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China's Plastic Waste Ban is Shaking up the Packaging Industry

FMCG Companies are increasingly being forced to change their approach towards waste.

China's plastic waste ban may force FMCG firms to make downstream packaging waste a key issue, says GlobalData.

China’s decision to stop importing recyclable plastic waste in January 2018 has left the world with little choice but to landfill recyclables for which no market now exists. The move, which is part of an initiative by China to focus on its own domestically-produced waste, is a wake-up call to the global recycling industry and may force FMCG companies to change their approach towards waste, and make downstream packaging waste a key issue and a major point-of-difference, says leading data and analytics company GlobalData.

Prior to the ban, China was taking in over seven million tons of scrap plastic each year from Europe, the US and other parts of Asia, including Japan. Recyclers in China use it to produce pellets as raw material for everything from office furniture to fiber-optic cables.

However, since the importation ban, waste plastic is stacking up globally as the supply far exceeds the demand. Developing markets like Vietnam and Malaysia have picked up some of the slack from China post-ban but the industry consensus is that tighter regulations and increased taxes will prevent Southeast Asia from helping to maintain the status quo for plastic waste.

Tom Vierhile, Innovation Insights Director at GlobalData, says: “Given that the days of exporting the waste plastic problem to China may be over, the only way out may be to stop creating so much plastic waste in the first place. If so, FMCG companies may soon find themselves on the front lines of the issue.

“For now, the average consumer is likely to be oblivious to the plastic recycling crisis. Support for recycling is high, and the vast majority of global consumers see recyclable packaging as a core element of environmentally-friendly packaging.”

This reflects in GlobalData’s global consumer survey, in which 75% of consumers globally see recyclable packaging as an important factor in environmentally-friendly packaging.

Vierhile concludes: “There is no way to be certain that the plastic waste a consumer has dutifully collected and presented for recycling is actually being recycled. If the cost of handling plastic waste were to double or triple from current levels, then consumers may be inclined to pay attention to the issue.

“FMCG companies have the potential to force the issue too, by using packaging that does not depend on third-party recycling activities that may or may not take place, depending on market conditions. Sooner or later, an enterprising FMCG company is going to make downstream packaging waste transparency a key issue and a major point-of-difference.”

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