Plastic Scrap Master Plan
I came up with an interesting idea that may revolutionize the plastic scrap market once and for all. I wanted to share this idea with everyone here.
I think the correct name for this idea is â€œPlastic Scrap Super Storeâ€. As in the name, the basic idea is to create a super store (like Wal-Mart) for plastic scrap. This is a place where suppliers around the world can ship their plastic scrap to sell direct to buyers in China.
The plastic scrap business at the moment is pretty closed off to those that understand and speak Chinese. This is because plastic scrap is not easy to import/export to China. There are no clear instructions in English for doing so. This gives many Chinese buyers and traders (the middleman) a chance to purchase plastic scrap from foreign businesses at low prices, import them into China, and sell for a decent profit.
A month ago, I wrote several articles on how to import/export plastic scrap into China including facts on AQSIQ, CCIC and China Import Licenses. Iâ€™ve been shipping plastic scrap to China for more than 5 years, and at the time of publishing these articles; I thought what I was about to share to be basic information you can easily find on internet. To my surprise, I started getting daily emails requesting for more information on this subject. I also received several emails thanking me for sharing such valuable information.
Recycled Plastic at Your Doorstep!
After realizing the issue, I came up with this super store plan for offering door to door service to those interested in selling direct to Chinese buyers in the Shanghai, Zhejiang, and Jiangsu provinces (which includes Ningbo). The tentative idea is to:
- Resolve the AQSIQ/CCIC issue for suppliers.
- Resolve importing the plastic scrap into China.
- Rent suppliers storage space in our facility.
- Help suppliers find Chinese buyers.
I figure since I have the experience and relationships involved in importing and exporting scrap into China, why not share this with others around the world. This will allow supplier to spend more time sourcing and doing quality controls. At the moment, I already have a storage facility where plastic buyers come to on a daily basis to check out goods I personally sourced around the globe.
I know this is a good plan, however, the difficult part is to gain the trust of the suppliers. The traditional way of trading plastics is to place a 30% deposit and the remaining 70% upon papers (or b/l). The method of doing business actually does not make sense since the buyer holds nearly 100% of risk. Therefore, I usually do not deal with companies Iâ€™m not familiar with.
Join My Scrap Plastic Mega-Store
In my super store plan, I want to change this up to where the suppliers can ship goods directly to my facility. A contract can be signed where Iâ€™m shipping and storing the commodity on the supplierâ€™s behalf. Like Wal-Mart, I will inventory everything using a computer system that offers live updates via a website. After discussing reserve prices with the suppliers, my sales team will sell the goods to buyers in this region. We will not sell the goods if they buyerâ€™s offer falls below the reserve price. In fact, weâ€™ll try to sell the commodity at the highest price possible. Once the plastic scrap get sold, weâ€™ll alert the supplier and transfer funds.
One setback of this plan is that the supplier will have longer periods of return on goods. For instance, if the plastic scrap is from the United States, it takes around 14 days for freight, 7 days for customs clearance, and another 7 to 14 days for me to sell the plastic to buyers. It therefore takes approximately 30 days.
A benefit of the super store plan is that suppliers are getting much higher return on goods by cutting out the middleman, which from experience has margins of at least $50 – $100 per metric ton.