Why does the State Council issue a heavyweight document to support the import of such products?, Exclusive Analysis | Shanghai Single Enterprise Pilot | State Council | Pilot | Document

Recently, the State Council issued a document supporting the pilot import of remanufactured products from key industries in free trade zones and ports such as Shanghai, Guangdong, and Hainan. This means that remanufactured products that were previously prohibited or restricted from being imported by our country can now be legally imported if they meet new product standards.

However, with the relaxation of relevant measures, there will inevitably be some foreign garbage, old products, and others attempting to pass the test under the guise of remanufactured products. To this end, it is necessary to steadily promote through case by case pilot methods. The reporter learned exclusively from the Lingang New Area Management Committee of the Shanghai Free Trade Zone that before the national pilot program in "conditional" areas, the new area had secured the opportunity for a leading international remanufacturing enterprise to pilot. After more than a year of single enterprise pilot, it has effectively explored the management mode of imported remanufactured products for the country and accumulated valuable regulatory experience.

This pilot project also demonstrates the mission and responsibility of Lingang New Area to explore new paths for the national trial system. Carrying out the import of remanufactured products not only reduces enterprise costs and enriches consumer choices, but also has profound significance in promoting better domestic integration with international norms.

Advantages from both economic and environmental perspectives

Why would the relaxation of imports of remanufactured products have these impacts? To answer this question, the first step is to clarify: what are the "benefits" of remanufacturing products?

In the Lingang Remanufacturing Industrial Park, the factory of Shanghai Jinzhi Automotive Parts Remanufacturing Co., Ltd. is stocked with a large number of automotive components such as car doors, bumpers, leaf panels, and headlights. There are dents on the surface of the car door, scratches on the bumper, and broken headlight pins... Most of these components have only suffered minor damage, but if they are not remanufactured, their consequences are nothing but two: either they flow to workshop style repair shops, becoming non-standard repair parts, and their value is greatly reduced; Either it can simply become waste and be recycled and dismantled.

In the hands of remanufacturing enterprises such as Jinzhi, "waste parts" have undergone a completely new transformation through new technologies such as 3D digital technology, surface engineering technology, and large database modeling. They have been branded and labeled as "remanufactured products" by the remanufacturing enterprises themselves, becoming standardized, high-quality, and high value-added products, and are being reintroduced into the market.

The quality of the product is also fully guaranteed. Jinzhi introduced that it has established a large database model, covering thousands of vehicle models, and produces remanufactured products according to various parameter standards of original and new parts. The quality has also passed the certification of the Ministry of Industry and Information Technology and the quality audit of NKFA remanufactured products. After the product is launched, it has a warranty and traceability, just like a new product.

Jinzhi remanufactured products awaiting shipment. Photo by Hu Xingyang

It can be seen that remanufactured products can effectively replace new parts, greatly reducing resource waste, which is also in line with the trend of major industry transformation under the global "dual carbon" background.

The front headlights of a car are a representative example. Zheng Jie, the general manager of Jinzhi Remanufacturing, picked up a headlight that looked almost intact overall. When he turned to the back, he saw that one of the plastic lamp legs was broken. "The original headlights produced by the host factory are all integrated, without individual replacement parts for the lamp legs. In car accidents, the front headlights are easily hit, and often the lamp itself is fine, but the lamp legs are damaged when subjected to force. Finally, the entire expensive headlight module needs to be replaced, which is very expensive." Zheng Jie said, "We model and 3D print the headlights of various brands and models of cars, manufacture replaceable lamp leg accessories, and significantly reduce costs and energy consumption without affecting the performance of the headlights."

The original Aston Martin DB sports car headlights with a single value of 79000 yuan are priced at around 15800 yuan for remanufactured parts, with a 20% discount. More importantly, compared to newly manufactured products, remanufactured headlights can achieve approximately 70.0% energy savings, 92.6% consumption reduction, and 76.9% emission reduction. From both an economic and environmental perspective, remanufactured products have irreplaceable advantages.

Are there really no good products that are cheap?

However, the development of the remanufacturing industry in China is still relatively lagging behind. On the one hand, the relevant policies and management documents are not sound enough. On the other hand, consumers also have a biased understanding of remanufactured products, generally believing that they are no different from repair parts and refurbished parts, and that "cheap goods are not good".

A BMW car shell assembled from remanufactured products by Jinzhi. Photo by Hu Xingyang

On Jinzhi's online sales platform, remanufactured products receive a large number of inquiries every day due to their highly attractive prices. However, the trading volume and the number of inquiries are often disproportionate, reflecting insufficient market recognition.

In developed countries such as Europe, America, and Japan, the attitudes of the public towards remanufactured products are completely opposite. Taking the automotive segment as an example, remanufactured components account for over 70% of the after-sales market. Major retailers such as Apple, IKEA, and Nike actively promote their products with attributes such as "remanufacturing" and "making renewable materials" as positive selling points. Consumers are also very satisfied with this and are more willing to purchase products with green labels.

"The State Council has issued a document supporting the pilot import of remanufactured products, which will help enhance the recognition of remanufactured products in the domestic market and indirectly promote the development of the domestic remanufacturing industry," Zheng Jie said.

Forcing domestic enterprises to adapt to international rules

On the other hand, the quality and performance of imported remanufactured products are equivalent to or higher than that of prototype new products, and they have a significant cost advantage throughout their entire lifecycle. Huang Yue, Deputy Director of the Special Comprehensive Bonded Zone Department of the Lingang New Area Management Committee, believes that domestic regulations do not specify the recycling and reuse obligations of consumer product manufacturers, and enterprises do not have the motivation to establish a core recycling system and enter the field of remanufacturing. After the pilot program is launched, once low-priced and high-quality imported remanufactured products reach a certain scale, they will have a "forcing" effect on domestic enterprises.

A massive amount of old parts waiting to be recycled. Jinzhi Offering Pictures

At present, it is urgent for major domestic manufacturing enterprises to strengthen recycling and remanufacturing, save resources and energy. Firstly, they must respond to the national "dual carbon" goal call and take the path of green, low-carbon and ecological development; Secondly, we also need to align with increasingly stringent international rules such as carbon emissions.

In the navigation and aviation industries, international industry organizations have proposed detailed decarbonization goals. In the manufacturing and retail industries, the European Union has even set market access thresholds for carbon emissions during the lifecycle of goods, and many developed countries have also established extended producer responsibility systems. Simply put, for every 100 cars/appliances/mobile phones sold by a company, it has an obligation to recycle and reuse dozens of them. If it cannot be achieved, one must pay a high carbon tax or simply not be allowed to enter the market.

LNG, methanol and other new shipping energy sources are gradually becoming mainstream. Photo by Yang Shiyao, journalist from Xinhua News Agency

This is not only for environmental protection considerations, but also a barrier intentionally set by developed countries. Anyway, China is actively promoting its accession to high standard economic and trade agreements such as the Comprehensive and Progressive Trans Pacific Partnership Agreement and the Digital Economy Partnership Agreement. In order to better align with international high standard economic and trade rules and for enterprises to "go global" more smoothly, it is necessary to adapt to these strict rules in advance.

Provide exploratory experience for national institutional innovation

The Lingang New Area is the forefront of opening up to the outside world, undertaking an important mission to test the system for the country and explore new paths. Therefore, when the enterprise proposed the import demand for remanufactured products to the Lingang New Area Management Committee, the responsible persons of various relevant departments quickly evaluated the feasibility, formulated a pilot plan, and communicated with the national ministries to strive for it.

A staff member of the New Area Management Committee introduced that in the process of striving for the pilot implementation, the advantage of the New Area lies in being more familiar with international economic and trade rules. "When enterprises speak of their needs, everyone understands the key points; when we communicate with national ministries and commissions on 'why we must break through this policy', we can also explain more deeply and comprehensively. This played an important role in the process of pilot approval and implementation."

When piloting single enterprises, the new area mainly explores the list of relevant imported products and the specific standards, requirements, conformity assessment procedures, and regulatory measures applicable - whether to import prohibited or restricted old mechanical and electrical products under the name of remanufactured products, whether to comply with all applicable technical requirements of the country for new product quality standards, safety and environmental performance, and whether the words "remanufactured products" are prominently marked

After more than a year of pilot exploration, the Lingang New Area has developed a relatively complete management model, which has also provided a solid foundation for the State Council to support the pilot areas in carrying out pilot projects for the import of remanufactured products in key industries. The reporter learned from multiple free trade zones such as Nansha and Qianhai in Guangdong that several pilot areas designated by the State Council are currently contacting and consulting the Lingang New Area Management Committee, hoping to come and learn from them. A person in charge of the Qianhai Management Bureau said, "The import pilot of remanufactured products this time, Lingang has taken the lead in the country."