Monthly Archives: June 2009

Why are 40,000 containers of scrap metal idling in Hong Kong and Guangzhou?

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Unless you trade in non-ferrous scrap metals, you probably weren’t aware that this was a problem. But let me assure you that it is a big problem, indeed, and if you have any interest in how business works in south China, the origins of this mess should interest you.

First,  a bit of background.

Ever since China began importing scrap metal in the mid-1980s, south China has been the preferred port of entry for a broad class of low-grade loads of mixed scrap recyclables. These range from electric motors, to insulated cables, and loads of – yes – mixed metals. Why? Taxes. For twenty years (with a few interruptions) Guangzhou Customs has accepted lower declarations on the value of imported mixed metals than other ports in China. Let me explain how this works.

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Say you have 5 kg of aluminum ball bearings, and 5 kg of steel ball bearings. To make this simple, let’s say that the aluminum bearings cost $1/kg, and the steel bearings cost $.10/kg. The correct value declaration on the two loads of bearings would then be $5.50. But say you take those bearings, mix them together in a bucket, and then present them to a customs agent with a declared value of, say $2.80 (claiming two kg of aluminum and eight kg of steel) – what are the chances that the Customs agent is going to pay someone to sort through that mixed pile in order to determine whether or not your declaration is true? Continue reading →

Plywood Infernal.

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Generally, I never turn down the opportunity to visit a factory. At a minimum, they’re invariably interesting, especially if – like me – you’re at all interested in how the things that one takes for granted are created. At best (in my case, at least), factory visits might lead to new stories. So I was more than happy when told that – as part of something else I was doing – I would have the opportunity to visit a very large plywood factory in a northern Chinese city that manufactures several types of wood products (for various reasons I won’t go into now, I can’t and won’t reveal the name or location of this factory). Over the years, I’ve visited facilities where safety and environmental conditions were abominable; but I can say, I’ve never left any of them feeling as physically and emotionally upended as I felt after exiting this plywood plant.

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Some background. The facility manufactures unfinished plywood, and coated plywood. Its markets are Chinese and – increasingly – Africa and Eastern Europe (that is, places that value cheap building materials and don’t have very tight requirements on quality or safety). It does not export to North America or Europe. At some point, in the past, it exported to Japan, but for reasons that weren’t revealed, that relationship ended. It employs 100+ people, almost all of whom are migrants. This latter fact surprised me: the factory is located in a relatively small town of the sort that one expects people to migrate from. But the economy of this town is quite unusual, and most of the locals prefer to work in the other major industry (which I won’t name). Like the manufacture of plywood, the other major industry utilizes hazardous chemicals with well-known negative health effects. Even so, despite two bad choices, the locals know that the more fatal choice is plywood. According to two knowledgeable people with whom I spoke about the issue (one of whom was very local), locals expect employees of the plywood plant to contract a terminal illness within two to three years of employment. I suppose it’s no accident, then, that few of the non-management employees that I saw at this plant appeared to be older than 25. Continue reading →

The couple that granulates Thai fruit baskets together …

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I spent the weekend in a part of Northern China that I can’t reveal, but suffice it to say that they recycle a whole lot of plastic there. Anyway, a quick photo to share before I get back to multiple looming deadlines. When I first came across this couple in the early afternoon the pile of shredded plastic was waist high and maybe two meters in diameter. This photo was taken at sunset (click for an enlargement).

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Nearby, there was a stack of red plastic fruit baskets – perhaps two stories high, and ten meters in all directions – awaiting their attentions. The shredded plastic is dried and packaged directly for shipment to a company that re-melts it for re-use. I’m going to hold off making any judgments (for now). But I will remind myself, and my readers, that if you are viewing this image on a computer screen during the work day, you undoubtedly have a more pleassant life than the folks pictured here. It’s worth recalling once in a while, and – over the weekend – I recalled (and confronted) it a whole lot.

Hoop, Dreams

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There are several China blogs concerned with explaining the unique facets of Chinese factories. But as useful as these resources are, I’ve yet to come across one that’s has anything to say about what I consider THE distinguishing characteristic of Chinese factories: namely, the large dreamy Chinese landscapes (waterfalls and mountains, preferably combined) typically found near the factory front gate or the largest spare wall of the production floor. Below, a highly representative example of this unusual art, taken on Saturday behind the front gate of a plastics plant in rural northern China (click for an enlargement).

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In my travels I’ve found that factory landscapes are not restricted to acrylics, only; quite often they’re executed as re-touched photographs (typically faded in the sun) or even done in tile. And, more often than not, they are utterly out-of-place. For example, the image above is located in a polluting facility in one of the most environmentally damaged regions that I’ve encountered in any country; the only thing that this painting has in common with the surrounding landscape is the past. Anyway, I’m going to make a point of starting to post these factory landscapes. At the same time, if my readers have any that they’d like to share, I’d be happy and honored to post them, as well [update 6/22: I think it was less than clear that I made this request somewhat facetiously. So, on the off-chance that anybody has such photos (very off chance), I'd be interested in seeing them, but I'm unlikely to post them. Good reminder not to try to be subtle when exhausted.] I’ll take just about anything, but preference is for shots – like the one above – that place the landscape in the context of the actual manufacturing facility.

US Expo 2010 Pavilion, Inc: Here Comes the Cover-up!

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Yesterday Shanghai Scrap reported that Shanghai Expo 2010, Inc., the group authorized by the US State Deparment to fund, design, and build a US pavilion for Expo 2010, had issued a press release claiming – falsely – that the US Congress had adopted a resolution in support of their efforts. The key quote in the undated release – “We are grateful that the US Congress has adopted this resolution …” – was made by Shanghai Expo 2010, Inc. co-chair Frank Lavin – who also served as an ambassador to Singapore and an Undersecretary of Commerce in the most recent Bush Administration. Lavin couldn’t have been more wrong: not only has the resolution not been adopted by Congress, it has only three co-sponsors, hasn’t left committee, and was introduced by impeached former federal judge Alcee Hastings. In other words: Congress is not supporting Shanghai Expo 2010, Inc. Not even close.

In any case, overnight (in Shanghai), the press release mysteriously disappeared from the official Shanghai Expo 2010, Inc. website – without any explanation or apology (to Congress). No doubt, Lavin and his colleagues are hoping that the matter will be forgotten. But fear not, dear readers: while preparing yesterday’s post, I made a screen capture of Ambassador/Undersecretary Lavin’s false claims of Congressional support, and – for posterity’s sake – I am posting them below (click for an enlargement):

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Unfortunately, this is hardly an isolated incident. Over the last several months, several other members of Shanghai Expo 2010 Inc have made similarly misleading statements to bolster their effort, and then backtracked when those statements were either disproven or no longer in their interests (for the most notable example, see the fourth paragraph of this recent blog post). And, as I’ve noted before, it is precisely this pattern – this duplicitous pattern – that has so damaged the pavilion’s prospects among Shanghai expats and businesses.

[Personal Addendum: A promise to my readers: never again will you confront three Expo-related posts in a row.]