When we think about changes in law that will have an impact on our business, we automatically think of those closest to home; Brexit, Government legislation etc.
But what about decisions made further afield? Can a change in Chinese waste laws really affect UK businesses?
Unfortunately, the answer is yes.
Last year, China, then the world’s largest importer of plastic waste, announced they would no longer be purchasing plastic waste (or “Foreign Garbage” as ministers have labelled it) from abroad.
With 25% of all the UK’s plastic waste previously exported (or should that be, sold) to China, recycling is about to get a lot more expensive, and someone needs to foot the bill.
In the following piece, we’ll explain why that looks like being UK businesses.
How did it work before?
Since the early 1980s, China has been purchasing plastic waste from countries in the west, with the UK being one of its largest providers. Due to the abundance of cheap labour available to the Chinese, they could profitably refashion scrap plastic for the manufacturing of mobile phones, media devices and other products.
The arrangement was mutually beneficial for both parties. Chinese businesses welcomed waste plastic from the UK as it was often of a higher quality than what was available domestically. From a UK perspective, it was more cost-effective to sell the waste abroad, rather than paying to process it at home.
How has it changed?
Economic and cultural factors have made a huge impact in the changing of Chinese waste laws.
- Economic: The country’s booming economic growth has seen the government focus investments elsewhere, prioritising more high-value enterprises, such as innovative technology solutions.
- Cultural: The environmental impact of the waste industry has become hot topic within China, fuelling protests throughout the state.
The combination of these two factors brought about the announcement that China would no longer be buying plastic waste from overseas nations, including the UK.
Why does this mean my prices will increase?
Simply put, the announcement means UK waste companies are losing a revenue stream.
Previously, waste suppliers could subsidies the collection costs incurred through the refunds received from recycled material sold to China. Now the well has dried up, somebody needs to pay the difference.
So far, the financial impacts of the ban have predominantly been felt by waste management suppliers, now hit with higher costs for the disposal of the same materials, rather than their customers. Providers have been willing to take a hit on margin to maintain a competitive pricing structure for customers, however, this is an unsustainable long-term business model.
We’re now beginning to see suppliers build this increased risk into customer renewals, meaning only one thing – prices is going up.
What can I do to combat this?
The best way to keep your costs down is one of the oldest and most tried and tested approaches going, you need to shop around! With many businesses sticking with old suppliers out of habit, real opportunities for savings are being missed.
Acquisition is still key for a lot of waste suppliers and despite the rising prices, there are still some great offers in the market, especially for new customers.
Can GAS help?
Our team of experts will do all the hard work for you. We’ll scour the entire market to find the most appropriate and bespoke deal for YOU. By conducting a thorough review of your current practices, we’ll make sure you only pay for the services you need.
Simply give us a ring on 0800 130 3514 to speak to one of our advisers.