A container terminal in Kowloon, Hong Kong
By Ed Avis
Prices of used large-format copiers in the U.S. have plummeted in the past two weeks, because Chinese authorities have prevented containers of used copiers in their ports from being unloaded.
“The only people buying used copiers in the U.S. now are paying a nickel on the dollar,” says Tom McNew, owner of Digital ES, which buys used copiers in the U.S and resells them in China. “My advice to people with used equipment to sell is to wrap it in plastic and stick it in the back room and forget you have it until this passes over.”
Hundreds of containers of used copier equipment were seized in Hong Kong on August 19, and 62 Chinese buyers of that equipment were taken into custody, according to Bob Aspland of Aspland International, a Hong Kong-based company that provides marketing research services to Chinese and American companies for import and export opportunities.
“U.S. prices collapsed on Monday and will continue in a free fall over the next few months,” Aspland wrote in an email. “Be prepared to move your marketing efforts away from China to scrap metal companies and the U.S. domestic market.”
McNew said that it’s difficult to determine exactly why Chinese authorities took this action, but that it evidently has something to do with Chinese importers not paying the expected taxes on that equipment.
“The authorities in China have made some arrests and it seems to involve taxation,” McNew says.
David Ma, president of Kingnote, another company that buys and sells used large-format copiers, added that the arrests seem to be part of a deeper problem.
"On the surface, the arrests that happened one week ago are what affected many vendors/customers," Ma wrote in an email. "But actually there is something bigger that happened a little time before that. Many people did not pay enough attention to the fundamental regulation changes happening in China about Environmental Protection/Used Equipment import. The tightening of the regulation and policy there will have a lasting impact yet to see. That will overturn the current business model of used copiers/large formats exporting to China."
Aspland says the Hunan Xinhua Chamber of Commerce issued a statement about the situation, part of which said:
“The ‘Chinese culture office equipment manufacturing industry association’ made contact. The association, as the national manufacturer of copier remanufacturing standards, has made it clear that this afternoon will make every effort to understand and coordinate the matter, hoping that we will be able to report on the relevant units so that they can report to the relevant ministries on Monday, Level and national high-level dialogue, communication.”
So what does the future hold?
"We are still buying on the market but being cautious, and we will watch how this going to pan out in the near future," Ma says.
Adds McNew: “It would be my expectation that prices will fall at an alarming rate and best thing to do is hold onto the inventory.”
Stay tuned to APDSP Today for more developments.