How to commit fraud, save money, and benefit the environment – all at once (in Shanghai).

[With a special end note for my friends and colleagues in the foreign media and environmental activist community.]

China is the world’s second largest market for PCs and other electronic devices. This is a good thing if you’re a manufacturer, but – potentially – a very, very bad thing if you’re an environmentalist concerned about what happens to all of that electronic equipment when it breaks down and/or its owners don’t want it, anymore. Indeed, for years, journalists and activists have documented the devastating environmental and human toll inflicted by the low-tech extraction of recyclable metals in small workshops in south China (and, to a much lesser extent, in Africa). But, for reasons that have always eluded me, the focus of those documentaries has been on the ever-decreasing volume of electronic waste imported from developed countries, and not on the growing tidal wave of electronic waste being generated – right now! – in places like China and India.

The problem is this: recycling electronics in a manner that damages the environment and human health is highly profitable. So, even if a company wants to do it in a way that’s minimally damaging, there’s no way that compete can compete to buy old electronics from companies who use environmentally ruinous methods to recycle. So what to do?

In June, after years of discussion and argument, several Chinese ministries issued a regulation creating one of the world’s biggest and best-funded e-waste recycling programs (regulation here; additional info, here). Among other measures, it offers direct subsidies for the purchase of old electronics and appliances – computers, monitors/TVs, a/c units, washing machines, and refrigerators – that would otherwise be purchased by the environmentally destructive informal recycling sector. Specifically, it offers vouchers to appliance owners that equal to 10% of the purchase price of new electronics. So, for example, if you want to recycle a computer in Shanghai, you call up the local authorized recycling center, and they’ll give you a voucher for as much as RMB 400 (US$58) toward the purchase of a new computer at the time they pick up your old one (and, for that matter, an additional RMB 400 voucher for your old monitor). From there, the devices are sent to an environmentally secure recycling center (more on that soon).

How successful has this program proven to be in its first two months? Successful enough that canny Shanghai businessmen have already figured out a way to make money by defrauding – indirectly – the program. And that’s a good thing (for the environment)!

Here’s how it works.

Say you don’t have an old computer to recycle. Or an old monitor. Or perhaps, you’re in the market for your first computer. Then just grab yourself a taxi to one of Shanghai’s several second-hand computer markets where – for a nominal fee – a vendor will sell you a broken computer expressly designed to receive a recycling voucher! The other day I accompanied a friend to one of Shanghai’s secondary computer markets for just this purpose. We stopped by several salesmen, and explicitly told them that we wanted to buy something that we could trade in for a recycling voucher. Everyone knew precisely what we were talking about, and nearly everybody was willing to help out. In essence: For RMB 140 (US$21) we’d get an an old computer case custom-stuffed with a broken motherboard. Or, if we were feeling lucky, we could spend RMB 40 (US$5.80) for an empty case, alone, in hope that the recycling company wouldn’t bother checking at the time of pick-up. In either case, we were looking at a net gain of RMB 260 (US$38) OR RMB 360 (US$52.74) toward buying a new PC.

The beauty of this fraud – and it is a “small-f” fraud – is that it still benefits the environment. Put differently: if the second-hand markets weren’t selling off the broken motherboards to people who are going to send them into the government-financed e-waste system, they would ultimately end up in the infomal, environmentally ruinous e-waste system. In other words: win-win-win (for the environment; for the second-hand PC markets; and for the new PC makers).

Now, it’s important to note that China’s e-scrap program is new, and there are still some major kinks to work out of it (consider that it took Japan more than a decade to perfect its system). Of these, none is more pressing or troubling than the fact that – so far – China lacks for environmentally-sound electronics recycling facilities. There are some – and many, many, many more are under construction at this very moment (also with government subsidies). But the simple fact is this: most of the electronic waste being diverted from the informal, environmentally ruinous sector is being stored in warehouses at the moment. And, as I noted a couple of weeks ago, the few electronic recycling facilities operating in China are unwilling to open their doors to media. Those are big problems, indeed, and they shouldn’t be overlooked. But neither should China’s sincere, and very well-funded effort to tackle an issue that has obsessed foreign media and activists for a decade.

And now a brief note to my friends and colleagues in the foreign media and environmental activist community: In 2002, the Basel Action Network [BAN] issued its groundbreaking report on the e-scrap problem, The High Tech Trashing of Asia. Despite some unfortunate hyperbole and inaccuracies, the report – and BAN – did more than any other organization to raise global awareness about the harmful effects of improper e-scrap recycling. Immediately, and correctly, international media followed-up the BAN report with stories of their own, documenting, and re-documenting the damage done by the informal e-waste trade. The results are stunning: google “China electronic waste” and you’ll get over 350,000 hits. Indeed, I think barely a month goes by that some publication or program doesn’t run an e-waste story, complete with dramatic photos of workers (sometimes children) laboring over burning circuit boards (for example, this perfectly awful NYT Magazine photo essay from a couple of weeks ago – minus an essay to provide context – showing e-waste recycling in Ghana).

From an editor’s standpoint, it’s a great story: the images are dramatic (and often exploitative – but let’s save that for another time), and a ready outline exists in the literally thousands of other stories that have been written and broadcast on the subject. And so, if you spend any time reading some of the e-scrap coverage over the last decade, you begin to have a bit of deja vu: the same sources, giving many of the same quotes, laid out alongside similar photos.

You may be saying: so what? It’s an awful industry, and it should be documented again and again, until it stops. And, for the most part, I agree with that sentiment. But, as a needed corollary, I’ll add this: when China and other countries make a concerted, well-funded effort to do something about the problem, that, too, demands coverage. Put differently, after nearly a decade of wall-to-wall coverage of everything wrong with China’s e-waste problem, how can the foreign media and activist community ignore what it is finally doing right – and doing right on a massive scale?

As longtime readers know, I’m no China apologist. This e-scrap program has problems. But it is a massive e-recycling program, nonetheless, and yet it has never – not once in its two month life – been reported by a mainstream (not industry trade) foreign news outlet despite the fact – over the last decade – mainstream foreign media outlets have done thousands of stories about the problem of e-waste. More damning, neither the Basel Action Network, which devotes itself to confronting the “unsustainable dumping of the world’s toxic waste and pollution on our global village’s poorest residents,” nor Greenpeace, which actively solicits donations beide photos of south China’s e-scrap recycling zones, has many any effort to mention China’s progress on their respective websites (or, for that matter, recent progress on the same issue in Brazil). Why? It’s anybody’s guess. Perhaps they – the activists and the foreign media who cover environmental matters in China – simply haven’t heard about this massive new program. Or, less flattering still, they know the old adage that it’s always more interesting to talk about the problem, than to document the solution. Whatever the case, this story is long overdue. Surely, someone is capable and interested in doing?

9 thoughts on “How to commit fraud, save money, and benefit the environment – all at once (in Shanghai).

  1. Silly Adam. You think those media reports are about China’s recycling industry. But they’re really about the western audience. They provide a brief frisson of guilt about having Too Much Stuff and not keeping it forever. China is just the stage set.

  2. Awesome post and awesome comment from Virgina Postrel. Since when is she hanging around here?

    One question, Adam: why, if you think it’s so pressing that this program appears in the mainstream media, did you publish on your blog rather than somewhere else?

  3. Activists often have an all or nothing approach to issues. The concept of trade offs is alien to their thinking. So any solution that doesn’t completely eliminate the problem is deemed to be no solution at all.

  4. I think you’re perfectly capable and clearly interested in writing the piece in conventional media that you’re bemoaning the absence of.

  5. Virginia – Well put, and you’ll get no argument from me.

    Clark and Luke – I do intend to write about the regs later this year in a couple of different venues. For now, though, this will have to do, as I’m really tied down with other projects. In any case, I’d really prefer to see some of the outlets who have produced stories on e-waste do the follow-up.

  6. You seem hesitatnt to say what seems obvious and that is that some in the media, and some activists like Greepeace, have an interest in seeing the situation in China remain bad. Or they have an interest in it appearing to remain bad. Sell more papers that way or raise more money that way.

  7. Great post. This scheme is perfect for my current situation with 2 duff laptops that need replacing. As a non Chinese speaker, what is the best way to take part? I called the hotline number from the website, but only got a recorded message in Chinese.

  8. Great post. If the west is going to continue to have its digital gadgets manufactured in the east then there is a great deal of sense in closing the loop through the responsible exportation and processing of electronic devices to the east. I’d love to learn more about instances of success in the ethical and environmentally responsible recovery of metals and plastics exported to china. Best regards, Don Carli

  9. This story is fascinating- i only just stumbled across it. Do you have any figures/estimates of how many of these recycling vouchers are given out per year?

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