2010-9
Closed-Loop Supply Chains in the Electrical andElectronics Industry of Japan
Tomoaki Shimada Luk N. Van Wassenhove

Closed-Loop Supply Chains in the Electrical and Electronics Industry of Japan
Tomoaki Shimada and Luk N. Van Wassenhove

ABSTRACT
We investigate the impact of the home appliance recycling law on closed-loop supply
chain activities in the home appliance industry of Japan. We also examine the activities of PC(personal computer) recycling and mobile phone recycling in Japan to conduct comparative
research on their reverse supply chains. This study is based on semi-structured interviews thatwere conducted with the managers of five major home appliance/PC manufacturers andpublic data. All the managers agreed that although the recycling business is not profitable forhome appliance/PC manufacturers in Japan, government legislation and CSR (corporatesocial responsibility) compel them to be active in the recycling of their products.

Keywords:
Recycling, closed-loop supply chain, home appliance, personal computer, mobile phone, law,Japan

Version: September 11, 2009
(The old version was accepted and presented
in the 68th Academy of Management Annual Meeting in 2008.)

1

Introduction
According to Guide, Harrison, and Van Wassenhove (Guide, Harrison, & Van
Wassenhove, 2003), in the US (United States), companies have become increasinglyinterested in reverse supply chains for economic reasons (e.g., (Giuntini & Gaudette, 2003)),
while in the EU (European Union), companies have become interested because of legislation(e.g., (Van Wassenhove & Ghaziri, 2004)). In Japan, companies have become moreconcerned with reverse supply chains for the latter reason.

The disposal of bulky products as waste is a serious problem in Japan due to thegrowing shortage of landfill sites. In January 2005, METI (Ministry of Economy Trade andIndustry) and MOE (Ministry of the Environment) enacted the automobile recycling law inview of EPR (extended producer responsibility). Under the automobile recycling law, carowners must pre-pay the costs of the disposal of shredder residues, fluorocarbons, and air
bags to recycle automobiles efficiently. The recycling fees vary among the automobile
models produced by each manufacturer. According to Toyota, the recycling fee ranges from10,000 yen1 to 18,000 yen for a regular car and from 7,000 yen to 16,000 yen for a small car.
The one-time payment of the recycling fee is made at the time of purchase for a new car or at
the time of the first regular inspection for a car in use after January 2005. Once the recycling
fee is paid, a recycling certificate is issued and passed to the next owner of the car.

Before the automobile recycling law took effect, METI and MOE brought the home
appliance recycling law into force in April 2001. Under the home appliance recycling law,consumers must pay recycling costs when they dispose of air conditioners, TV (television)

1

Approximate exchange rate: 90 yen = US$ 1. The fee does not include the 5% consumption tax.

2

sets2, refrigerators3, or washing machines4. In general, the recycling fee that must be paid tothe manufacturer is 3,000 yen5, 2,700 yen, 4,600 yen, or 2,400 yen, respectively. In addition
to the recycling fee, a consumer is required to pay approximately 2,000 yen to the retailer forthe collection and transportation of an end-of-life product to the manufacturer's collection
center. The recycling fee that a manufacturer charges is fixed; however, the collection andtransportation fee for a product differs among retailers. For example, most large electric
home appliance retailers charge only 500 yen for collection and transportation, whereas somesmall retailers quote more than 2,000 yen for this service.

Based on the concept of EPR, the manufacturers or importers of the four groups ofhome appliances are responsible for the recycling of their end-of-life products. The electric
appliance retailers are accountable for their collection and transportation. The duties of theconsumers, retailers, and manufacturers in the electric appliance industry of Japan are listed
in Figure 1. In this reverse supply chain structure, a consumer bears all of the costs ofrecycling, a manufacturer obtains a recycling fee, and a retailer receives a collection andtransportation fee. However, in contrast to the automobile recycling fee, the payment for thehome appliance recycling fee is made only at the time of disposal (end-of-life). The total
number of the four categories of home appliances that are currently used in Japan was
estimated to be approximately 300 million. Since it is difficult to keep track of all of them,and the average duration of their usage is generally more than 10 years, it was decided thatthe recycling fee should be paid at the time of disposal.
2

At this point, the home appliance recycling law targets only cathode ray tube CRT TV sets and not flat-panel
TV sets (e.g., LCD (liquid crystal display) TV sets or PDP (plasma display panel) TV sets). However, the law
was revised in 2008 and it is confirmed that the new law will include flat-panel TV sets among the recycling
items.
3Freezers are included in the category of refrigerators.
4
It is confirmed that the new home appliance law will include electric clothes dryers in the category of washingmachines.
5
The original recycling fee for an air conditioner was 3,500 yen, but it was reduced to 3,000 yen due to the riseof the price of aluminum in 2007.

3

FIGURE 1
Home Appliance Recycling (End-of-Life) Product Flow in a Supply Chain
Home Appliance
Manufacturers
Duty:- Recycling of endof-life products

New ProductEnd-of-Life
Product

Retailers
Duty:- Collection andtransportation of
end-of-life products

New ProductEnd-of-Life
Product

Consumers
Duty:- Return of endof-life products

In this study, we investigate the impact of the home appliance recycling law onenvironmental supply chain activities in the electric home appliance industry of Japan. We
also examine the activities of PC (personal computer) and mobile phone recycling in Japan to
conduct comparative research on their reverse supply chains. This study is based on semistructured interviews with the managers of four major home appliance manufacturers and aleading PC producer as well as on public data.

Background of Home Appliance Recycling
The waste disposal flow of home appliances before the enforcement of the recycling
law is illustrated in Figure 2 (Ministry of Economy Trade and Industry & Ministry of theEnvironment, 1998). At that time, it was estimated that consumers disposed of 600 thousand
tons of home appliances every year. This was equivalent to 18 million units: 2.7 million unitsof air conditioners, 7.6 million units of TV sets, 3.7 million units of refrigerators, and 3.9
million units of washing machines. Then, 80% of these units were returned to retailers, and
20% went to municipal authorities. Before the recycling law was enforced, most metalmaterials were dumped as shredder residue and not recycled. At that time, a scarcity oflandfill capacity for shredder residue had become an urgent problem in Japan. Thus, theJapanese Diet enacted the home appliance law in June 1998, and it went into effect in April
2001.

4

FIGURE 2
Annual Disposal Flow of Home Appliances before the Enactment of the Recycling Law
20%

Municipal
authorities
240,000 tons

Consumers
600,000 tons
(thousand units)
Air conditioner: 2,700
TV set: 7,600
Refrigerator: 3,700
Washing machine: 3,900
Total: 18,000

40%
Landfill without
shredding25%

Retailers, etc.
480,000 tons

Waste
disposal
75% companies
240,000 tons

80%

Disposal after
shredding60%
Retrieval of metalmaterials

The four product categories of home appliances (i.e., air conditioners, TV sets,
refrigerators, and washing machines) were selected for the home appliance recycling law for
the following reasons: (1) It is difficult for municipal offices to recycle or dispose of theseproducts; (2) it is necessary to recycle these products (due to valuable material compositions);(3) it is important for manufacturers to consider the design of these products and selection ofmaterials used in these products for recycling; and (4) it is reasonable for retailers to collectthese products from consumers (because they also deliver the products to the consumers).
Thus, retailers and manufacturers play crucial roles in achieving a "closed-loop economy andsociety", which is the primary purpose of the home appliance recycling law.

Performance Data Concerning Home Appliance Recycling
The recycling rates have experienced a constant growth since the home appliancerecycling law went into effect in April 2001, as shown in Table 1 (Ministry of theEnvironment, 2008). This implies that the manufacturers' efforts toward the efficient
recycling of their end-of-life products have yielded fruitful rewards. The only exception is5

TV sets after 2004. The decrease in the recycling rates of TV sets is mainly due to limited
demand of CRT (cathode ray tube) glasses for recycling in the new era of flat-panel TV sets.
TABLE 1
Recycling Units and Rates for the Four Home Appliance Categories in 2001–2007

Recycling units in 2001 (tons)
Recycling rates in 2001 (%)
Recycling units in 2002 (tons)
Recycling rates in 2002 (%)
Recycling units in 2003 (tons)
Recycling rates in 2003 (%)
Recycling units in 2004 (tons)
Recycling rates in 2004 (%)
Recycling units in 2005 (tons)
Recycling rates in 2005 (%)
Recycling units in 2006 (tons)
Recycling rates in 2006 (%)
Recycling units in 2007 (tons)
Recycling rates in 2007 (%)

Air
TV setRefrigerator Washingconditioner
machine45,01958,81476,35930,783
78%
73%
59%
56%
56,73972,11091,00642,967
78%
75%
61%
60%
57,05876,025
97,11952,288
81%
78%
63%
65%
64,93983,868103,546
58,710
82%
81%
64%
68%
72,58583,530108,284
69,664
84%
77%
66%
75%
66,79191,092
112,106
74,854
86%
77%
71%
79%
68,861
115,563
116,683
77,231
87%
86%
73%
82%

Note: Year 2001 (from April 2001 to March 2002); Year 2002 (from April 2002 to March 2003);
Year 2003 (from April 2003 to March 2004); Year 2004 (from April 2004 to March 2005);
Year 2005 (from April 2005 to March 2006); Year 2006 (from April 2006 to March 2007);Year 2007 (from April 2007 to March 2008). All the decimal points are cut off.

Under the home appliance recycling law, manufacturers must recycle 60% of thematerials used in air conditioners, 55% in TV sets, 50% in refrigerators, and 50% in washingmachines. The recycling rates for each product category in 2007 were 87%, 86%, 73%, and82%, respectively. Their breakdowns are provided in Table 2 (Ministry of the Environment,
2008). The recycling rates of the four home appliance categories in 2007 sufficiently
exceeded the minimum recycling rates stipulated by the law.

6

TABLE 2
Recycling Units for the Four Home Appliance Categories in 2007

Collected units at designatedcollection centers (thousand units)
Processed units for recycling(thousand units)
Processed units for recycling (tons)
Recycling units (tons)
Recycling rates (%)

Air
TV setRefrigerator Washingconditioner
machine
1,890
4,613
2,725
2,884
1,872

4,542

2,724

2,879

78,71568,861
87%

134,283
115,56386%

159,763
116,68373%

94,101
77,23182%

Note: Total units from April 2007 to March 2008. All the decimal points are cut off.
Recycling rate = Recycling units (tons) / Processed units for recycling (tons).

Table 3 summarizes the recycled resources in the four product categories in 2007
(Ministry of the Environment, 2008). In addition to these materials, 1,084,342 kilograms ofrefrigerants6 were retrieved from air conditioners and 298,145 kilograms from refrigerators inorder to be destroyed in 2007. The same elements were only 467,316 kilograms and 135,779
kilograms, respectively, in 2001. Between 2004 and 2007, 562,020 kilograms of the liquefied
fluorocarbons contained in the insulation materials of refrigerators were also retrieved for
destruction. The enforcement of the home appliance recycling law had a significant impact on
recycling activities in Japan. In fact, many home appliance manufacturers improved theirrecycling performance.7

6

CFC (Chlorofluorocarbon) refrigerants deplete the ozone layer.
Many home appliance manufacturers show their recycling performance data based on the classification in therecycling law. For instance, Matsushita's (Panasonic's) recycling units in 2007 (from April 2007 to March 2008)
were 10,035 tons for air conditioners, 22,940 tons for TV sets, 23,161 tons for refrigerators, and 15,465 tons forwashing machines (http://panasonic.co.jp/eco/recycle/data.html; in Japanese). Matsushita's recycling rates were83%, 84%, 69%, and 78%, respectively. Similarly, Mitsubishi's recycling units in 2007 (from April 2007 to
March 2008) were 9,462 tons for air conditioners, 8,323 tons for TV sets, 13,642 tons for refrigerators, and5,073 tons for washing machines (http://www.mitsubishielectric.co.jp/recycle/home/zisseki/index_b.html; inJapanese). Mitsubishi's recycling rates were 89%, 87%, 75%, and 84%, respectively.
77

TABLE 3
Materials Recycled from the Four Home Appliance Categories in 2007
Air
TV setRefrigerator Washingconditioner
machine23,72913,881
68,43540,755
5,076
4,951
1,994
1,240
8,634
73
325
612
24,453
1,199
20,18812,915--68,269----6,969
27,19025,741
21,70968,861
115,563
116,683
77,231Iron (tons)
Copper (tons)
Aluminum (tons)
Ferrous and non-ferrous compounds (tons)
CRT (cathode ray tube) glass (tons)
Other valuable materials (tons)
Total weight (tons)

Note: Total units from April 2007 to March 2008. All the decimal points are cut off.
Other valuable materials include printed circuit boards, plastics, etc.

Profitability of Home Appliance Recycling
We visited five major home appliance/PC manufacturers––Matsushita (Panasonic),
Toshiba, Mitsubishi, and Sanyo for electric appliances, and NEC for PCs––and conductedsemi-structured interviews with their managers to obtain information to complement the
public data. In particular, information regarding recycling profitability is not available to the
public. Among the various home appliance manufacturers, we selected these four companies
because of (1) their large market shares in all four product categories8 and (2) the different
recycling groups to which they belong9. Similarly, among all the PC manufacturers, we chose

8

The top market shares of air conditioners in Japan in 2006 were (1) Matsushita (20.8%), (2) Daikin (18.6%),(3) Mitsubishi (14.1%), (4) Toshiba (12.8%), and (5) Sanyo (10.0%) (Nikkei, 2007). The top market shares of
CRT TV sets in Japan in 2006 were (1) Matsushita (23.7%), (2) Sharp (20.0%), (3) Sony (15.8%), (4) Toshiba(12.1%), (5) Sanyo (5.8%), and (6) Mitsubishi (4.2%) (Yano Research Institute, 2007). The top market shares ofrefrigerators in Japan in 2006 were (1) Matsushita (21.4%), (2) Toshiba (16.9%), (3) Sharp (16.5%), (4)Mitsubishi (14.8%), (5) Hitachi (13.6%), and (6) Sanyo (Yano Research Institute, 2007). The top market sharesof washing machines in Japan in 2006 were (1) Hitachi (22.9%), (2) Matsushita (21.0%), (3) Toshiba (18.6%),(4) Sharp (14.7%), (5) Sanyo (13.1%), and (6) Mitsubishi (9.7%) (Yano Research Institute, 2007). Thus, only
Matsushita, Toshiba, Mitsubishi, and Sanyo appear among the top 5 or 6 companies in all four productcategories.
9
There are two groups related to the efficient recycling of the four home appliances: Groups A and B. Group A
includes Matsushita, Toshiba, Daikin, JVC, Samsung, LG, Electrolux, etc. Group B includes Mitsubishi, Sanyo,
Hitachi, Sharp, Sony, Pioneer, Fujitsu General, Daewoo, etc. Group A has 30 recycling plants in Japan, while
Group B has 16 recycling plants as of March 2007 (Association for Electric Home Appliances, 2007). Each
plant is responsible for several prefectures in Japan, and a plant belonging to Group A or B exclusively recycles
products manufactured by companies belonging to Group A or B except the recycling factory of NKRC
(Nishinihon Kaden Recycle Corporation). Each company in Groups A and B has 190 designated collection
centers (i.e., 380 centers in total) across Japan. AEHA (Association for Electric Home Appliances) is in chargeof (1) products manufactured by small manufacturers/importers that do not belong to either Group A or B; (2)8NEC because (1) the company has been occupying the largest market share in Japan's PC
industry for more than 10 years 10 and (2) the company used to be an electric appliancemanufacturer. In addition to NEC, we also visited Toshiba's PC recycling facilities and
Mitsubishi's PC monitor recycling facilities.

In theory, manufacturers and retailers can profit from recycling because theconsumers bear all the costs. Redesigning the products and reselecting the materials used in
the products will reduce the manufacturer's recycling costs. Since the recycling fee that ischarged to the consumers is almost fixed, the reduction in recycling costs will lead to anincrease in the manufacturer's profit. Thus, home appliance manufacturers have an incentive
to develop products that are suitable for recycling. In fact, this is the fundamental goal of
EPR. On the other hand, retailers can use the collection and transportation fee in pricenegotiations. Since retailers normally deliver new products to consumers, it is not costly forthem to collect the old products from the consumers when they deliver the new products.
Thus, retailers can offer the potential buyers of new products some discounts for thecollection and transportation fee of their end-of-life products.

In practice, however, the managers of all the five home appliance/PC manufacturers
agreed that they are not profiting from the recycling business due to their initial investment intheir facilities as well as the labor-intensive recycling processes. They do not receive any
subsidy from the government. Their primary revenue sources are part of the recycling fees
paid by the consumers and the sales of the recycled materials to raw material suppliers11. The

products manufactured by NEC that discontinued the production of electric appliances; and (3) orphans, that is,
products whose manufacturers are unknown.
10
The top market shares of PCs in Japan in 2006 were (1) NEC (20.1%), (2) Fujitsu (17.5%), (3) Dell (14.2%),(4) Toshiba (9.9%), and (5) Hewlett-Packard (6.5%) (Nikkei, 2007).
11
The recycled materials can be used for home appliances or some other products. The recycled materials
cannot be 100% genuine; they are normally mixed with fresh materials when they are used for new products.

9

manager of Matsushita admitted that these revenues may be insufficient to cover therecycling costs even in the future. However, it is difficult for manufacturers to increase therecycling fees charged to consumers because the fees are often equivalent to more than 10%of the new product prices. The potential buyers of new products may hesitate to purchasethem if the recycling fees for the old products are relatively high. According to the manager
of Toshiba, the current recycling fees are close to the threshold of potential buyers'
willingness to pay, and any fee increase will negatively influence new product sales, which is
the ultimate goal of home appliance manufacturers. In fact, one of the objectives of the home
appliance recycling law is to encourage consumers to continue to use their old appliances inan effort to reduce waste. However, our interviews show that the manufacturers are notcompletely in favor of this.

Unlike the production process of a new product, the recycling process of an end-oflife product is not standardized because of its different design, size, materials used, etc.
Therefore, the recycling process basically requires manual disassembly and the segregation ofa product's components. The manager of Mitsubishi affirmed that although many machines
are installed in the recycling plants, the recycling process cannot be as automated as the
production process, In Japan, labor costs are high; thus, labor-intensive recycling processes
hinder cost reduction. The Basel Convention on the Control of Transboundary Movements ofHazardous Wastes and their Disposal prohibits manufacturers from moving end-of-life
products to low-labor-cost countries for the purpose of their disposal. Thus, the manager of
Matsushita claimed that the recycling business is not profitable for home appliancemanufacturers in Japan. The manager of Mitsubishi insisted that the survival of the recycling
facilities depends on the parent company's commitment to continuing to offer them financial
assistance. However, all of the five home appliance/PC manufacturers agreed that the10endurance of non-profit-making recycling plants is assured because they are essential for the
corporate group's CSR (corporate social responsibility) activities.

Matsushita engages some full-time staff in its recycling facilities for R&D (researchand development) concerning recycling technology and processes. The company alsotransfered several staff who are involved in the new product development of eco-friendly
home appliances to its recycling facilities. The company regularly communicates with new
product development teams in its parent company to develop eco-efficient products. For
example, they determine the kind of material that is easiest to recycle and the product designthat can improve recycling processes. On the other hand, Toshiba does not designate any staff
to recycling technology R&D in its recycling facilities; rather, it relies on its employees'commitment to the philosophy of kaizen (continuous improvement) to achieve efficient
recycling processes. The staff's ideas on eco-efficient products are conveyed to new productdevelopment teams in the parent company whenever necessary. Approximately 100
personnel from Mitsubishi were transferred to its recycling facilities. This arrangement
promotes effective communication between the recycling facilities and the parent company
not only with respect to the R&D of recycling technology and processes but also concerning
new product development.

Challenges in Home Appliance Recycling
One of the major challenges in the home appliance recycling law is illegal dumping.
Since consumers need to pay a recycling fee at the time of disposal, those who are unwillingto pay the fee can avoid doing so by leaving a bulky home appliance at a garbage dump, in an
empty space, in a forest, or near a river. As a basic rule, the illegally dumped products arecollected by the municipal authorities. Table 4 shows the numbers of illegally dumped home11

appliances (Ministry of the Environment, 2007a). Most municipal authorities have reinforced
the monitoring activities of illegal dumping as a countermeasure. As a result, the number ofillegally dumped products has been reducing in all the four categories of home appliances
since 2006.
TABLE 4
Illegal Dumping of the Four Home Appliances in 2001–2006

Illegal dumping in 2001 (units)
Illegal dumping in 2002 (units)
Illegal dumping in 2003 (units)
Illegal dumping in 2004 (units)
Illegal dumping in 2005 (units)
Illegal dumping in 2006 (units)Air
TV setRefrigerator Washingconditioner
machine
16,78665,441
27,44522,481
17,89982,93535,73929,154
17,13888,331
38,00631,505
15,786
86,64038,63831,263
10,501
82,702
34,75527,421
5,831
72,64730,941
22,197

Note: Year 2001 (from April 2001 to March 2002); Year 2002 (from April 2002 to March 2003);
Year 2003 (from April 2003 to March 2004); Year 2004 (from April 2004 to March 2005);
Year 2005 (from April 2005 to March 2006); Year 2006 (from April 2006 to March 2007).
The numbers in each year are the total sum of the data from municipal authorities, which
covers the following percentage of the population in Japan: 95.4% in 2001; 99.6% in 2002;
99.2% in 2003; 99.9% in 2004; 99.7% in 2005; 94.7% in 2006.

Prior to this, some experts in recycling policy in Japan claimed that the payment
scheme for home appliance recycling should be changed to an advance payment system likethat of PC recycling to reduce consumers' illegal dumping activities. However, it was decided
that the payment scheme would not change in the revised home appliance recycling law dueto the appliance manufacturers' objection against the advance payment of recycling fees. In
fact, in our interview with the managers of Sanyo, they insisted that the increase in the legal
dumping of home appliances is related to the increase in the number of new product units
sold approximately 10 years ago.

The other major challenging issue in home appliance recycling is the illegal sale ofend-of-life products that should have been deposited at recycling facilities. For example, the12logistics companies, to which leading retailers outsource the delivery of end-of-life
appliances to their producers, were caught not returning the products to their manufacturing
companies, though consumers paid the recycling fees. They were illegally exporting theseproducts to developing countries in Asia so that they could receive money from both theretailers and the trading companies.

PC Recycling
In addition to the recycling of the four groups of household appliances, consumers arealso aware of PC recycling. The Law for Promotion of Effective Utilization of Resources wasenacted in May 2000 and was enforced in April 2001. The original law required the recyclingof PCs for office use only, but the revised law that came into effect in October 2003 requires
the recycling of PCs for home use as well. This law necessitates 3R, that is, reduce, reuse,
and recycle. In the case of PC manufacturers, they need to reduce PC waste, reuse PC
components, and recycle PC materials. PC recycling is also restricted by the Waste Disposal
and Public Cleaning Law in Japan, and this law prohibits the retailers from collecting andtransporting end-of-life PCs without permission.

Under

the

PC

recycling

law,

the

targetsfortherecycling/reuseofmaterials/components are 50% for desktop PCs, 20% for notebook PCs, 55% for CRT
monitors, and 55% for LCD monitors. The PC recycling/reuse rates for home use in 2007
were 71.2%, 47.6%, 76.8%, and 64.3%, respectively. Their breakdowns are provided inTable 5 (Ministry of the Environment, 2007c). Table 6 shows the PC recycling/reuse rates forhome use from 2003 to 2007 (Ministry of the Environment, 2007c). Similar to household
appliance manufacturers, PC manufacturers announce their recycling performance based on13the classification of desktop PCs, notebook PCs, CRT monitors, and LCD monitors for officeuse and home use12.
TABLE 5PC Recycling/Reuse Units for Home Use in 2007

Processed units for recycling/reuse (units)
Processed units for recycling/reuse (tons)
Recycling/reuse units (tons)
Recycling/reuse rates (%)

Desktop Notebook CRT
LCD
PC
PC
Monitor Monitor
112,866
51,459 108,707
36,079
1,271
174
2,604
250
905
83
1,999
161
71.2%
47.6%
76.8%
64.3%

Note: Total units from April 2007 to March 2008.
Recycling rate = Recycling/reuse units (tons) / Processed units for recycling/reuse (tons).

TABLE 6PC Recycling/Reuse Units and Rates for Home Use in 2003–2007

Recycling/reuse units in 2003 (tons)
Recycling/reuse rates in 2003 (%)
Recycling/reuse units in 2004 (tons)
Recycling/reuse rates in 2004 (%)
Recycling/reuse units in 2005 (tons)
Recycling/reuse rates in 2005 (%)
Recycling/reuse units in 2006 (tons)
Recycling/reuse rates in 2006 (%)
Recycling/reuse units in 2007 (tons)
Recycling/reuse rates in 2007 (%)

DesktopNotebook CRT
LCD
PC
PC
MonitorMonitor
216
9
406
7
78.0%
50.3%
72.8%
64.8%
709
30
1,452
33
75.6%
51.9%
77.4%
65.7%
873
44
1,693
65
69.5%
46.6%
77.1%
63.1%
933
66
1,629
113
69.9%
47.1%
73.8%
62.6%
905
83
1,999
161
71.2%
47.6%
76.8%
64.3%

Note: Year 2003 (from October 2003 to March 2004); Year 2004 (from April 2004 to March 2005);
Year 2005 (from April 2005 to March 2006); Year 2006 (from April 2006 to March 2007);Year 2007 (from April 2007 to March 2008).

There are some differences between PC recycling and home appliance recycling. Firstof all, PC recycling includes component reuse as well as material recycling. Normally, none

12

For instance, in 2006, the total PC recycling/reuse units of NEC for both home use and office use were 681.1
tons for desktop PCs, 110.3 tons for notebook PCs, 723.9 tons for CRT monitors, and 116.9 tons for LCD
monitors (http://www.nec.co.jp/eco/ja/04/4-9-04.html; in Japanese). NEC's total PC recycling/reuse rates were
76.7%, 45.9%, 72.8%, and 55.8%, respectively. Similarly, in 2003, the PC recycling/reuse units and rates ofToshiba were 29.6 tons and 69.6% for desktop PCs, 26.4 tons and 54.9% for notebook PCs, 89.7 tons and76.3% for CRT monitors, and 4.6 tons and 58.4% for LCD monitors (http://dynabook.com/pc/eco/haiki06.htm;
in Japanese).

14

of the components of household appliances are reused except for ICs (integrated circuits) in
air conditioners; however, some components of PCs are reused as repair parts. Secondly,
unlike home appliance retailers, PC retailers are generally not involved in the reverse supply
chain, as illustrated in Figure 313. Most PC retailers14 are not responsible for the collection
and transportation of end-of-life PCs to manufacturers. Instead, PC home users are required
to bring their PCs to one of 20,000 post offices in Japan after they pay the recycling fees andreceive their payment receipts from PC manufacturers. Then, the post offices deliver them to
the PC manufacturers' recycling plants. Alternatively, they can ask the post offices to collect
their PCs from their residences without paying additional charges.
FIGURE 3
Home-Use PC Recycling (End-of-Life) Product Flow in a Supply Chain
Personal Computer
Manufacturers
Duty:- Recycling of endof-life products

New Product
New ProductEnd-of-Life
Product

Retailers

Post Offices
Role:- Collection andtransportation of
end-of-life products

New ProductConsumers
Duty:- Return of endof-life products

End-of-Life
Product

Thirdly, unlike electric appliance manufacturers, in general, PC manufacturers do nothave a common group to recycle their end-of-life products. According to NEC, the company
refurbishes some PCs if they are in good condition and sells them as "NEC Refreshed PCs".
In addition, some components have been discontinued, and such components are sometimes

13

In the flow of new products, some consumers buy their PCs directly from PC manufacturers (e.g., Dell)
without going through retailers, unlike home appliances.
14
PC retailers (e.g., Tsukumo Denki) that sell their private-label PCs or distribute imported PCs are responsible
for the collection and transportation of these PCs. They also sell other major brand PCs in the same outlets, but
are not responsible for the collection of those PCs.

15

kept as repair parts after they are retrieved from old PCs. Thus, it is convenient for NEC tohandle its PC recycling without collaborating with other PC manufacturers.
Fourthly, the financing options vary between PC recycling and home appliancerecycling 15 : cost-internalization/invisible fees for PCs and end-of-life fees for home
appliances. PCs that are sold after October 1, 2003 do not oblige home users 16 to pay
recycling fees because the fees are included in their prices. However, PCs that were sold priorto October 1, 2003 or were manufactured by companies that do not recycle their products
require the recycling fees. The recycling fees are 3,000 yen1 for desktop PCs, 3,000 yen for
notebook PCs, 4,000 yen for CRT monitors, and 3,000 yen for LCD monitors. These fees
include postal charges for the collection and transportation of the products.
In the case of PCs whose manufacturers are not located in Japan (e.g., self-assembled
PCs, personally imported PCs, or PCs whose manufacturers or importers are no longer inbusiness in Japan), the PC 3R Promotion Center17 takes care of the recycling of such PCs.
The return processes of the PCs are the same as those of PCs whose manufactures are locatedin Japan. However, the recycling fees for these PCs are 1,000 yen higher. Thus, the recycling
fees including postal charges are 4,000 yen1 for desktop PCs, 4,000 yen for notebook PCs,
5,000 yen for CRT monitors, and 4,000 yen for LCD monitors. The illegal dumping of PCs is
not as serious as that of the four home appliances. Table 7 shows the numbers of illegally
dumped PCs from 2003 to 2006 (Ministry of the Environment, 2007b).

15

In the case of automobiles, as explained earlier, advanced recovery fees are charged to new car owners inJapan. The fees are visible and collected separately from the car prices when consumers purchase cars.
16
The PCs that are sold after October 1, 2003 are labeled "PC Recycle". However, the recycling schemes arestrictly applicable to PCs for home use. Regardless of the presence of the "PC Recycle" label, firms need tocontact PC manufacturers for the recycling of PCs for office use. The collection points, transportationcompanies, and recycling fees for office use are different from those for home use.
17
The center was established by JEITA (Japan Electronics and Information Technology Industries Association)in May 2004 to promote "PC 3R activities".

16

TABLE 7
Illegal Dumping of PCs in 2003–2006

Illegal dumping in 2003 (units)
Illegal dumping in 2004 (units)
Illegal dumping in 2005 (units)
Illegal dumping in 2006 (units)

DesktopNotebook CRT
LCD
PC
PC
MonitorMonitor
1,315
368
1,324
88
2,800
779
2,627
228
2,912
599
2,418
204
2,138
507
2,295
216

Note: Year 2003 (from October 2003 to March 2004); Year 2004 (from April 2004 to March 2005);
Year 2005 (from April 2005 to March 2006); Year 2006 (from April 2006 to March 2007).
The numbers in each year are the total sum of the data from municipal authorities, which
covers the following percentage of the population in Japan: 73.6% in 2003; 82% in 2004;
82.8% in 2005; and 61% in 2006.

Mobile Phone Recycling
In Japan, there are more than 100 million mobile phone subscribers. However,currently, there are no laws for mobile phone recycling in Japan. However, TCA(Telecommunications Carriers Association) and CIAJ (Communications and Information
Network Association of Japan) jointly promote consumers' returns of end-of-life mobile
phone handsets. In April 2001, TCA and mobile phone network operators started the MRN(Mobile Recycle Network) to promote recycling by encouraging consumers to return their
end-of-life mobile phones to one of approximately 9,500 retail shops or agencies of themobile phone network operators. Figure 4 illustrates the reverse supply chain structure in
Japan's mobile phone industry. Rather than the mobile phone manufacturers, mobile phone
network operators voluntarily collect end-of-life handsets. This is because mobile phonehandsets are all sold under the mobile phone network operator names in Japan. Thus, amobile phone manufacturer receives its product development costs from its mobile phone
network operator.

17

FIGURE 4
Mobile Phone Recycling (End-of-Life) Product Flow in a Supply Chain
Mobile Phone
Manufacturers

Retailers

New ProductConsumers

End-of-Life
New ProductProduct
End-of-Life
New ProductProduct
New Product
New ProductDevelopment
End-of-Life
Mobile Phone Network
Product

Recycling Companies

End-of-Life
Product

Operators or their
Agencies

Thus, the reverse supply chain structure is different from that in the home applianceor PC industries. Unlike in the cases of the four home appliances or PCs, there is no return
fee for mobile phones, though NTT DoCoMo18, the largest mobile phone network operator inJapan, estimated the collection costs to be at least 170 yen1 per unit in 2001 (NTT DoCoMo
Report, 2003). In the current mobile phone recycling system, each mobile phone network
operator bears the costs for the collection of their end-of-life products. The operators willcontinue to collect their end-of-life mobile phones voluntarily not only because of the public
opinion toward 3R activities but also because the mobile phones contain some precious
metals. Although the latest data are not available, NTT DoCoMo calculated the weight of thematerials recycled from their mobile phones, batteries, and battery chargers in 2001 as shownin Table 8 (NTT DoCoMo Report, 2003). NTT DoCoMo dominated approximately 81%,79%, and 69%19 of the market for mobile phones, batteries, and battery chargers, respectively,
which were collected for recycling in 2001.

18

The market share of mobile phone network operators in Japan in 2006 was (1) NTT DoCoMo (54.4%), (2)KDDI (29.1%), and (3) Softbank (16.4%) (Nikkei, 2007).
19
In 2001, NTT DoCoMo collected 10.57 million units of mobile phones, 9.33 million units of mobile phonebatteries, and 2.92 million units of mobile phone battery chargers (NTT DoCoMo Report, 2003). The totalcollected units for recycling in 2001 were 13.107 million, 11.788 million, and 4.231 million, respectively(Telecommunications Carriers Association, 2007).

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TABLE 8
Materials Recycled in NTT DoCoMo in 2001
Recycled Materials
Copper (kilograms)
Iron (kilograms)
Cobalt (kilograms)
Nickel (kilograms)
Silver (kilograms)
Aluminum (kilograms)
Gold (kilograms)
Palladium (kilograms)
Slug (kilograms)

Weight61,908
14,218
5,430
2,880
769
450
133
49
230,677

Note: Total units from April 2001 to March 2002.

Table 9 shows the metal recycling units of mobile phones, mobile phone batteries,
and mobile phone battery chargers 20 in 2004 (Telecommunications Carriers Association,2004). At this point, the metal recycling rates for mobile phones, batteries, and battery
chargers were 19%, 53%, and 23%, respectively. The latest data are not available for metal
recycling, but the material recycling rates for mobile phones and batteries are more than 60%
and 30%, respectively (Telecommunications Carriers Association, 2007). Table 10
summarizes the collected units of mobile phones for recycling from 2000 to 2007
(Telecommunications Carriers Association, 2007). The collected units have been decreasingover the last three years because many young people tend to keep their old mobile phones athome. A multi-functional mobile phone can be used as a phone directory, a HDD (hard disk
drive) for data backup, a digital camera, a game player, an alarm clock, a wallet for electronicmoney, etc., and it also contains private data such as digital photos and e-mails. In addition,
mobile phones do not occupy much space, unlike PCs or bulky home appliances. Thus, thedecrease in the collected units of mobile phones does not imply the increase of their disposal
as waste.

20

A mobile phone battery charger basically consists of an AC (alternating current) adapter and a desktop holder.

19

TABLE 9
Metal Recycling Units of Mobile Phones in 2004
MobileBattery
Battery
Phone
Charger
8,528
7,312
3,181
677
159
288
129
84
52
19%
53%
23%

Collected units (thousand units)
Collected units (tons)
Metal recycling units (tons)
Metal recycling rates (%)

Note: Total units from April 2004 to March 2005.
Metal recycling units (tons) = Metal recycling rates (%) * Collected units (tons)
Metal recycling rates = metal contents in a mobile phone.

TABLE 10
Collected Units of Mobile Phones for Recycling in 2000–2007
MobileBattery
Battery
Phone
Charger
13,615
11,847
3,128
13,107
11,7884,231
11,369
9,727
3,355
11,717
10,247
4,387
8,528
7,312
3,181
7,444
6,575
3,587
6,622
6,133
3,475
6,443
7,198
3,706

Collected units in 2000 (thousand units)
Collected units in 2001 (thousand units)
Collected units in 2002 (thousand units)
Collected units in 2003 (thousand units)
Collected units in 2004 (thousand units)
Collected units in 2005 (thousand units)
Collected units in 2006 (thousand units)
Collected units in 2007 (thousand units)

Note: Year 2000 (from April 2000 to March 2001); Year 2001 (from April 2001 to March 2002);
Year 2002 (from April 2002 to March 2003); Year 2003 (from April 2003 to March 2004);
Year 2004 (from April 2004 to March 2005); Year 2005 (from April 2005 to March 2006);
Year 2006 (from April 2006 to March 2007); Year 2007 (from April 2007 to March 2008).

Conclusion
In this study, we introduced closed-loop supply chain activities in the electrical andelectronics industry of Japan. We focused on the home appliance industry and compared itwith the PC and mobile phone industries. We used public data to analyze the recycling
performance in the three industries. To investigate recycling profitability in our study, we
conducted semi-structured interviews with the managers of four major home appliancemanufacturers and a leading PC producer.

20

During the next decade of recycling activities in the electrical and electronics industry,
we may need to consider ways to achieve efficient recycling across borders. For example, aphotocopy manufacturer successfully created an international resource recycling network
covering nine Asia-Pacific countries and regions outside Japan, overcoming the politicalchallenges brought by international laws such as the Basel Convention (Shimada,
Kemarangsi, & Methawattanakul, 2006). The company achieved a higher material recycling
rate in its recycling factory in Thailand than that in Japan. This achievement was the result ofrelatively low labor costs that enabled highly manual disassembly. In Japan, the company's
standard photocopy machine is disassembled into 44 categories, while the same photocopy
machine is separated into 65 categories in Thailand. Among them, the plastic materials
themselves are classified into 6 categories in Japan and 14 categories in Thailand. In fact, themanager of Mitsubishi acknowledged that the material recycling rate of the electric
appliances can further increase by more disassembly and segregation of their components;
however, they also increase labor costs.

Now, China is a production base of new products in Asia due to its low labor costs.
Similarly, in the future, China, or some other developing countries, may become a recyclingbase of end-of-life products in Asia to achieve efficient recycling by gaining economies ofscale. In fact, the Japanese Government has been working toward establishing atransboundary material recycling system in Asia or between Japan and China. This attempt
will lead to the establishment of an environmentally sustainable society.
[2010.2.22 959]

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Closed-Loop Supply Chains. Interfaces, 33(6): 3-6.
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