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IBM Opens China's First Factory To Refurbish Old Computers, Tapping A $2 Billion Market

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IBM on Wednesday will announce that it has opened the first facility in China to refurbish and resell old computer servers, a market expected to grow to $2 billion in that country by 2014.

For decades, the export of electronic waste from the United States and Europe to Asia has raised concerns about the impact on local environments and the low-paid workers who dismantle toxic-laden computers and other gear to recover valuable metals and parts.

But China’s perpetually booming economy has created a burgeoning e-waste problem of its own and the government’s latest five-year economic plan encourages recycling and remanufacturing of computers to keep them out of landfills, according to Richard Dicks, general manager of IBM Global Asset Recovery Services.

“In China, they’ll use them for five, seven or nine years and they’re basically landfill when they come out,” he says.

The remanufacturing plant opened last Wednesday in Shenzhen near an existing IBM factory. Big Blue expects to remanufacture 100,000 servers and personal computers a year by 2014 by installing new memory and storage and packaging them for resale to the domestic Chinese market.

“The Chinese market is huge from a server perspective,” says Dicks.

The supply of old servers will come mainly from China as equipment leases expire and customers turn in old machines, IBM says.

The company operates remanufacturing facilities around the world, taking in 33,000 metric tons of discarded equipment a week, enough to fill 61 Boeing Dreamliners, according to Dicks. That diverts from landfills about 97% of the weight of old machines on average, IBM says.

Dicks says IBM had been negotiating with the Chinese government for two years to license the Shenzhen remanufacturing plant and he expects competitors to eventually establish their own facilities.

“The thing we talked to Chinese government about is that it’s really easy to buy a new computer but it’s really hard to get rid of one,” says Dicks. “We’re the first licensed facility and we have a first-to-market advantage.”

He says the company will accept non-IBM machines but will send those elsewhere to be refurbished or properly dismantled.