2007 International Trading Supplement - Global Approach

Hong Kong-based Fook Woo Group engages in wider business circles as the global economy dictates.

The Fook Woo Group, based in Hong Kong, helps turn that city’s bountiful scrap paper into tissue and other paper products for use in Hong Kong and Southern China.

Using its own fleet of barges, the company ships scrap paper from Hong Kong to a mill in Southern China and then sends back finished product to be warehoused and sold in Hong Kong and throughout the world.

Sourcing the fiber to keep this loop flowing effectively is one of the several challenges facing Executive Director Billy Leung and the team at Fook Woo Group.

Although it is an Asian and world financial center, Hong Kong is a city that is by no means dominated by multi-national companies only.

While office towers with the world’s largest banking, insurance and

Both the skyscrapers and small shops have one thing in common—they generate scrap paper. Whether office paper in the financial district or old corrugated containers (OCC) in shops, recycling opportunities abound.

According to Leung, this urban forest is most commonly tapped by smaller collectors and scavengers, but the material works its way up the chain to a large recycler with a mill connection such as Fook Woo. The collection of recyclables in Hong Kong, as in other parts of China, can seem "very disorganized" to outside observers, says Leung.

But the Fook Woo Waste Paper Co. Ltd. division of the group has recycling roots in Hong Kong that trace back to 1968. At that time, Leung’s father Eddie was collecting material at the street level in the same manner that so many peddlers who supply Fook Woo still do today.

The company’s roots lie in collecting industrial paper from printers and factories, and its first recycling plant was devoted largely to shipping that grade. But Fook Woo has subsequently branched out into collecting all other paper grades as well as textiles, plastic bottles, aluminum cans and virtually any other marketable recyclables. Some materials are collected and marketed within the Fook Woo Environmental Technologies Ltd. division. In a comment that will sound familiar to North American recyclers, Leung says, "Customers don’t want to hear that you collect only one material."

In 1984, the Group created another division called CMDS (Confidential Materials Destruction Services Ltd.) to add secure shredding to its roster of services.

The broadening of its business means that Fook Woo Group now handles some 1 million tons of recyclable materials each year. Its divisions deploy some 160 vehicles and employ some 2,750 people at 18 facilities and offices.

The company’s largest investment to date has been on the consuming end with the creation in 1991 of a paper mill in Guangdong Province in Southern China.

That mill was a joint venture with the local government, but is now fully owned by the Fook Woo Group. The mill complex, which now has more than 20 pulpers, according to Leung, also produces tissue and duplex board. Those products are marketed through yet another division—Fook Woo Assorted Paper Co. Ltd.

In the less than two decades since the Leung family opened its first recycling plant, it has seized the opportunity to turn the Fook Woo Group into a diverse group of companies that can take full advantage of the booming Chinese economy and its need for more and more secondary fiber and finished paper products.

Whether to label Fook Woo’s growth as vertical or horizontal is difficult to say, but, in fact, circular may be the best geometric term to apply.

The company’s scope of operations has it working with office and hotel cleaning crews and scavengers on the collection end to major retailers and other users of paper products on the finished product side.

The fragmented and entrepreneurial nature of fiber and recyclable container collection in China has meant that Fook Woo has in most cases sought alliances with such collectors rather than trying to replace them.

According to Leung, a skilled scavenger collecting cans, bottles and paper can earn up to HKD$400 per day, or about US$50, which can translate into a much better living than a laborer or even a sales clerk can rely on.

These collectors quickly gain market knowledge and use that knowledge to raise the recycling rate of secondary commodities that are in demand. "These are the people who take the most advantage when the price [of a commodity] goes up," says Leung.

As an example, he points to PET bottles. "Three years ago, no one collected bottles; now, they get collected quickly here."

The company’s CMDS division, on the other hand, allows it to source fiber from the world’s multi-national banking, finance and manufacturing companies, almost all of which have offices in Hong Kong.

Additionally, Fook Woo Group has made some inroads into residential collection, but Leung acknowledges that city-run programs are not yet common. "Starting residential programs is always the trickiest part, because there are so many stakeholders," he comments.

The energy spent aggregating small amounts of paper in Hong Kong eventually results in barge loads of recyclables heading to the paper mill in Guangdong Province in Southern China.

There, some 250 metric tons of tissue and paper towels are produced each day, as well as rolls of newsprint, boxboard and duplex board. The Chinese economy will seemingly absorb as much product as Fook Woo can produce. "The tissue market, in particular, is growing very rapidly," says Leung.

Recently, the company has also built a plastics factory next to the mill that can convert its plastic scrap into recycled plastic fiber, ropes and bags.

As it has added new services, products and capital equipment, the Fook Woo Group has found itself growing beyond its Hong Kong and South China roots.

Although sourcing recovered fiber in Hong Kong and making finished paper for booming Southern China remain key activities, the company has also reached out to the wider world.

In addition to collecting paper in Hong Kong, the company now has depots or small plants in Southern China and either facilities or trading offices in Beijing, Shanghai, Manila and Tokyo.

The company’s operations rely on mobile material handling equipment made by Japanese companies like Toyota and Isuzu as well as one Shinwa baler from Japan.

At the CMDS confidential shredding facility, three shredders made by Ameri-Shred Corp., now based in Alpena, Mich., handle the array of office files and paper heading into the plant, while a baler built in Singapore (designed in part by Fook Woo) compacts the shredded paper.

The mill consumes some 1,300 tons of secondary fiber each day, about 1,000 of which is sourced within China and Hong Kong. But another 300 tons per day must be imported, with about 30 percent of that coming from the United States.

Fook Woo works in cooperation with American brokers such as Fibre Trade Inc. of Burlingame, Calif., to source that material.

Seeking additional allies from throughout the world prompted Billy Leung to offer a presentation at the Paper Division meeting at the Bureau of International Recycling (BIR) Spring 2006 Convention, which took place in Beijing that year.

At the session, Leung outlined Fook Woo’s operations and invited any and all interested parties to contact him to explore business relationships.

Reaching out to the wider world will remain a key task for Leung and the Fook Woo Group in the years to come, as it has for so many Chinese business managers and owners this decade.