This is the English edition. The article body below is the publisher's English rendering of the original Chinese article; figures, license numbers and institutional names follow the original.
In one sentence: the money behind dismantling subsidies comes from a processing fund levied on producers and importers of electrical and electronic products according to sales volume; it enters the central budget and is then allocated to processors as a reward in place of subsidy under a factor method, in which standardised recovery and processing volume carries 70% of the weight and the remainder is calculated from processing capacity and environmental investment.
1. Producers Pay, Not Consumers
The processing fund is levied on producers and importers of electrical and electronic products, at fixed rates per unit on sales volume within the catalogue. It is collected at the factory gate or at import, enters the central budget, and is then arranged through the budget to subsidise the dismantling stage.
The design reflects extended producer responsibility: whoever places a product on the market bears the cost of disposing of it at end of life. The price a consumer pays may already embed that cost, but the obligated payer is the producer or importer — not the consumer, and not the recycling company.
2. Two Separate Lines: Collection and Allocation Never Meet
The fund is not a closed loop in which a company pays in and receives the same amount back. Collection is one line, allocation is another, and the budget sits between them. What a processor receives comes from the annual budgeted subsidy pool, not from the fees paid by particular manufacturers.
Two consequences follow. First, the total subsidy is constrained by the budget, so not every compliant unit of volume is fully paid. Second, allocation needs rules, which is where the factor method comes in. A company cannot buy a larger subsidy by paying more; it can only compete for share by raising standardised volume.
3. The Factor Method: Shares Calculated from Objective Factors
The factor method fixes a total first, then calculates each region's share from objective factors and weights. Typical factors include standardised recovery and processing volume, processing capacity, environmental investment and regional layout, each carrying its own weight.
It differs from applying per project and being reimbursed on actual cost. Reimbursement looks at what a company spent; the factor method looks at how much compliant work it completed and how capable its facilities are. That explains why identical volume can yield different amounts.
- Standardised recovery and processing volume — assessed dismantling volume, the heaviest weight.
- Processing capacity — approved capacity and the level of line configuration.
- Environmental investment — completeness and operating condition of pollution control facilities.
- Regional layout — coverage of the collection network and service radius.
4. What a 70% Weight Actually Means
Standardised volume carrying 70% is the heaviest item in the rule. The design steers money towards how much was actually dismantled and how compliant that process was, rather than how large the plant is.
The direct implication: capacity is only the entry ticket, volume is the score. Idle lines and low volume mean that even heavy environmental spending earns only the remaining factors. Conversely, high volume with unclear output destinations puts compliance in doubt and erodes this same weight.
5. Accounting for the Subsidy Once It Arrives
The subsidy is part of revenue, not all of it. A dismantling business earns from three streams: recycled material sales, reusable component sales and subsidy funds. Costs include purchase price, labour, energy, environmental disposal fees and the cost of capital tied up.
Treating the subsidy as profit overstates project returns. It is subject to assessment delays and possible reduction, so it should be booked as receivable but uncollected, with working capital headroom. What ultimately decides profit or loss is still material recovery rate and operating efficiency.
6. Practical Notes
- Model the subsidy separately from material sales revenue when appraising a project.
- Track annual adjustments to the allocation rule; weight changes move the budget directly.
- Build a three-way reconciliation of dismantled volume, output volume and sold volume to test compliance.
- Forecast subsidy receipt on a rolling quarterly basis to avoid cash flow breaks.
- Keep invoices and acceptance records for environmental investment, which also counts as an allocation factor.