Route and Consequences of the “Treatment after Pollution” Problem

——Environmental Control and Development of Leather-making

Industry in Maoji Town①

Chen Ajiang LuoYajuan Chen tao

Abstract: Since began to carry out the policy of reform and opening-up, the Hui people had taken advantage of the geographical location of Maoji to develop leather-making industry and gradually made it the “capital of leather” in central China and, regrettably, also caused serious environmental pollution. Under the high pressure of the government’s policy for environmental protection, the number of Maoji's leather-making factories has been reduced from 500 to 3. After all the efforts in closing down factories, suspending operation and merging some with the others, though their total productive capacity remains stable, these enterprises have been greatly devitalized. The recession of leather-making industry of Maoji is related to the changes in its geographical advantage and the change in international and domestic market demands as well as the coercive policies. The case study of Maoji deserves the reflection of the industrial circle and the governments. Key Words: leather-making industry; environmental pollution; transformation in production; reflection

Introduction

The foucs on Maoji began with the literature research stage on the NSSF subject called “Harmony Relationship between Water-Human”. According to the literature reading impression, Maoji was not only polluted seriously, the pollution also

① NSSF subject: Harmony Relationship between Water-Human（07BSH036） The Chinese edition was published in Journal of Guangxi University for Nationalities(Phlosocophy and Social Science Edition), No.3, 2011（本文中文版本发 表于《广西民族大学学报》（哲学社会科学版）2011 年第 3 期）.

1 restricted its development. As described by Ou Zhengtao, because of the pollution, Maoji gradually declined from the original “capital of leather” in central China. “No body dared to drink the polluted water, no outsider dared to come. People in the town had almost moved away. Those who stayed in Maoji were the people who had no way to leave or the people kept on undertaking leather-making factories.” [1](P121~122)So, the authors regard it as the type of disharmonious human-water relationship in which the relationship between human and water enters into the vicious cycle. It means water pollution causes human diseases, economic recession, poverty, population migration, and then deepens the social differentiation, social inequality and other problems induced social problems. [2] In the design stage of the NSSF subject, Maoji was seen as a typical point for studying disharmonious human-water relationship in Huaihe River Basin. In the April of 2009, we arrived at Maoji with the research hypothesis. In the field study, we found that Maoji’s actual situation roughly matched the type of disharmonious human-water relationship, but, there was a significant difference from the literature impression. Besides, it would be no great significance if our research was only satisfied with finding some materials to proof or deny that whether it match the type. Therefore, we took our time to research into some in-depth problems, like why the capital of leather in central China rising from Maoji, and how environment issue affect it’s subsequent economic development, and so on. The development history of Maoji’s leather-making industry over the 20 years shows that environment deeply affects its whole development process. And in a sense, this development path and restriction influence of environmental protection on economic development is a epitome of the early development stage of central China even the whole China. When China’s economy hasn’t taken off, the models of “treatment after pollution” in the western capitalism were criticized. And we have confidence in avoiding this model because our county is a socialist state. However, the following development path shows that, all the developing countries including China have almost impossible to avoid this model. Of course, considering the unbalance of developing path across China and the uncompleted industrialization, if

2 we can actually avoid the” treatment after pollution” from now on, it will still play a decisive role in environment protection in China. And this is just the practical significance of analyzing this case.

The Rising of Leather-making Industry

Maoji is located in X city in eastern province situated in the transitional zone of alluvial plain districts of the and the . There are four rivers in X city, called Sha, Fen, Ni and Gu, and there are lots of branches along these four rivers. X city has 12 towns, 3 villages and 6 subdisrict offices, with 1083 square kilometers, and 117 million people. As a traditional agricultural area, it mainly grows corn, wheat, soybeans and other crops. Currently, besides the agriculture, monosodium glutamate, leather, pharmaceutical, food, textile and other industrial pillar industries also develop well. Maoji is 10 km away from X city, with 30 administrative villages and 56 thousand people. [3] In the history, Maoji is a traditional agriculture area and most residents live on farming. Since the 1980s, Leather-making industry becomes the pillar industry gradually. There are two ethnic groups, Han people and Hui people, and Han people are the majority. Hui people have the population of 900, living in the North of Maoji where is habitually called Hui people village. Guhe River runs through the center of Maoji town. The town mainly lies in South bank of the Guhe River. In the early 1980s, a few Hui people of Hui people village began to do leather business. They bought rawhide sheep and cattle from Gansu, Qinghai and other provinces, and then sold to the eastern China after processing into dressed leather. The economic benefit encouraged other Hui people to deal with leather business. What’s more, Han people in Maoji and nearby also began to engage in leather business. Initially, in our county town, besides our Maoji’s Hui people, there were also some Hui people dealing with leather industry in the old county town. But Mouji is the main location……This Hui people village began to make leather from 1980s. After 1990s, nearly each family in this village was engaging with leather industry……At that time, many people around came here as temporary workers. (Village cadres’

3 interview record in Maoji, April 4, 2009). By the end of the 1980s and early 1990s, the title of “capital of leather” in central China had been slowly formed. With the guiding of Hui people, more and more people began to deal with leather business. According to Mr. Ma who works in BM Leather Limited Company, there were at least 500 family leather workshops in Maoji. At that time, the market demand exceeded supply across the county, and because Maoji’s Leather-making Industry started earlier, it developed very well. And the businessmen from Haining and Guangzhou all came to Maoji to purchase Leather. Gradually, Maoji became the collecting and distributing center of national Leather-making Industry. Until 1995, Maoji’s Leather-making Industry had been in such a state of flourishing, playing a role of collecting and distributing center. Due to the prosperity of the Leather-making Industry, Maoji town took on a scene of prosperity. The increasing of alien population (including foreign businessmen and temporary workers), promoted the development of service industry. According to the locals, there were 2000 to 3000 temporary workers in Maoji’s leather-making factories in 1995. In the morning at 8 o’clock, the boss could easily seek 100 or 200 temporary workers from Maoji’s street. On both sides of the streets, besides leather stalls, there were many restaurants and hotels. The situation of foreign businessmen inflowing can be reflected from the hotel’s business. At that time, Maoji was very prosperous; lots of bosses around China came here to trade leather and sheepskin. They all lived in my hotel. Both sides of the road in front of my hotel were Leather-making Industries, and restaurants were from door to door. People around 15 km came here to look for jobs. This hotel was built in 1987. On the third floor, there is also a ballroom and a dining-room. Some bosses live here. It’s normal that bosses from Zhejiang province came here for fun after a busy day. The hotel’s business was very good at that time. There were no rooms if you came here after 11 o’clock at night. Consequently, I wanted to augment the size of the restroom then. (Interview record of the hotel’s boss, April 3, 2009) Before modern industrialization, traditional handicraft industry existed across

4 China, like textile industry, leather-making industry, bamboo industry and so on. X city also had some traditional handicraft industry. However, according to X city’s county annals in 1985, it had some leather-making industries, but not in Maoji. So, it’s an interesting question that why the leather-making industry in central China rise from

Maoji? And why Maoji’s leather-making industry derived from Hui people village? From the macro aspect, the geographical advantage is very obvious. First of all, the raw material advantage is obvious. Central China has wide area and raises numerous cattle and sheep. Besides, the traffic is convenient and close to Northern China which is rich in supply of raw hide. Secondly, its product market had great advantage because Maoji located in central Region connecting west and east. But why did leather-making industry rise in Maoji and Maoji’s Hui people village? It might have great connection to Hui people’s cultural tradition. They are good at business. Different from Han people who have tradition of attaching import to agriculture and despising commerce, the Hui people have traditional business and are good at and happy to business. Hui people are famous in China and even on international arena. The folk saying of “all the Hui people are expert in business” shows that business is heritage from generation to generation. Hui people’s dietary habit makes it frequent to deal with cattle leather and sheepskin, and more good at dealing with cattle and sheep leather. Although, the staple food of Hui people is different from place to place, all of them basically eat mutton and beef. It’s different from Han people’s satisfaction with current situation that Hui people have a lot of liquidity. Thus, it formed Hui people’s characteristic of big dispersed and small settlement, being the most widely distributed nation. They also have strong regional identity and are guided by shared religious, ethics, and code of conduct, customs, marriage system, and living habitat. What’s more, within the nation, they have strong cultural homogeneousness, cohesion and identity. Consequently, when Maoji’s Hui people deal with the business, they could acquire stable source raw skin from Hui people in Gansu, Ningxia and Qinghai.

Twists and Turns between Water Pollution and Leather-making

5 Industry

From 1980s to mid-1990s, Maoji’s leather-making industry developed rapidly. It promoted the development of the whole town boom, provided plenty of job opportunities and enhanced government's financial strength. Meanwhile, the development of leather-making industry seriously polluted the environment. During that period, the technology used in leather production was relatively simple and almost every process could produce waste water. Water is in flow system, water pollution in upper reaches inevitably exerts influence on the lower reaches’ drinking water. And surface water would inevitably affect groundwater if it is polluted for a certain extent and period. With Huai River basin’s economic development and increased enterprises, the quantity of waster water far exceeds river’s cleaning capacity; water pollution becomes a serious social problem. With Huai River’s water pollution getting more and more serious, as well as government officials and people’s expecting to dealing with water pollution, the solutions are becoming more and more urgent. Since mid-1990s, our nation stated and strengthened to control Huai River’s pollution for several times. Under this background, Maoji has taken up the work of environmental protection for 3 times in 1995, 2000 and 2004. Rapid and high strengthen environmental protection has a deep affect on the development of leather-making industry, which is full of twists and turns. The first twist: environmental protecting facilities are enforced

Until mid-1990s, environmental pollution created by leather-making industry had been very serious. Roads were full of wool and hide and flesh dregs, plenty of waste water unhandled flowed into Guhe River. Mr. Zhang who worked in Maoji’s government described the situation below: The leather-making industry’s pollution is mainly produced in the process of raw hide plucking. Before plucking, it needs quicklime, and then soaking. After plucking, the left grappier and flesh were stacked on roads without any process. The smell could be smelled miles away. Before I worked in Maoji, I came here some times. Every time I came here can felt the awful smell; it was really disgusting. (Interview record of Mr.

6 Zhang Maoji government, April 7, 2009) In 1995, our country began to control the pollution produced by leather-making industry. As for Maoji, leather-making industry must have environmental protecting facilities to process waste water. At that time, facilities’ costs were required 100, 000 to 500, 000 yuan. Maoji’s leather-making industries were family workshops, small scale and difficult to purchase facilities. Thus, some family workshops were shut down, others merged to bear the costs. After reorganizing, Maoji’s leather-making factories (according to Mr. Ma who worked in BM Leather Limited Company, there’re at least 500 leather-making industries) shrunk in number to only 30. Around 1995, Henan Daily reported an article, the title was Uncovered Pollution. Therefore, the party secretary of Maoji introduced the prologue of leather-making industries pollution regulation. That year of 1995 was a peak of environmental protection nationwide. The requirement of environmental protection was to install facilities to process waste water in 1995.The costs of facilities was about 100, 000 to 500, 000 yuan. Thus, after 1995, only 30 leather-making industries left. (Interview record of Mr. Zhang Maoji government, April 7, 2009) The memory of the Hui people village leader in maoji also verified the situation. After rectification, leather-making factories have shrunk, but their total productive capacity remains stable. According to Mr. Zhang, it only affected the family workshops of small businesses. Although small businesses without economic capability of purchasing environmental protection facilities were eliminated, big businesses with good economic capability and merged businesses were maintained. Through merging, their production capacity enhanced. Therefore, it could be said that it only had an effect on small businesses. And it had little effect on the whole leather-making industry, except increasing costs of processing waste water. The second twist: closing and merging From 1995 to 1999, the leather-making industry kept on boom. BM Leather Limited Company was one of the largest economies. Mr. Ma, who worked in BM recalled that the leather price was high after 1995, marketing demand was great and the business was very good. According to him, the price of each better quality

7 sheepskin was 130 Yuan in 1995. The processed dressed leather’s price was 20 yuan per foot and 150~160 Yuan per skin, with the net profit of 20~30yuan. At that time, the annual GDP of BM Leather Limited Company was 100 million Yuan. And the best efficiency year was 1997 and 1998, with the annual GDP more than 200 million Yuan. However, with the increasing production, environmental pollution also became obvious. Although after 1995, the existing leather-making industries installed special facilities to process waste water, the facilities were simple. Even they could work normally, the function had limitations. And what’s worse, the facilities couldn’t work well. The facilities process waste water consumed power, water and drugs, so productive costs increased. Thus, in order to decrease cost, some leather-making industries only operate the facilities to deal with inspection. Consequently, plenty of unprocessed waste water was discharged into Guhe River, and flowed into Huaihe River finally. As far as the macro background, China’s top government paid great attention to Huai River’s pollution when it was becoming more and more serious. The state set an objective to make Huai River clear before the year of 2000. On request of higher -level government, the local government in Maoji took up the work of environmental protection; the corn task was regulating leather –making industry for the second time. This time, all existing leather-making industries were asked to equip more effective sewage treatment unit which cost about 3 millions Yuan. Because the huge increased productive costing, some industries were shut down, others merged to bear the costs. Consequently, after the second reorganization, Maoji’s leather-making factories shrunk in number to 20. However, the total productive capacity wasn’t decline than before. The year of 2000 was the second height of pollution control. After this year, there were only 20 leather-making industries left; all of them equipped the required sewage treatment unit which cost about 3 millions Yuan. (Interview record of Mr. Zhang Maoji government, April 7, 2009) Maoji’s leather industry began to decline after 2000. Although the total productive capacity wasn’t decline than before, many of the left industries ran under

8 their production capacity. First, the primary reason for the recession was the change of market demand. In the respect of domestic market, demand quantity of leather decrease because of fur clothing became unpopular that time in China. Meanwhile, Maoji’s leather industry lost foreign market because leather quality problem. Local cadres of Hui village in Maoji told us that US and Europe raised import standard of leather quality, especially the carcinogen standard like azo, chromium. Second, after the great national prosperity of leather-making industry in late 1990s, the national supply capacity of leather increased. Therefore, as far as domestic leather market was oversupply. The third twist: in-depth merging After 2000, Maoji’s leather industry has been sluggish for 3to4 years. Regrettably, all the 20 leather-making industry in Maoji didn’t improve technology process to increase product quality, what was the additional cost of sewage treatment unit in 2000 made them incapable to do. For economic rationality, they tended to cut productive cost, including Sewage treatment cost which aggravated environmental pollution. According to Jixie’s survey in August 2004, most of leather-making industry’s sewage was drained off to Gu River, then to Hui River. The water in Gu River was gray, and the COD was 800 to 1000. [4] According to SEPA’s investigation result publish at June 20of 2004, the sewage treatment of 56 enterprises in 4 provinces in Huai River basin is below standard. 11 of them were Maoji’s leather-making industries. [5] From early 2004, SEPA began to regulate leather-making industry again, with more strength. [6] This was the third twist of Maoji’s leather-making industry. The whole leather-making industry in Maoji faced the difficult choices to dead or transformation thoroughly. In 2004, Mr.Liu who was the leader of Pollution Control Office of SEPA said that if Maoji wouldn’t control pollution efficiently, the whole leather-making industry would be shut completely. And then SEPA published the new standard of pollution control. None of Maoji’s leather-making industries reached this new standard. Under this situation, the whole Maoji’s leather-making industry stopped production. What SEPA’s new standard requested, was that the every leather-making

9 want to start operation must equip new sewage disposal equipment with the capability dispose 1,000 ton sewage one day, which need adding 5 millions Yuan. Furthermore, for corresponding to the increased sewage disposal capability, enterprises need to improve the productive capability, which means invest more capital to enlarge workshop buildings and renew productive equipments. For that time, Maoji’s 20 leather-making industries accumulated about 3to4 millions Yuan after over ten years. All of them didn’t have ability to reach SEPA’s new standard. Together with the recession which had been lasting 3to4 years, SEPA’s regulate action this time was fatal to Maiji’s leather-making industry. Some industry owners full of grumbles because of this: Last time government regulated leather-making industry request us to equip sewage disposal facility cost millions Yuan. Only 5to6 years ago, now they ask us to renew sewage disposal facility cost 5millons Yuan. All the hard earned money of these years was input to the sewage disposal facility. [7] Only 3 leather-making enterprises left after this governance, all of the others were shut. Among the 3 left enterprises, BM has the largest capability of sewage disposal, 3,000 ton one day. The sewage disposal capability of the other 2 enterprises was 2,000 ton. All of these 3 enterprises were equipped online monitors for monitoring COD and ammonia nitrogen contained in sewage. According to Maoji’s government offical Mr. Zhang, during this SEPA’s regulation, these 3 enterprises at least added 10,000,000 Yuan. BM added the most, 30,000,000 Yuan. Additional costs made all the 3 enterprises run into debt. BM’s debt was 20,000,000 Yuan. In this way, from the first environmental protection government in 1995, the amount of firms was compressed from hundreds to 30, then to 20, finally to 3.Though the number of leather-making enterprises has reduced, the whole Maoji’s productive capacity does not reduced in contrast with the past because of the expansion of these 3 enterprises’ production capacity. Although production processing ability does not reduce, the whole leather processing capacity of Maoji has greatly reduced after 2004. Currently, the whole situation of these 3 enterprises is that they do not have enough to “eat”, which means

10 that their actual production capacity is huge. At the moment, these 3 leather-making enterprises in Maoji have been in difficulty because of the decline of production processing amount, the rise of production cost and the pressure of debt. Among the 3 enterprises, Mr.Ma’s son in BM enterprises has gone out to do other business and the main business is not leather. The operator of HX leather-making enterprise has given up his business and went to Ningxia province to do the real estate business. In his mind, his HX enterprise can not hold on any more and the other is Difficult to maintain. In addition, just as what Mr.Ma in BM leather-making enterprise said, Maoji is not booming as before because of the decline of leather industry. Maoji’s leather-making industry has transformed from labor intensive to technology intensive and capital intensive. In recent years, the labor that the leather industry can absorb has greatly reduced because of the decline of leather industry. In the past, most of the local rural labor worked in the leather company, but now most of them go out and work in other places. As a result, the catering and accommodation services business also followed the depression. Our group of this subject went to Maoji in April 2009, and we found that there were just a few people in Maoji town. For example, the HY luxury hotel in Maiji town that time was always full of people in the past, but now it shows us a strong sense of depression owing to bad business, old hotel objects and the mottled stain marks on the housing wall. In this hotel, there is only one boss in operation and even no waiters here. The reason why he has maintained the hotel is mainly on account of the previous customers. If they come to Maoji and have no place to live, they can live in this hotel, so he barely maintained it.

The reflection of leather-making industry’s rise and fall

In 1980s ， the rise of Maoji leather industry was associated with its special geographical conditions and the practice and culture of Hui people. Under the geographical conditions that time, the location advantages of the development of Maoji leather-making industry were obvious. It is between the raw materials origin and market, playing the role of bridge connecting the east with west of China. It has

11 significant advantages of raw materials supplying and market. After more than ten years of rapid development, the environment issues of leather industry were fully revealed. If they continued to use the traditional ways of processing hides and operating in small-scale, there would be no environment problems in modern sense. There are many reasons. First of all, production yields of the traditional workshops are low, and its limited production is usually only for consumer services in the surrounding areas. But industrial production usually takes the national markets even the global markets as its target. Secondly, most production pollutants of traditional ways can be degraded. For example, hair, meat scraps and fat removed from the process of raw hide becoming dressed leather can be degraded and the lime does not pose a major impact on the environment. During the process of traditional family workshops turning into modern industry, nature of the relationship between industry and environment has undergone essential changes. Firstly, it comes to the quantity expand. The growth of large enterprises, use of efficient equipment and the amount of processing hides per labor becoming hundreds times than previous. Therefore, the generated waste growth is far beyond the self-purification capacity of the rivers around Maoji, even if all the generated waste of processing can be degraded. The fact is far from here. As the demand for leather products has increased, factories add a large number of chemicals in the production process. As a result, harmful and toxic emissions of production process have got a significant increase. So, if we still use the traditional methods to handle the relationship between industry and environment after the greatly expanded production scale, problems must be apparent. From the abstract view, the relationship between business and environment has certain regularity. Namely, different kinds of industries (production, technology, etc) require different environment protection methods and measures. So, in theory (environmental pollution practice also shows), when the company comes to a certain stage and size, it should have relevant methods and measures of environment. But in fact, the focus is on economic growth on the long- term, so the environmental factors are intentionally or unintentionally neglected. In terms of firms, the settlement of paying attention to environment problems is not to realize the importance of

12 environment problems by their own; they have to do this under the government request. So when high-level government pays attention to environment problems and forcibly promote local solutions of environment pollution, enterprises are in embarrassing situation. After 3 reorganizations in 1995 、 2000 and 2004, lots of enterprises have been passive and shut, and many years of hard-won wealth has evaporated one night under the pressure of environmental management. Currently, the one-time booming leather industry of Maoji is no longer prosperous. It has apparent decline in terms of total economic output, employment and economic effect. Of course, the decline of leather industry is a result of multi-factors effect. Firstly, geographical advantages in early stage of development such as raw materials supply is an important factor in development, but advantages of location such as raw materials are no longer major factors and disadvantages of location become major constraints. From the view of developmentregion, in contrast with eastern regions, the central plain of China is in a very negative development situation. The leather-making industry is currently changing from labor-intensive to capital-intensive and technology-intensive. Convenient raw materials and cheap labors have a limited impact on industry, market, technology and human resources have become key factors. What is more, human resource is the key factor among all the key factors. For example, leather-making industry of Haining in Zhejiang province is very easy to attract a large number of talents. That is to say, even if the talents do not stay in Haining, it is very easy to use these talents in Shanghai and Hangzhou. But Maoji does not have such advantages. Secondly, changes in the markets have a great impact on the industry. In the international markets, Europe and America have strict requirements on the leather quality, especially chromium content. Because of leather quality problems, Maoji has lost many foreign markets. In the national markets, leather coats swept Chinese urban and rural areas in the late 1990s, but they gradually fade out of ordinary people’s sight when the fashion passed. Finally, we will talk about the effects of environmental factors on Maoji leather industry. Though environment is not the only factor, the strongly promoted environmental governance has hurt Maoji leather industry a lot. Today, if we can seriously think

13 about such industrial development route and environment management methods, it will be useful for other industrial development and environmental governance. Reflection one: if the companies take the initiative to deal with environmental pollution (including the enterprise consortium formed through the formation of waste treatment business) rather than wait for mandatory promotion. What will it be? Why can not the corporate be initiative to have the courage to solve environmental problems rationally? The results of lacking initiative to solve environmental problems are forcing the companies to the opposite of the common people and government. It is a pity that once the government takes efforts to implement environmental management, these hard-founded family business will instantly disappear, having no time or chance to exist and develop through environmental management. Reflection two: if the business lacks such vision and coordination capacity, local government can make a difference. While local government is promoting local business to improve economic output, is it necessary for it to plan a more profound and long term plan? Reflection three: what are the reasons for compressing the amount of firms from 500 to 30, then to 20, finally to 3? Though it is convenient for the government management including environmental management when there is less companies and bigger-scale per company, other issues are also evident along. On pollution treatments, the joint construction of sewage treatment plants can also solve the problem instead of forcing a lot of firms to shut during a short time. Similar problems also appear in other industries. For example, after the Sanlu milk powder incident, there is an opinion that says the problems lie in the spread of cattle ranchers, so some people advocated to abolish the individual cattle farmers and cattle companies took the opportunity to drive down the milk prices. Previously, the government have strongly encouraged the individual cattle households, but now wanted them to disappear one night. In terms of food safety, individual cattle ranchers have certain security risks, and it is not easy to manage. However, is there really no way to solve the problem out? Therefore, from the perspective of the government management, there is still space for reflecting.

14 [References]

[1] Ou Zhengtao. Secret investigation in Huai River[M]. Beijing: Xinhua Press, 2005.121-122. [2] Chen Ajiang.Reach on Harmony Relationship between Water-Human[J]. Hohai University Journal,2008(1).

[3] X city GovNet: http://www.xiangcheng.gov.cn [4] Jixie. Journalist observe Huai River’s pollution: Our village are Engulfing by

Factories. http://www.people.com.cn/GB/huanbao/35525/2708243.html [5] Bai Cunmo. Leather Pollution is the Fourth in Henan Province[J]. Beijing leather. 2004(8) [6] By June 2004, Henan province has shut 769 enterprises for pollution problem. Seven ministries of the national development and reform commission publish Decision on Controlling Export High Energy Consumption Products, High Pollution Products and Resource Products, leather-making industry was therein.

http://www.sdpc.gov.cn/cyfz/zcfg/t20060526_70944.htm

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