Where Do All the Clothes You Don't Want Go?

Because we buy clothes more often, we also discard more of them. Getting rid of them is a headache for some people and a business for others, though not always a respectable one.

Huaxin Town, in Shanghai's Qingpu District, is about two hours' drive from the city center. The town has a large warehouse that, from the outside, looks like any other. Two dogs chained at the door bark loudly, protesting the few visitors who come.

Inside, the surprise is less the sight than the smell: the damp, musty odor of clothes dried indoors during a rainy spell hits you at the door. The warehouse is about the size of two basketball courts and full of old clothes. Some are bundled into piles, some lie loose on the floor, and here and there other junk is mixed in.

There are 60 tonnes of old clothes here. Assuming a mix of winter and summer wear at 3 garments per kilogram, that comes to roughly 180,000 items. Shanghai's Hongkou District alone reportedly sends 81.9 tonnes of clothing here every year.

The warehouse is run by Yuanyuan Industrial, a company of fewer than 10 people. Its business model is simple: it places "pandas" in Shanghai's residential neighborhoods. The pandas are clothing collection bins shaped like the animal.

Since 2010 the company has put 2,000 bins in more than 1,700 residential compounds across Shanghai (1,300 panda-shaped iron bins and 700 plain sheet-metal ones). Staff visit the compounds regularly to empty the clothes residents have thrown away and haul them back to this warehouse.

Yu Miao, 25, badly needs a panda bin. At the bottom of her wardrobe sits a pile of clothes she doesn't know what to do with: some pilled after two wears, others fell out of favor after one. Torn between the urge to buy and the voice of reason, most people give in to the urge and then have to live with the clutter. Since the "danshari" (decluttering) craze took off, what to do with the clothes that get "streamlined" away has become a problem for many.

Some people, though, have turned that pain into an opportunity.

Yang Yinghong, Yuanyuan's general manager, leads me into a small room in a corner of the warehouse. "These are the clothes we can donate. They make up 3-4% of what we collect from the panda bins, and they'll be shipped to poor areas of Yunnan and Inner Mongolia," he says. Donated clothes must be at least 90% new and are sterilized under ultraviolet light. Compared with the vast warehouse, the room is so narrow that I almost have to turn sideways to avoid bumping into him.

Americans throw away about 10,000 tonnes of clothing a year (not counting donations and the secondhand market). The clothes go from the bin to the landfill, and the synthetic chemicals in some of them take more than 10 years to break down. That is why clothing is sometimes called "the second-largest pollutant after oil."

Chinese consumers are no different. Shanghai produces 20,000 tonnes of household waste a day, and old clothes make up 2.55% of it. That means 500 tonnes of old clothing, the equivalent of 1.5 million garments, is thrown away every day. The figure dates from around 2013 and comes from a study by the Shanghai committee of the Chinese People's Political Consultative Conference; Yang Yinghong was a member of the research group. Beyond that, almost no comparable statistics exist.

Many people assume an old garment's life ends in the bin. For Yuanyuan, the business is only beginning.

Yuanyuan is the company the Shanghai municipal government has designated to collect waste clothing. Six or seven similar companies exist, including Ronghao and Wanrong. The difference is that Yuanyuan's project was approved by the city's development and reform commission, while the others were approved by the waste materials office of the city's greening and city appearance bureau.

Whoever collects the clothes, only a small share ever goes to donation. After the 2014 Ludian earthquake in Yunnan, Uniqlo worked with the China Foundation for Poverty Alleviation to give collected used clothing to survivors. The foundation asked Uniqlo to supply only uniform types of garment, for example only down jackets and trousers, because "if survivors see that you got a down jacket and I only got a jacket, they'll feel the gap very keenly," said Mr. Wang, the foundation's project manager. The clothes also had to meet several other conditions: 90% new, warm, and no summer wear.

Uniqlo began putting collection bins in its Shanghai stores in 2012. "What we tell consumers is that the clothes we collect are given to people in need. Anything that doesn't meet our collection standards, we can only dispose of," Uniqlo told QDaily.

According to Yuanyuan, donated clothes are the best quality and form the first tier. The second tier, slightly worse, is sold to Africa and South America. These are mostly summer clothes, which must also be free of tears and stains. Yuanyuan bales them and sells them at US$1,000 a tonne to traders from those regions, who resell them in local markets. This tier makes up 10% of what the panda bins collect.

Add the donated clothes to those shipped to Africa and together they account for only a little over 10% of everything collected. The rest is treated as raw material. Clothing recovery divides into "reuse" and "regeneration": reuse covers donation and the secondhand market; regeneration means reprocessing the clothes into new materials.

Yuanyuan ships the remaining clothes to a joint venture in Hangzhou, Dingyuan Textile Technology Co., Ltd. There an automatic infrared-spectrum system sorts the garments, and separate opening machines break them down into raw material for non-woven fabrics and for textiles. The result can be used to make new clothes, car interior parts, insulation, furniture and all kinds of decorative building materials, and can even be made to mimic the structure of soil.

Reprocessed material also sells for less. "New wool costs 60,000 yuan a tonne. The wool fiber we make by processing old clothes is identical, and costs only 10,000 yuan a tonne," Yang Yinghong says.

"It's best if clothes can be donated or traded secondhand, because then they still have value and are still being used, instead of being shredded to start a new cycle," Mr. Xu, a co-founder of the clothing recycling website Lvdai (Green Bag), told QDaily. He declined to give his full name.

Lvdai has been running for six months. Unlike Yuanyuan, it lets you book a pickup online, and after your clothes are weighed you receive a small payment. Lvdai then sells the clothes at a higher price to environmental organizations for processing and pockets the difference. It is something like the "SF Express" of clothing recycling.

Lvdai is still working out its business model. It plans to expand offline and set up collection bins like the pandas. "Offline is definitely cheaper. With online collection you have to pay for shipping, and you can't control how much the clothes weigh," Mr. Xu says.

Expanding offline is easier said than done. As Lvdai puts it: "To be blunt, the companies that can put panda bins in residential compounds all have connections." Yuanyuan's "designated" status, mentioned above, is what entitles it to place bins in the compounds. If the other six or seven companies want to do the same, especially to claim spots in the most populous compounds, they have to "pull a few strings."

Some of them, however, never collect the clothes at all. Instead they act as "sublandlords," renting each panda bin to secondhand peddlers for a few dozen yuan a month. On top of that, Yuanyuan's own panda bins are often smashed open at night and the clothes inside stolen, so when staff come on their rounds they find the bins empty.

The peddlers give the clothes from the panda bins a quick going-over, attach brand-new tags and put them straight on the market (often claiming they are export surplus). Some sell them at street stalls, feeding an underground secondhand market where refurbished clothes can earn margins above 30%.

"They make money from two things: China bans offline trade in secondhand clothes, and Chinese people don't like secondhand clothes," Xu says.

China has no clear rules on the secondhand clothing market, or rather, different agencies have different rules. Yet the market exists, which means hygiene and disease-control problems are very likely going unchecked.

Many countries have been through something similar. In the early 20th century, Japan saw a boom in secondhand clothing shops selling garments mostly imported from the United States, with jeans the best sellers. Dealers washed and disinfected the imports and threw away anything torn or stained. But that meant large quantities of twice-discarded clothes slipped into looser trading chains. Today Japan's secondhand market follows strict industry rules. In "furugi" (vintage) shops in particular, which sell not merely used clothes but garments kept for a certain number of years and valued for their cultural worth, every item goes through thorough washing and disinfection before it reaches the shelves.

The secondhand market is in fact the fourth outlet for old clothes, after donation, export and reprocessing. In the internet age, it can be a company's commercial operation or a person-to-person deal. On platforms like Xianyu, few sellers say anything about how clean a used garment is, and the platform itself has no specific rules.

Liangyihui is a secondhand fashion platform. Over the past year it has focused on fast-fashion brands and has sold more than 20,000 used garments. It chose fast fashion because that is what people buy most of, and it wanted to meet the most pressing need. If your clothes meet its standards for brand and condition, a courier collects them from your home, and Liangyihui lists them on its website and sells them for you at a price below what the garment cost on discount.

But it is a tough business. "A secondhand handbag keeps 40% of its price, while fast-fashion clothes keep only 15-20%," Ken, Liangyihui's founder, told QDaily. With accessories that aren't worn against the skin, such as handbags, buyers will accept a flaw or two, but a garment loses much of its value the moment someone has tried it on.

A Michael Kors bag, for example, costs 1,500-2,000 yuan on discount and sells online for only about 800 yuan. A discounted Zara garment costs 300 yuan and sells online for only 50. Liangyihui also has to cover shipping, cleaning and photographing the items for the seller. "When you sell a Zara piece, there's basically no profit left at the end," Ken says.

Zara, Vero Moda, H&M and Ochirly make up 40% of the brands on Liangyihui. Uniqlo's styles are too plain and its prices too low, so its clothes have almost no resale value; Zara is considered the best bet in secondhand fast fashion.

Liangyihui is not yet profitable, and a number of other Chinese secondhand clothing companies, such as Taoshenbian, Youxian, Sihuo and Xiaojiaoyi, have already gone under. Secondhand markets abroad, by contrast, are fairly mature. Tradesy, Vinted and Twice are good examples: Vinted has been operating since 2008, and Twice was later bought by eBay. One big reason these companies have survived is that people abroad don't mind secondhand clothes, while Chinese consumers won't accept them. No company hoping to sell secondhand clothes in China can get around that gap.

Companies like Tradesy and Vinted only provide a platform; buyers and sellers trade with each other directly, and the deal depends on mutual trust. In China, consumers worry that even new goods on Taobao might be "fakes," so trading secondhand clothes is far more fraught. Companies like Liangyihui are essentially paying for trust: they send sellers' clothes to professional cleaning firms to be cleaned and disinfected before they dare list them online.

This may be the root reason none of China's online secondhand shops makes money. Most are a year old or younger. After struggling for a year, Liangyihui decided in 2016 to change course and sell only "affordable luxury" brands such as Ralph Lauren, Tory Burch and Kate Spade.

For all these reasons, only a tiny share of secondhand clothing in China is ever resold.

There is one exception, in which old clothes become a gain rather than a burden: the "charity" marketing of fast-fashion companies. H&M, the first to launch a used-clothing collection program, works with the recycling company I:CO and has even released a fashion line made from old clothes. According to its instructions, customers don't need to do anything to their old clothes; they just pack them up and bring them to any H&M store.

On the website it set up for the program, H&M writes that customers can see information for each country, the charities chosen, the amount of clothing "we" have collected, and how much money "we" have donated to particular charities through the initiative. "As of February 26, more than 1,000 tonnes of clothing have been collected in mainland China, which makes us very confident in this environmental effort."

It looks a little like a small payment to ease its own guilt. Fast fashion does not follow the economic logic of "diminishing returns." That is, a factory may not be very efficient when it first starts making clothes, but given enough time its workers learn the process and output per worker rises. Fast fashion, though, turns out new designs every few days, so resources are quietly wasted.

Fast fashion also depends on rapid turnover. Consumers like Yu Miao don't spend much on each purchase, so they don't hesitate long before throwing things away, and they don't feel much guilt. The more often people buy, the more likely clothes are to be thrown out. We were unable, however, to find out what share of secondhand clothing is fast fashion.

Under H&M's program, every time a customer hands in old clothes, they get a 15%-off coupon with no conditions attached. A company representative told QDaily: "We do not encourage consumers to overconsume and create waste."

But how many people can resist a 15%-off coupon?