Chinese Apparel Makers Face Pressure to Reduce Water Pollution

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Esquel spent heavily on a water-treatment system at its Gaoming site. (Photo credit: ESQUEL)

Article courtesy of Kathy Chu | June 2, 2015 | The Wall Street Journal | Shared as educational material

Apparel makers in China are facing growing pressure from regulators and high-profile brands to tackle wastewater pollution from their factories.

The textile industry has long been one of China’s largest polluters. One Chinese government estimate puts the amount of shallow and deep groundwater that is severely polluted in the North China plains, home to a significant portion of China’s farmlands, at more than 70%.

But change is coming. This year, the government made it a criminal act to pollute. Violators face jail time and stiff fines. Environmental groups are naming and shaming Chinese factories that don’t adequately treat water used in production. And companies including Nike Inc. are pressing suppliers to use less water.

Cleaning up

Hong Kong-based Esquel Group, one of the world’s largest producers of cotton shirts, says it is investing to address such problems. Three years ago, the manufacturer to brands such as Ralph Lauren and Tommy Hilfiger spent more than $7 million on a system that converts some of the 30,000 tons of wastewater generated daily at its Gaoming facility in southern China into drinkable water that is put back into the dyeing process.

Esquel believes the technology makes the company more attractive to apparel brands that are increasingly focused on reducing their environmental footprint. “This is part of the reason we work together,” says Yugao Zhang, research and development director at Esquel.

The technology is similar to what’s being used in places like Singapore and Orange County, Calif., to turn household wastewater into drinking water. It has been adopted by some of China’s largest textile makers.

But the price tag puts it out of reach of many of China’s small and midsize dye houses, which dump billions of gallons of toxic discharge into China’s waterways each year, analysts say.

Even the cheapest water-treatment systems can cost hundreds of thousands of dollars, says Hong Chua, dean of science and technology at the Technological and Higher Education Institute of Hong Kong. Mr. Chua has advised Chinese factories on installing water-treatment systems that cost between 2 million yuan and 50 million yuan (roughly $325,000 to $8 million).

International Finance Corp., the private-sector arm of the World Bank, advises and facilitates financing for textile-manufacturing initiatives in China that conserve water, seeking to reduce amounts of waste and chemicals that later need to be treated, according to Navneet Chadha, a principal operations officer at the IFC. The Chinese government is also making it easier for factories in industrial parks to treat their discharge together, which could cut costs.

(Photo credit: THE WALL STREET JOURNAL)

Still, some of China’s smallest manufacturers are going out of business because they can’t afford the wastewater-treatment technology, says Matthew Collins, project manager at the Institute of Public and Environmental Affairs in Beijing, which maintains a database of pollution violations by factories in China.

Mr. Zhang, of Esquel, estimates that it costs about 5 yuan, or 80 cents, to recycle one ton of fresh water compared with 1 yuan to buy that much water. “The cost is pretty high, but we are trying to improve the technology,” he says. Esquel uses an ultrafiltration process that traps bacteria in microscopically minute membranes.

Crystal Group, one of Asia’s largest apparel manufacturers, and Levi Strauss & Co. are working together on a water-recycling program at a denim factory in Zhongshan, China, where 60% to 65% of water used is recycled. About 90% of the recycled water is used in production, landscape irrigation and cleaning. The companies plan a similar program in Cambodia.

Investing in future

Crystal looks at such costs as an investment that will pay off when energy and water prices go up, says Catherine Chiu, general manager of the manufacturer’s corporate quality and sustainability department.

Brands are paying increasing attention to environmental issues such as water pollution, according to the San Francisco-based Sustainable Apparel Coalition, which represents numerous companies such as Adidas and Levi.

“Five years ago, this issue wasn’t so much on the radar,” says Jason Kibbey, chief executive of the coalition, which developed an index to help companies measure the environmental performance of suppliers. “But every brand and retailer is looking at this issue.”

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