Recycling rakes in huge profits for demolition companies

PUBLISHED : Saturday, 19 June, 2010, 12:00am
UPDATED : Saturday, 19 June, 2010, 12:00am

The heads of several companies who specialise in demolishing homes have given a rare glimpse into the mainland's cut-throat urbanisation process, which sees some participants make profits of up to 400 per cent.

The companies compete - sometimes literally fighting - for demolition projects from which they can make hundreds of thousands of yuan through recycling steel reinforcing bars, wooden window frames and doors, bricks, flooring and even electricity meters, the Shaanxi-based Huanshang News reported in a story based on interviews with several key industry players.

A head of a demolition company in Qian county, Shaanxi , said recycling demolition waste was a lucrative business.

'The profit comes from the steel bars and doors and windows, plus what the developer pays, or minus what you pay the developer and fees of renting bulldozers, workers and trucks,' he said. 'This is a sure-win business. Everybody makes money as long as there is no safety accident.'

A second demolition company boss from Qian county said: 'The doors and windows are the most valuable things in demolition. For a village demolition project of around 100,000 square metres, the contract price is 15 yuan (HK$17.10) per square metre and it is actually worth 26 to 27 yuan per square metre.

'You can make millions of yuan with ease after a couple months.'

The bosses refused to reveal their names.

A third boss said: 'Everyone knows village demolition is a good job. It has high profit margins. The sun rises and falls, and you get 100,000 yuan in your pocket. It rises and falls again, you get another 100,000 yuan.'

He said the way demolition companies won projects depended on their relationship with officials.

'If you have the relationship you go to the authorities directly, or you depend on the introduction from a middleman,' one of the bosses said. 'As long as you can establish contact with the middleman, you can get the project anyway. It's just a matter of money.

He had bought a project from a middleman for 10 yuan a square metre. 'That middleman made two million yuan simply by moving his lips,' he said.

Demolition companies needed qualifications which they usually acquired by finding a company to be their affiliate, or they simply borrowed the licences from other companies. His company borrowed 16 licences for one project.