A former project manager at a travel company, a 985 graduate, invested 60,000 yuan in 2020 in his girlfriend's hometown county to join a used-clothing recycling franchise, but ultimately recovered only 22,000 yuan—an experience that may reshape perceptions of the used-clothing recycling world packaged by short videos as a "sunrise industry."

Key Points

  • Franchise fee was 12,800 yuan; the contract promised a full refund of the franchise fee plus a 300 yuan per ton subsidy upon collecting 60 tons, but the person exhausted his savings and collected only about 12 tons.
  • Wu Ge, who joined the same batch, collected 15 tons and paid to transport them to Guangzhou for delivery; after inspection, less than 1 ton was Grade A, and the payment was less than the freight, resulting in a total loss.
  • During the street-collection phase, the person collected 300 to 500 jin of used clothes per day, but at that rate it would take over 400 days to reach the 60-ton refund threshold.

Starting from a Complaint at a Late-Night Food Stall

At the end of 2019, the pandemic broke out. The person was originally a project manager at a domestic travel company; the company suspended operations and paid only a base salary. His girlfriend had already quit her job and returned to her hometown in a central county, where she secured a government position. He resigned to attend a talent recruitment interview in the county but was rejected, and the idea of staying took root.

One night at a late-night food stall, a woman at the next table complained that there was nowhere to store old clothes at home, that giving them away was frowned upon, and that no one would accept donations. He saw this complaint as a business opportunity. That night he scrolled through short videos until dawn, and the content was highly consistent: "sunrise industry," "recycling," "win-win," with images of used clothes being packed and shipped to Africa, where Black people tried on the clothes and paid cash. He sent a private message to a manufacturer overnight.

The next morning, a salesperson from the factory, Xiao Liu, added him on WeChat, showing videos of the warehouse, business license, and sales performance, promising partners a minimum annual income of nearly 300,000 yuan, no problem with sales channels, high-priced door-to-door collection by the factory, and free training. He then went south with his girlfriend and Wu Ge, a counterpart from Xianyang he had met on a high-speed train, to inspect the operation. The factory was located in old rural houses on the outskirts of Guangzhou, where several local women manually sorted clothes amid a pungent smell. The factory then showed a disinfection workshop, a washing workshop, and a warehouse of about 1,000 square meters filled with hundreds of tons of packed goods, which would be sent to the dock for shipment and export in five days. Xiao Liu refused to disclose the specific destination countries, citing trade secrets, and also stopped them from taking photos.

The office was in a villa area in the village, and franchisees came in an endless stream to sign contracts. Manager Qi, who handled the contracts, claimed that "Kenya has already cut off supply" and that the market gap was huge, with a signing fee of 12,800 yuan. The contract stipulated: franchisees sort and pack locally, with down jackets purchased at over 10,000 yuan per ton; upon collecting 15 tons, the factory would send a truck to pick up the goods, with freight borne by the manufacturer; upon collecting 60 tons, the full franchise fee would be refunded plus a 300 yuan per ton subsidy. After signing, they attended sorting training, taught by rural women from the factory who demonstrated collection standards.

A War of Attrition in the County

Back in the county, he first used his last strength to solve the storage problem: after five days under the scorching sun, he found a 500-square-meter abandoned factory on the outskirts of town, with an annual rent of 15,000 yuan, and it was expected to be demolished within a year or two.

He had intended to register a company but followed Wu Ge's advice to give up—since he was only supplying the factory, there was no need to register. He then spent over 10,000 yuan to customize more than a dozen recycling bins, deliberately avoiding the words "charity" and "donation" on the bins, marking them only with "garbage sorting, used clothes recycling." But door-to-door visits to property management all ended in rejection, and during the pandemic it was even harder for outsiders to enter residential compounds. Only after his prospective in-laws pulled strings and gave away several thousand yuan worth of cigarettes and liquor did he secure placement in three compounds, on the condition that the bins be placed next to garbage cans.

The recycling bins were repeatedly filled with garbage. Twice, bins placed next to garbage cans in urban villages were stolen the same night. Four bins near parks and squares were taken away by urban management. In the end, only a few remained at the warehouse entrance, his girlfriend's home, and the homes of relatives and friends. He also spent money on local media promotion, with little effect.

"Sunshine and Storms" on a Tricycle

After shedding his white-collar identity, he spent 4,800 yuan on an electric tricycle, hung a sign reading "Used Clothes Recycling," and equipped it with a loudspeaker to hawk his services through the streets. On the first day, he collected over 300 jin, and he maintained that pace for days; sometimes nearly 500 jin a day. He began calculating in his head: at that rate, it would take over 400 days to accumulate 60 tons and get back the franchise fee.

An unexpected rainstorm taught him a hard lesson: there was nowhere to shelter the tricycle, the entire load of clothes was soaked, and he fell ill and was hospitalized for several days. After discharge, he found that people had unexpectedly begun putting clothes into the recycling bins one after another, and some even offered clothes for free and asked him to pick them up. He put up a QR code and locked in many casual customers. Two months later, the warehouse was neatly stacked with over 200 bundles of clothes, each weighing 50 jin. From the clutter, he picked out extremely old and damaged items that could not be reused and disposed of them. By then, Wu Ge had collected nearly 10 tons and reported that the market inventory seemed to have bottomed out.

The Two Layers of Skin Peeled by the "Scam"

The pandemic struck again, and the county imposed the strictest lockdown, forcing collection to halt for nearly a month. After the lockdown was lifted, news came: Wu Ge had gathered 15 tons, but the factory did not send a truck to pick up the goods, repeatedly citing the pandemic, and later suggested he find his own truck and promised to subsidize part of the freight. The goods had to be transported to Guangzhou: upon arrival, they waited a day and a night for inspection, and the driver, unwilling to wait, had to be paid extra. The next afternoon, a team from the factory arrived, casually slashed open the bundles with knives, threw the clothes all over the ground, and declared that less than one ton was qualified, judging the rest as "garbage." The remaining goods had to be hauled away by himself or destroyed on the spot. Wu Ge argued with the factory on site, and more and more workers came, hinting at a possible conflict. In the end, the payment earned was not even enough for the freight, and he had to abandon the goods and return home alone.

After such a chain of blows, the 12 tons of goods on hand were no different from being thrown away whether or not they were taken to Guangzhou, and all were stuck in the warehouse. He could only wait as conflicts escalated at his girlfriend's home and he moved into the warehouse. Days passed like a groundhog burrowing through piles of clothes. At one point he was so desperate it was indescribable. At the worst, he went days without collecting a single plastic bag of clothes, and the recycling bins were nothing but shells full of smelly garbage. For many days, even when he rode out, he only got half a load. When he had endured all hardships, there was no way out. He wanted to clear the warehouse but had only collected 12 tons and still could not sell, yet he did not want to give up. Finally, an older brother he had met in a WeChat group for used-clothing sorting offered a way out. The man had been running a sorting business for years and was looking for goods for an old project. Not far from the county, he inspected the sorting precision of the goods on hand and was very satisfied, selecting all 12 tons and taking them away for a total price of 22,000 yuan. The 12 tons not only recouped the cost but also gave him a sense of the residual value. He returned tens of thousands of yuan of his girlfriend's "happiness fund," left his hometown, and began preparing for the postgraduate entrance exam while making further plans.

What Exactly Is Not Explicitly Stated in This Industry

For the business chain engaged in used-clothing trade and franchising, this incident is more like a negative mirror. The entry cost of this market appears extremely low because ordinary people have almost no ability to identify export information and quality, and upstream suppliers happen to magnify this space through small and medium-sized operating accounts, packaging the pressure of cargo transport into a "self-circulating躺赚钱" (lying down to make money) model. The two difficulties involved may be that the profit source of downstream receiving factories' Grade A quality assessment lies in suppressing waste quality, because secondary sorting at the collection stage can absorb many individual operators who see seemingly infinite purchasing hope, ensuring the production channel's fake appearance of price-raising purchases. However, in the middle, there is no clear recognized standard for the counter-guarantee to subcontracting franchisees; especially for newly opened sorting households, standardized traceability must be completed before settling with sellers. Industry exchange groups generally believe that the most profitable part of this chain may be treating the franchise fees paid by franchisees as working capital, while the subsequent refund amounts are always magnified to unattainable levels—190 to 400 times the quantitative amount—to pull most people into the game. Therefore, this field must always guard against the opaque "Grade B seller sorting and grading trap" model of packaged price reductions.

Source: After losing my job in the pandemic, I fell into the "used clothes recycling" huge-profit trap · Originally published on 2022-08-08