Firm Finds Market Selling Scrap to China
She doesn’t look the part, but 35-year-old Zhou Fang is a pro in the junk business.
“We don’t call it junk,” she insists as she navigates the cavernous warehouse in her delicate heels and designer suit, dodging mountains of scrap that look more like spaghetti and coils of snakes--visions of some mad artist come to life.
“See inside this insulation?” she says, teasing out a thin thread of telephone wire and pointing to its gut of eyelash-like fiber. “This is copper.”
It is copper bound for China--scraps of modern American society that Zhou and her husband, Liu Gang, are shipping across the Pacific to be turned into building blocks for the emerging Chinese economy.
From their two warehouses in Industry, the onetime statistics professor and translator from China have built one of the nation’s biggest scrap metal export operations to northern China.
Sino-Am Enterprises, which boasts revenue of $20 million to $30 million a year, moves 30,000 to 50,000 tons of American scrap metal to China annually, much of it recyclable copper from telephone wires, underground cables and other leftover high-tech components.
Exporting scrap doesn’t put them in the same league as airplane builders or computer makers. But the couple are their own kind of trailblazers and have positioned themselves firmly in the mainstream of American history.
Like a handful of other livelihoods, the scrap business has long attracted immigrants breaking into the U.S. economy by doing what others considered too lowly.
“People usually come here with nothing and they don’t have enough money to get into business for themselves,” says Evelyn Haught of the Institute of Scrap Recycling Industries, a trade group in Washington. “In the 19th and early 20th century, most people started with push carts and wagons to pick up castoffs that no one else wanted and then traded them in.”
Asian nations became major consumers of scrap metal after World War II, following the pattern of economic development in that part of the world. Japan was first, then came South Korea and Taiwan.
Fast-growing mainland China is the newest, said Zhou’s husband Liu, 39. And that’s where they come in--selling to a country with an enormous appetite that few others know how to tap.
“The Chinese people are doing most of the exporting because they have the connections,” said David Brand, a scrap consultant for three California vendors who sell up to 2,000 tons of scrap to Sino-Am a year. “Their country needs raw material and we have an abundance here on the West Coast.”
Making that connection work, however, was a private journey that plucked the young couple from the security of a Chinese intellectual’s life to the backwaters of an America as exotic to them as a country and western song.
Liu was teaching statistics and his wife entertaining visiting dignitaries at the prestigious Nankai University in China in the late 1980s, earning little money at a time when “going into business” had become a novel and trendy thing for Chinese to do.
In the late ‘80s they met up with a New York dealer who sought their help importing scrap to China on a small scale. Liu did some book research, saw the market’s potential and wondered if he could hack it on his own.
“I knew China needed copper,” Liu said by phone from his office in Tianjin, “But I didn’t know if America had what we needed.”
In 1990 he left his pregnant wife behind to see for himself. In Houston, the ex-professor nearly lost all his savings to two overseas Chinese who claimed to have connections in the U.S. scrap metal business.
“They treated us like fools from the mainland,” Zhou said, still angry at the early betrayal.
They managed to get most of his money back. With that $10,000, Liu sent for his wife, bought a Ford Aerostar and tried again to kick-start his survey of America’s junkyards.
“We drove to about 20 states, 50 or 60 cities,” Liu recalls. “I felt kind of lost coming to America without any close friends and not speaking any English. But after I got on the road and saw what this country had to offer, I knew I could get on my feet again.”
At every new city, the couple, plus a translator, would pull up to a phone booth and thumb through the yellow pages for the address to the nearest junk yard.
The three would visit the junkyards, typically in the seediest parts of town, and explain in wobbly English and broken jargon what they wanted to do and see. It can be a rough, cash-only business, they learned. Dealers were often armed.
At nights they stayed at Motel 6 or Super 8. Once they checked into a place so shabby they wanted to leave. But they couldn’t express themselves clearly. The owner chased them out.
Since setting up shop in Los Angeles, and adopting the English names Lisa and David to facilitate business transactions, the couple have prospered. They survived the Asian financial crisis by cultivating their China connections.
“China is one of the biggest consumers of scrap metal. They need it to build automobiles, aircraft, window frames, houses, all kinds of things,” said Tony Nam, vice president of Alco Iron & Metal Co. in San Leandro, which sells about 1,000 tons of copper, aluminum and other scrap to Sino-Am each year.
Meanwhile, the scrap business is now more familiar and reputable in the Chinese community. Many smaller players have entered the volatile market hoping to capitalize on the growth potential in China.
In the beginning, people in China “looked down on us as scrap dealers,” recalled Zhou, who runs the business in Los Angeles while her husband travels often to Tianjin, China, where their shipments account for about 60% of the scrap metal entering the harbor. “They used to ask us ‘What is that?’ They were only interested in trading general merchandise.”
With the market on an upswing as Asian markets regain strength, the two have begun hedging their bets by branching out.
Taking advantage of lower wages in China, they opened several processing plants there to conduct the labor-intensive process of separating junk from salvageable materials.
They helped save about 700 jobs in Tianjin at a state-owned rug factory, which shut down in the recent wave of closures that hit bankrupt companies across China. Sino-Am retrained the workers and put them back to work smelting metal.
“As China develops, they will always need more raw material,” Liu said.
The company also opened Tianjin’s first auto parts dealership and repair shop, selling all imported American components.
Back on the outskirts of Los Angeles, Zhou is making sure that the 19-employee company is also investing in their new country. There are real estate and shopping center deals in the works. Early this month, Zhou was sworn in as a naturalized American citizen.
“China is my homeland. But America is now where my home is,” Zhou said late one night in her office attached to one of the warehouses. Her thoughts are drowned out periodically by the roar of the Union Pacific freight train passing a block away.
Suddenly she remembers the one place she and her husband stopped as tourists, just for an hour, during those endless driving days. It was the Gateway Arch in St. Louis.
“The arch is an important symbol of the American settler’s migration from east to west,” Zhou said, wiping dust from the frame of a night scene of the arch, her lone souvenir from that long trip. “We read about it in China. As new immigrants, we thought it was a very appropriate symbol for us as well.”
