HOLLAND CIRCULAR HOTSPOT

HOLLAND CIRCULAR HOTSPOT

Sustainable E-commerce packaging and waste packaging

A preliminary view into the research

Introduction 1421

Introduction Market Research

Ecommerce Boom

Growth of Logistics & Innovations

Circular Economy in China

Sustainable PackagingCurrent situationRules & Regulations, Government initiativesBusiness Initiatives

Recycled Plastics Industry

Summary

Table of Content

“BECAUSE CHINA EXCITES US,

GUIDING WESTERN COMPANIES DRIVES US

AND THE CHALLENGE OF IT ALL INSPIRES

US”

Because China excites us, guiding Western companies drives us and the challenge of it all inspires us

• Cooperation with Embassy & RVO

• Market study on sustainable e-commerce packaging and waste packaging

• Focus: • Development of e-commerce packaging sector• Circular economy• Sustainable packaging• Recycle of waste packaging

• Aim: to address opportunities for international cooperation, especially for Dutch companies


Market Research

Ecommerce in China


42,8%47,0%

50,7%54,1%

57,0% 59,5%

22,2%

20,7%19,4%

18,3%17,6%

16,9%

35,0% 32,3% 29,9% 27,5% 25,5% 23,6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 2020

Pe

rce

nta

ge

Year

Worldwide

US

China


E-commerce China vs US

2,43

3,64,1

4,65

42,90%

48,90%

55,70%

60,00%64,10%

68,00%

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%

0

1

2

3

4

5

6

2012 2013 2014 2015 2016 2017

Amount of online shoppers (hundred million) % in all internet users


Online Shoppers

0,8

1,2

1,9

2,8

3,8

5

6,2

7,5

70,20%

51,30%

59,40%

46,90%

36,20% 30,70%

25,40%

20,40%

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%

0

1

2

3

4

5

6

7

8

2011 2012 2013 2014 2015 2016e 2017e 2018e

China's online shopping GMV(Gross Merchandise Volume)(Trillion Yuan) % Growth


GMV of Online Market


Logistics Industry China

• First 3 quarters in 2018, 52.43 billion pieces

• Double 11 in 2018: 1.882 billions pieces of parcels -> circles the earth one and a half times


Facts

0

20

40

60

80

100

120

140

160

180

200

2018E 2019E 2020E 2021E 2022E 2023E

51,8

67,3

87,5

113,8

147,9

192,3


Projected Demand 2018-2023

Rank City Courier Traffic (in billion pieces) Region

1 Guangzhou 3.93 Pearl River Delta

2 Shanghai 3.11 Yangtze River Delta

3 Shenzhen 2.56 Pearl River Delta

4 Jinhua (Yiwu) 2.55 Yangtze River Delta

5 Hangzhou 2.32 Yangtze River Delta

6 Beijing 2.27 Beijing-Tianjin-Hebei Region

7 Dongguan 1.22 Pearl River Delta

8 Suzhou 1.04 Yangtze River Delta

9 Chengdu 0.82 Mid China

10 Quanzhou 0.74 Yangtze River Delta

11 Wenzhou 0.72 Yangtze River Delta

12 Wuhan 0.70 Mid China

13 Ningbo 0.64 Yangtze River Delta

14 Nanjing 0.63 East China

15 Jieyang 0.58 Pearl River Delta


Top 15 Courier Traffic


Circular Economy China

• Frontrunner on circular economy policies: visible in last 3 five year plans• Addressing pollution

• Promoting resource efficiency

• Industrial ecology

• Specifically, the 13th five year plan outlines the Extended Producer Responsibility Framework: • 50% of all waste should be recycled by 2025

• 20% is the proportion of recycled materials in products by 2025


Circular Economy China



Sustainable Packaging China

Two challenges in the industry:

• "over-packaging" and "parcel recycling"


Current Parcel Waste

40.06 billion pieces of parcels shared in 2017

8 million tons of waste generated through parcels

Parcel packaging waste = 40% of city solid waste

Domestic waste = increased 93% in

megacities

Recycled = Plastic <10% Paper <20%

• In 2017, 80% of 40.06 billion parcel labels are electronic labels: Saved a large amount of paper and wood.

• Promotion of recyclable transporting plastic bagsSaved 400 million pieces

• Use of bio-degradable packaging materials instead of traditional PE plastic bags:Saved 2,000 tons of Polyethylene

• Reduced usage of tap

However, in 2017, the following consumption remained:

• 11.05 billion plastic packaging bags

• 800 million transporting plastic bags

• 4.8 billion envelopes

• 400 rolls of taps (91 meters/roll)

• 1.2 billion of paper boxes


Sustainable Packaging Achievements

• Government’s goal: to promote a prosperous but sustainable market

• Promotion of green logistics and efficient utilization of resources

• Published & Implemented Regulations (2010-2017)• Circular Economy Promotion Law• National Standard for Parcel Packaging Products• Temporary Management Regulations of Packaging Resources Recycle• Guidance on Collaboration of Promoting Green Packaging in Courier Express

Parcel Industry• Implementing Scheme of Promoting Green Packaging in Courier Express

Parcel Industry


Rules & Regulations

By 2020, JD aims to reduce usage of 10 billions one-time paper boxes; 80% of packaging material can be recycled in the supply chain; to reduce 25% on the weight of packages; over 50% of plastic bags are degradable; to use 100% recyclable packaging materials.


Business Initiatives: JD


Business Initiatives: Cainiao


Business Initiatives: Suning


Business Initiatives: Post China

• Disorder domestic recycling system• Recycling & sorting relies on manual work: low efficiency, error, difficult control on

quality• Lack of standard industrial technology• Industry data statistics are difficult: lack of data analysis• Lack of advanced equipment

• Lack of advanced technology• In total 15,350 plastic recycling manufacturers• Most of them are non-licensed small scale factories• Double pollution during recycle and reproduce process

• Lack of leading enterprises

• The society lacks rational understanding of this industry


Challenges Plastic Recycling

Questions


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5,69

9,19

13,96

20,67

31,28

40.1

55,0%

61,6%

51,9%

48,0%

51,4%

28,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

0

5

10

15

20

25

30

35

40

45

2012 2013 2014 2015 2016 2017

Amount of Packages Growth Rate


China Courier Traffic

60%

51,90%48% 51,40%

28%36%

41,90%35%

44,00%

24,50%

0%

10%

20%

30%

40%

50%

60%

70%

2013 2014 2015 2016 2017

Growth of Business Volume Growth of Revenue


Volume vs Revenue Growth

• Automation technologies and equipment

• Big data

• Internet of Things

• Packaging material recycling


Key Innovations

• Direct business model (such as SF Express and JD)• Top to bottom that invest in construction and operation of entire delivery network.• Headquarters have the authority to directly control all branches on all fronts.• Businesses can ensure a high standard for service quality and obtain a brand premium. • All costs are the company’s costs. • All corresponding income is the company’s revenue.

• Franchisee – Headquarter model (such as STO, ZTO, YTO and Yunda)• Headquarters controls through the franchise agreement. • Franchisees need to manage their own transport equipment, recruit employees, build

branches and so on. • Headquarters generates revenue from courier receipt charges, transit fees and delivery fees.• The light asset management model makes sure that the operation and sales net expand in a

short period of time.


Innovation vs ”Established” Players

• In 2017, China’s domestic waste plastic recycling capacity was 16.93 million tons.

• China has implemented a ban on “foreign garbage” and banned waste plastics from domestic sources, which results the recycling rate of domestic waste plastic resources will be greatly improved

• In 2017, the market size of China's recycled plastics industry was 129.69 billion yuan

• The Industrial Green Development Plan (2016-2020) requires that by 2020, domestic recycling of waste plastics should reach 23 million tons.

• “Circular Development Leading Action”, proposing that by 2020, the main waste recycling rate will reach 54.6%.


Plastic Recycle Industry

Documents

HOLLAND CIRCULAR HOTSPOT