Waste sorting out 200 billion new air outlets? Bottleneck of industry qualification licence to be solved

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 Waste sorting out 200 billion new air outlets? Bottleneck of industry qualification licence to be solved


With Shanghai entering the era of waste classification, related industries and types suddenly become popular. According to market feedback, only in the last week of June this year, there were 53 newly registered companies on waste classification in China.

On July 11, a salon on Guanghua Road, Beijing, with the theme of throwing out a new outlet in the garbage industry, was full of seats. Most of the salons were industry enterprises, investment managers and media who took the initiative to sign up. This industry also attracted many young peoples attention.

This round of tuyeres is coming fiercely. The Ministry of Housing and Construction and other nine departments recently issued a circular, deciding to start the domestic waste classification work in cities at prefecture level and above nationwide from 2019.

Industry figures estimate that the future of the sanitation industry will reach 200 billion markets. Ma Rui, Vice President of Fengrui Capital, who has invested in sanitation enterprises, said that it was uncertain whether garbage classification was a tuyere, depending on whether there would be a new business model.

Both investors and entrepreneurs agree that the beginning of garbage classification in cities is a process of improving the level of social civilization. - Song Wenhui

How big is the garbage sorting market?

Before Shanghai entered the era of garbage classification, the garbage classification industry had two outlets in China.

The first tuyere was in 2012, a batch of 3C digital electronic recycling enterprises emerged. The second tuyere is in 2015, the mode of O2 O has produced a lot of on-site recycling companies, in Beijing alone, there are 78 on-site recycling companies.

Expansion of waste classification pilot projects has brought new demands, including front-end classified delivery, classified collection, classified transportation of sanitation equipment and service requirements. From the relevant recruitment website, the reporter can see many recruitment information about garbage sorter, supervisor, project manager, environmental sanitation engineer and so on.

The business model of intelligent garbage recycling and O2 O recycling is also attractive. On the morning of July 11, 21st Century Economic Reporter visited a residential district in Beijing, where a small yellow dog intelligent waste sorting and recycling bin was set up. Neighbouring residents told 21st century economic reports that because classification requires intelligent operation using mobile phones, many of the people who throw garbage are the elderly, and they are used to throwing it directly into traditional garbage cans. In addition, several recycling bins of this group of smart trash cans have been unable to be put into operation. Some residents suspect that they are either uncleaned or broken.

Zhang Xiaowen, deputy general manager of Everbrights financial control and investment management department, said in a salon on July 11 that Chinas solid waste removal capacity is only one third of that of the United States, and the market-oriented degree of the sanitation industry is less than 30%. The future space is very broad, and the market of the sanitation industry is expected to reach 200 billion yuan. Chinas solid waste industry is still in the stage of decentralized operation of the industrial chain in mature markets such as the United States of America. There is a huge space for integration and development in the future.

21st Century Economic Reporters have noticed that investors and entrepreneurs alike are accustomed to comparing the Chinese market with the US giant garbage sorting companies, with more references to Waste Management, the largest in the United States, with a market capitalization of $48.7 billion, and three listed companies (Waste Management, Republic Services, Waste Connections) The market value is over $92 billion. So far, Chinas garbage classification industry has not yet emerged a giant enterprise, the industry has always believed that China will also emerge in the future industry giants.

Fang Hao, CEO of idle beans recycling, a representative enterprise of the industry, believes that garbage classification not only aims at the community and campus market, but also at the commercial user markets such as hotels and office buildings. It also includes the undeveloped garbage classification market in the industrial manufacturing fields such as automobile tyres, lead-acid batteries for electric vehicles and scrap cars. Garbage disposal needs a huge logistics system to support, and there are a lot of opportunities in back-end storage, channels and other fields.

According to Zhang Xiaowen, the marketization rate of the sanitation industry in the United States has reached 78%, and the market share of the top three enterprises is as high as 44%, which almost forms the pattern of oligopoly. However, the market-oriented rate of Chinas sanitation industry is less than 30%, and the market share of the top three enterprises is less than 5%. In addition, the gross margin of the sanitation business of the head enterprises in the United States is 30% - 40%, and the cash flow is healthy, while the gross margin of the domestic sanitation business is only 6% - 10%. It is in the stage of expansion, and the cash flow is very tight. There is still much room for the Chinese market.

Faced with licensing and qualification issues

In the view of some investors, garbage classification is a slow industry. At present, China still faces various problems. The industry is still small, scattered and chaotic. Industry entrepreneurs and investors are calling for the garbage classification industry to become a market-oriented and commercialized industry. At the policy level, there are more humanistic considerations to solve the problem with the market model.

Xu Yuanhong, general manager of Ai Classification, calls himself the second generation of waste. He and his father are both engaged in garbage classification industry. He believed that the current compulsory classification model allowed the district to be equipped with supervision, security and patrol inspection, which cost a lot of time and money, and whether it is sustainable to invest so much money every year.

Xu Yuanhong suggested that more enterprises should participate in this market, including state-owned enterprises and private start-ups. For some private enterprises, they spend their own money, and every penny should be spent on the blade. Efficiency and cost control will be better.

Yang Guisheng, senior partner of Dacheng Law Firm, believes that in the current garbage sorting operation, everyone may be a passive participant. In the early stage of habitual cultivation, the government should extend its hand to guide. In this process, legislators and policy makers gradually know the needs of the people and the market. Whether it is the problem of industry qualification, land use, and the division of labor between state-owned enterprises and private enterprises, it can be solved by the norms at the institutional level, which needs the attention of the whole society.

As for the business model of garbage classification and the entry threshold, Zhang Xiaowen said that the industry is still immature, with gross interest rates of only 8% to 10%. This shows that the market is not very profitable, and that there is still a lot of room for improvement.

One of the issues mentioned by entrepreneurs in the garbage classification industry in their exchanges is industry qualification and licensing.

Xu Yuanhong told 21st Century Economic Reporter that garbage clearance needs the qualification of domestic garbage clearance. This qualification also includes different categories, such as kitchen garbage clearance, domestic garbage clearance, construction garbage clearance, feces clearance and so on, which has a certain threshold for entrepreneurs. Others mentioned that with the promotion of garbage classification and the industry becoming hot, all kinds of qualifications licences will become precious. After having a license, how to achieve large-scale and standardized operation in this industry is a problem that entrepreneurs should explore. Li Zhujie, founding partner of venture capital, believes that from the perspective of investment, this industry is not very good to invest. There are various licences in the industrial chain. Every department may be in charge of this industry, ranging from small subsidies to community subsidies, to policy control and garbage sorting. It is very difficult for different departments to coordinate. Now lets let the bullet fly for a while. However, both investors and entrepreneurs agree that the beginning of garbage classification in cities is a process of improving the level of social civilization. Source: Responsible Editor of Economic Report in the 21st Century: Youyuan_NO4712

Xu Yuanhong told 21st Century Economic Reporter that garbage clearance needs the qualification of domestic garbage clearance. This qualification also includes different categories, such as kitchen garbage clearance, domestic garbage clearance, construction garbage clearance, feces clearance and so on, which has a certain threshold for entrepreneurs.

Others mentioned that with the promotion of garbage classification and the industry becoming hot, all kinds of qualifications licences will become precious. After having a license, how to achieve large-scale and standardized operation in this industry is a problem that entrepreneurs should explore.

Li Zhujie, founding partner of venture capital, believes that from the perspective of investment, this industry is not very good to invest. There are various licences in the industrial chain. Every department may be in charge of this industry, ranging from small subsidies to community subsidies, to policy control and garbage sorting. It is very difficult for different departments to coordinate. Now lets let the bullet fly for a while.

However, both investors and entrepreneurs agree that the beginning of garbage classification in cities is a process of improving the level of social civilization.