual recyclers earn the price difference. The recycling cost of one ton of used clothes is about 600 yuan, and the direct resale price can exceed 2,000 yuan; if simply dismantled and baled, it can sell for up to more than 6,000 yuan. Most individual operators do not sort, but sell directly to sorting plants.

Sorting plants capture the value added by sorting and packaging. Their purchase price is about 2,000 yuan/ton, and after sorting and packaging, the selling price per ton quickly doubles or triples. Practitioners who operate well can earn annual income of over one million yuan.

Foreign trade companies and export enterprises are at the end of the chain. They ship used clothes recycled domestically overseas, where they eventually appear in market stalls or street stalls abroad, making this the most profitable link among the three tiers. But this link also has the highest threshold. In addition to requiring huge capital, it also requires export channels and the ability to open up overseas markets, so not everyone can enter it.

The industry's current development allows used clothes discarded in China to realize their residual value, contributing both environmentally and economically, and it has also been a continuously favored direction in recent years.

Source: Hidden "huge profit" industry, how does used clothing recycling operate? A comprehensive analysis of the overall market · Originally published on 2022-03-10