Eco Chains in China The Guitang Group

An important strategy for implementing the Circular Economy was inspired by a Southern China case that evolved over several decades. The term used in CE planning is "eco-chain," where resource use is optimized through a chain of uses for any by-product. The Guitang Group (GG) in Guigang City developed a sugar production based eco-chain internally and now extends it to its competitors in the city.

China produces 10.5 million tons of sugar annually from 539 sugar mills, the majority from sugar cane. Over the last few years, the sugar industry in China has experienced a significant economic decline. This industry has to increase its productivity to remain competitive with Brazil, Thailand, and Australia, three major sugar producing countries. Low prices for sugar on world markets in recent decades have eliminated the industry in former leading countries, including Hawaii and Puerto Rico in the U.S. Sugar production is becoming much less competitive in the Philippines.

The Guangxi Zhuang Autonomous Region, in the far south of China, is the largest source of sugar, producing more than 40% of the national output. The cost of producing sugar has been high in Guangxi. Most farmers have small landholdings, productivity is low, and sugar content of the canes is low. Most refineries are smaller scale and fail to utilize their byproducts. This gap causes them to lose secondary revenues and generate high levels of emissions to air, water, and land. The farmers burn the cane leaves every harvest season, generating air emissions. Currently 70,000 families grow sugar in the region and there are 100 sugar mills. One-third of Guigang City's economy depends upon sugar related industries (Zhu and Lowe 2004).

The Guitang Group is a city-owned enterprise formed in 1954 that operates China's largest sugar refinery, with over 3,000 workers. The group owns 14,700 hectares of land for growing cane. Though the sugar industry in China is generally responsible for high levels of emissions, this company has created a cluster of companies in Guigang City to reuse its by-products, thereby reduce its pollution. It has also created supplier relationships with other sugar mills to increase input to its paper mill and alcohol refinery by using their by-products.

The complex includes: an alcohol plant, a pulp and paper plant, a toilet paper and tissue plant, a calcium carbonate plant (recycling waste water from the paper mills), a cement plant, a power plant, and other affiliated units. The goal of the initiative is "to reduce pollution and disposal costs and to seek more revenues by utilizing by-products" (Duan 2001). The GG has established two primary eco-chains, each of which has additional members and some internal feedback loops.

The annual total production of the complex includes sugar (150,000 tons), raw sugar (300,000 tons), pulp (150,000 tons), paper (200,000 tons), alcohol (10,000 tons), cement (330,000 tons), alkali (35,000 tons) and fertilizer (30,000 tons) (Guitang Group 2004). In the late 1990s the secondary products accounted for 40% of company revenues and nearly as large a portion of profits and taxes paid.

The synergy among the Guitang Group's production facilities reduces the market risk for each product and enables an integrated profit for the complex. For example, the sugar refinery suffered a large loss in 1999 because the price of sugar in China decreased by about 1,000RMB (US$122) per ton compared with 1998. However, the GG remained profitable because the prices of other products such as paper remained high and it increased the production of other products (Guigang City and Guitang Group 2000).

The GG is supporting its farmer suppliers in the transition to cultivation of organic sugarcane with higher sugar content, increased productivity, and an extended harvest period. This will reduce the cost of the sugarcane supply per ton as it improves quality and earns a premium price. Eliminating chemical inputs will reduce farmers' costs while higher productivity also increases income {Guigang City and Guitang Group 2000).

The GG's plans for the future include expansion of the production complex and changes in processes at various stages. This innovative plan includes:

• Construct a new beef and dairy farm using dried sugarcane leaves as feed

• Construct a milk processing factory to make fresh milk, milk powder, and yogurt for the local market

• Construct a beef packing house to process beef, oxhide, and bone glue

• Build a biochemical plant to make amino acid based nutrition products and other bio-products using the byproducts from the beef packinghouse

• Develop a mushroom growing company using manure from the new dairy and beef farm

• Process residue from the mushroom base to use on sugarcane fields as natural fertilizer

China's expected entry into the World Trade Organization poses a major threat to the economy of Guangxi. With barriers to lower-priced imports lowered, the economy of this region could be injured profoundly. So the Guitang Group's eco-industrial initiative has strategic importance for this and other sugar producing regions in China.

Continue reading here: City of Guigang Plans to Become an Ecoindustrial City

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