When one steps onto the factory floor of Oriental Green Materials Limited (亞東綠材), a subsidiary of Far Eastern New Century (FENC), the first thing one would notice are the giant bricks made out of crushed PET bottles, each weighing up to 400 kilograms.

It is far more than just a recycling company. It’s the driving force behind FENC's green transformation and the key to improving its profits.

Taiwan uses up an average of 5 billion PET bottles every year. That's 100,000 tons of plastic, enough to fill 1,200 Olympic-size swimming pools. 

Half of them are recycled on Oriental's premises; the bottles are smashed, cleaned, and reconstituted into pellets. The recycled PET material, better known as rPET, can be used for anything from new bottles to clothing.

"Recycling has become good business," says Ching-Tsu Peng (彭清族), CEO of Oriental. The carbon footprint of rPET is 40% less than that of virgin plastic. Because of this, beverage companies like Coca-Cola and Nestlé, sports brands like Nike and Adidas, and even toy company Lego and furniture brand IKEA are lining up to use rPET in their products as a way of reducing carbon emissions.

The booming market, coupled with Oriental's new palletizing production line, which came online in 2021, boosted the company’s revenue in 2022 to US$79 million, an annual increase of 80%. FENC derives 20% of its revenue from environmentally friendly products. Oriental's rPET production is central to all this.

Rebirth of an old money-losing venture

The fact is, it was not always smooth sailing for Oriental. For twenty years, it hemorrhaged cash. It was a hot potato that shareholders couldn't wait to get rid of.

In 1988, Far Eastern, Shin Kong, and Heysong jointly established a company named Taiwan Recycling (台灣再生), which was the precursor to Oriental. It was Taiwan's first PET bottle recycling factory. 

Unfortunately, neither the technology nor the market were ready, and the venture lost money. By 2007, it had nearly lost its entire capital stock. The other founders threw in the towel, and so it became FENC's subsidiary.

Oriental's early rPET products suffered from unappealing colors and low tensile strength; they were only good for making cheap, short plastic fibers, which are mainly used in carpets and stuffed toys. After FENC took the reins, it pivoted toward long fibers and food-grade rPET, both of which have higher value and a higher barrier to entry.

Under FENC's direction, Oriental invested in new infrared testing equipment to replace manual sorting. To comply with the requirements of food-grade rPET, the assembly line was also upgraded.

"Suppose a farmer tosses a bottle that he used to keep pesticide in onto the pile, how will we make it safe?" Peng says as an example. When Oriental conducted food-grade rPET tests in compliance with the US FDA standards, it soaked the plastic bottles for two weeks in eight different types of chemical solutions. The concentration of residue on the rPET material must be below 200 ppb for it to be safe.

In addition, Oriental developed a tracking system: a barcode is attached to each giant block of bottles before it enters processing, and slight adjustments are made to the reconstitution formula every year. That way, if the end customer would like to check the source of the rPET, they can use the barcode and test results to find out when and where the rPET was made.

"When brands buy recycled materials, they need a vendor they can trust, and there's always a catch," explains Peng. Recycled materials match raw materials in quality, but they cost more to produce and sell for 30% to 50% more. The "catch" is that end customers will ask to test the materials as part of the trust-building process.

Recycled materials need to earn trust from brands, and the source of trust lies in the control of ingredients. (Source: Chien-Tong Wang)

Carbon economy a boon to Oriental

In the 2010s, demand for rPET increased as the world focused on cutting emissions. Oriental expanded production and cut the unit price in half as a result. The company began making money. Even though its biggest customer was still FENC, international orders also started trickling in.
Peng saw that demand was on the upswing. In 2014, Oriental invested almost NT$800 million to establish a second plant in Taoyuan. It also improved its production lines and got rid of bottlenecks. Currently, it has the capacity to recycle 60,000 tons of PET bottles a year.

In order to increase the value of its output, Oriental set up a palletizing line in its new factory in 2021. Now, it can manufacture rPET polyester pellets directly. This is a major reason that revenue skyrocketed last year. When asked about rPET's profit margins, Peng would only say this: "Revenue from (rPET) makes up only a quarter of FENC's new petrochemical fibers business but contributes more than 40% of the profit." In other words, profit for recycled materials is much higher than that of virgin materials.

The benefits of rPET extend beyond stellar profit margins. A senior manager at a major petrochemical fibers company observes that demand for recycled materials is outpacing supply around the world. On the other hand, virgin plastics is a buyer's market. FENC's strategy has been to package recycled materials and virgin one in their deals to maintain an edge in the hypercompetitive virgin market.

Another thing to note is that more PET bottles appear in trash cans in summer than in winter. The peaks and troughs are clearly delineated. Oriental plans to expand warehouse space in its second plant to store excess materials in the summer. This way, business will be booming all year round.

Through the expansion of the storage room, Oriental Green Materials operate stably all year long. (Source: Chien-Tong Wang)

The next milestone: clothing

Now that the business of recycling PET bottles is on track, Oriental and FENC have their eyes set on the next goalpost: they want to recycle clothes and fabrics into rPET.

Peng explains that while the constituents of PET bottles are relatively simple, fabrics are made from a mix of materials, and so chemical recycling will have to be employed to extract useful components out of the contaminated waste stream. This is a difficult process that costs ten times more than producing virgin materials.

"It's hard for the market to grow when the price is so steep, but this is a path we must take if we are to succeed," says Peng. FENC plans to establish a test production line in Taiwan with an annual capacity of 1,200 tons. Its specialty will be recycling fabrics and the more difficult variants of colored PET bottles. Its success will mean a great step forward in rPET technology.

During a shareholders' meeting earlier this year, FENC Chairman Douglas Hsu (徐旭東) described investment in green products as "unlimited". Its contribution to revenue is set to grow from the current 20% to 40% by 2030. This shows the conglomerate’s commitment to its green transformation. It goes without saying that Oriental will have a major role to play.
Peng admits that it's been a long, hard journey, and it was difficult to retain talent. "People used to be embarrassed to admit that they work in recycling; they wouldn't even tell their families."

Now Oriental Green Materials Limited is Taiwan's champion and set to take the world by storm. Peng says that there is a future in recycling after all.

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Translated by Jack Chou
Uploaded by Ian Huang