Shanghai generates about 130,000 tons of waste clothing each year, accounting for roughly 30% of all household waste, yet the total formal recycling volume is only just over 300 tons annually. Starting in December 2010, Shanghai piloted waste clothing recycling in residential communities, expanded it citywide in May 2011, and in February 2012 included "waste clothing recycling and utilization" alongside "source reduction and sorted collection of household waste" in the 5th round of the "Three-Year Environmental Protection Action Plan." As of the time of reporting, three companies participated in recycling across the city, covering more than 2,000 communities. Yuanyuan Industrial, one of the participating companies, had more than 2,000 "Giant Panda" collection bins, including 348 in Hongkou District, covering 313 communities and 213 neighborhood committees, a coverage rate of 55%.

Key Points

  • Shanghai generates about 130,000 tons of waste clothing annually but recycles only just over 300 tons per year, leaving the reuse rate at an extremely low level.
  • Nearly 40% of Yuanyuan Industrial's "Giant Panda" collection bins have been pried open and stolen from, with three bins even stolen whole by vehicle, and the recovered materials flowing into street stall markets, brick kiln fuel, and other channels.
  • Shanghai has introduced a threshold of around 900 bins to start: one collection bin collects an average of 80 kg of clothing per month, yielding about 150 yuan in lawful profit, and a company needs to deploy at least 1,000 bins before it can hope to turn a profit.

Where exactly do the old clothes in the collection bins go? According to Yang Yinghong, general manager of Yuanyuan Industrial, clothing taken from the "Giant Panda" bins generally undergoes two rounds of sorting: the first round picks out items in new condition and with new styles, which are disinfected and donated to impoverished areas, accounting for about 3%–4% of the recovered volume; the rest is classified by wool, cotton, chemical fiber, blended fabric, shoes and bags, etc., and processed into recycled textile raw materials such as non-woven fabric, labor protection supplies, warming cotton for vegetable greenhouses, and automotive heat-insulating fabric. Shanghai Lüsheng Textile Technology likewise stated that about 8% of its recovered old clothes are used for donations, while the remaining 92% are sorted and regenerated. Yang Yinghong has calculated a resource account: 1 mu of land yields 80 kg of cotton, and every 1 kg of old clothing regenerated fiber utilized is equivalent to saving 8.33 square meters of land, while also saving labor, fertilizer, pesticide, and logistics inputs; 1 ton of petroleum produces 800 kg of chemical fiber raw materials such as polyester and nylon, and making recycled pellets from old chemical fiber fabrics likewise reduces petroleum consumption.

But this circular chain is frequently pried apart. Yang Yinghong revealed that nearly 40% of the collection bins deployed in communities citywide have been pried open and stolen from. A gatekeeper at Hongye Mingyuan said the collection bin had been placed at the north gate for more than seven months, and when the weather was warm, people often came in the middle of the night to dig through and pick out clothes; a security guard at Lancun Community said "peddlers come to steal almost every day," with the peak between 8 and 9 p.m., and after the bin door was damaged it was only barely held on with wire; he also encountered an extreme case in which a security guard colluded with peddlers to steal. The stolen clothing mainly flows in three directions: relatively new and intact items enter the second-hand street stall market, more worn items are sold at low prices to brick kiln factories as fuel, and items with no usable value are thrown into trash bins.

Some experts point out that China explicitly prohibits the import and trade of second-hand clothing. Because sanitary storage conditions for street-stall old clothes are difficult to guarantee, they easily carry pathogens and parasites, and vendors do not necessarily clean or disinfect them, raising serious hygiene and safety concerns. The same expert also pointed out that the calorific value of waste clothing is comparable to that of coal, about 5,000 kcal, but burning old clothes as fuel runs counter to the government's goal of promoting resource utilization and harmless treatment. According to industry insiders, using clothes as fuel does not fetch a high price and their ignition point is about twice that of paper, yet many old clothes are still sent to brick kilns and boiler plants in Anhui, Jiangsu, and other places for incineration.

The economics are the core reason this system is difficult to sustain. Yang Yinghong introduced that at the company's current scale, monthly expenses are about 75,000 yuan, while revenue from selling old clothing products is less than 50,000 yuan, so it operates at an overall loss. A veteran industry insider provided a more detailed profit model: one collection bin collects an average of 80 kg of old clothes per month; in summer, about 15% of general clothing meets export standards, while in autumn and winter about 5% does; about 25% can be used as textile raw materials, and the rest is chemical fiber and blended fabric. Calculating at 6,500 yuan per ton for summer categories, 2,000 yuan per ton for autumn and winter categories, an average of 2,800 yuan per ton for textile raw materials, and 200 yuan per ton for chemical fiber blends, one bin yields a lawful operating profit of about 150 yuan per month; a formal recycling company alone faces site fees of 400,000 yuan per year, labor of 800,000 yuan, social insurance of 180,000 yuan, fuel costs of 200,000 yuan, and other expenses of 180,000 yuan, totaling about 1.76 million yuan in annual expenditure. With 1,000 bins, annual profit is about 1.8 million yuan, leaving only a slight surplus after public welfare donations. The conclusion is: a recycling company with fewer than 1,000 bins is bound to lose money.

To this end, Yuanyuan Industrial has redesigned the "Giant Panda": the new bin uses a new type of engineering plastic with added anti-freeze, anti-cracking, and anti-UV substances, does not crack at dozens of degrees below zero, costs 200 yuan more than the old bin, has a total price of about 1,200 yuan, can last up to 8 years, and still has a recycling value of about 300 yuan when discarded. The key anti-theft design is a 40-degree angled baffle installed inside the residents' clothing drop opening, so that once clothing enters the bin it cannot be hooked out with a long hook; the metal parts are welded directly into the plastic, making them difficult to pry off. The new bins are first placed in newly promoted communities and gradually replace the old ones.

Regulatory responsibility still needs to be clarified. A relevant official from the Shanghai Municipal Administration of Greening and City Appearance said that old clothing generated by residents belongs to recyclables in household waste. According to the "Shanghai Municipal Measures for Promoting Household Waste Sorting and Reduction," which took effect in 2014, the recycling of recyclables is guided and supervised by the commerce administrative department; the greening and city appearance department has no authority to approve or supervise collection bin companies, and therefore cannot fully grasp data such as the volume and flow of old clothing recycling. The administration is working with relevant departments to advance the "two networks in one," namely coordinating the household waste disposal network with the renewable resource recycling network, and promoting the orderly recycling of low-value recyclables such as waste clothing. According to the Ministry of Housing and Urban-Rural Development's "Standard for Urban Household Waste Classification and Evaluation," old clothing (textiles) together with paper, plastic, metal, and glass are suitable recyclables, but there is currently no direct supervisory department; although waste clothing recycling has been defined as a "circular economy special project," the "Shanghai Municipal Measures for the Administration of Renewable Resource Recycling" does not clearly specify its attribution. An official from the Shanghai Municipal Waste Management Office said that next they will standardize collection and transport practices, unify container sizes in pilot areas, and improve the layout of collection bins.

Policy-level momentum has also emerged. At that year's Shanghai "Two Sessions," An Yiqing, a member of the Shanghai Municipal Committee of the Chinese People's Political Consultative Conference and director of Shanghai Lige Law Firm, specifically submitted a proposal recommending improved legislation to clarify the management responsibilities of relevant departments, with the greening and city appearance bureau working together with the municipal commerce commission to investigate and handle the outflow of old clothes, and to conduct another study on collection bin projects and adjust the existing benefit distribution mechanism. She proposed two paths: if public welfare is upheld, nonprofit social organizations could take on the work, raising funds through fiscal support and social donations; if operated on a market basis, recycling companies must be allowed to obtain the necessary reasonable profit for operations.

Industry Significance: The dilemma presented by this case—"high output, low recycling, enterprises but no regulation"—is a foundational issue in the early stage of the old clothing recycling industry. The loopholes of collection bins being pried open and diverted, and recovered materials mixing into fuel and street stalls, must be addressed through the combined efforts of clear competent authorities, an accountable profit model, and anti-theft design; otherwise, large-scale recycling will remain confined to model communities. As cities successively roll out bins and build networks, the "1,000-bin break-even line" and the question of regulatory attribution raised by Shanghai also have reference significance for other places promoting recycling networks.

Source: What Exactly Is the Fate of Waste Clothing? · Originally published on 2000-01-01