While it’s too early to say this single investment will transform the entire sustainability investing landscape in China, investment by Ingka Group in Re-mall ( also known as Shanghai Re-mall Environmental Protection New Material Company ), a Shanghai-based recycler of plastic products, is undeniably a landmark. This investment follows Ingka's earlier announcement that it will be investing €1billion ( US$1.17 billion ) in recycling-focused companies. 

For context, the Netherlands-based Ingka Group, also known as Ikea Retail, announced on August 11 that it is making the capital injection in Re-mall, as part of its commitment to support the transition towards a circular economy by investing in companies that are developing technology or growing capacity to prevent waste or supply recycled materials.

Ingka is the primary retail unit of Ikea. It is the largest franchisee of the Ikea brand, operating the majority of Ikea stores worldwide with 390 of them across 32 countries, representing about 80% to 90% of global Ikea retail locations.

Re-mall, on the other hand, is an established leader in China for producing premium-grade recycled polypropylene ( rPP ) using proprietary technology for post-consumer packaging waste. Founded in 2015, Re-mall serves blue-chip companies with products used in storage boxes, tableware, toys, cosmetics packaging and textiles.

Large, impactful

The investment is undeniably a landmark for two main reasons, namely: it is the first large-scale foreign circular economy investment in China targeting plastics. A circular economy is a sustainable model that prioritizes resource reuse, recycling and regeneration to minimize waste and environmental impact.

In China, companies like Re-mall and policies like the 2020 plastic ban align with this model, aiming for a recycling rate of 50% to 60% by 2030-2035, well above the global average of 9% to 10%.

Apart from its size, the Ingka capital injection in Re-mall also sets a visible precedent for investments in high-value, environmentally focused companies and start-ups in China, particularly in plastics recycling and sustainable materials.

Another thing that makes this investment important is that it has the potential to significantly boost the recycling rate of China’s plastic industry. Industry data indicates that while China’s current plastic recycling rate of 30% to 35% is higher than the global average of 9% to 10%, it is still much lower than the country’s target optimum plastic recycling rate of about 50% to 60% by 2030-2035, based on balancing the environmental benefits, technological feasibility and economic viability.

China’s recycling industry is also characterized by a predominance of small and medium-sized enterprises, and challenges like volatile market demand and limited high-value utilization.

Ingka’s investment will directly enable Re-mall to scale its operations, including increasing recycling capacity and innovating new products. While Re-mall is relatively unknown outside China, it is recognized for its speciality in converting post-consumer food packaging waste into transparent rPP, a material used in various products like tableware, toys and storage containers.

Re-mall’s proprietary technology, which allows it to produce rPP at scale from contaminated sources, is rare globally and could set a benchmark for domestic players, according to its online literature, potentially accelerating the adoption of advanced recycling methods in China.

In any case, the Ingka investment would have been done with strategic investor due diligence. While this is not a rating for Re-mall, an investment by a corporate entity of Ingka’s global stature typically follows strict internal screening on compliance and risk, as well as meeting globally aligned sustainability and environmental, social and governance ( ESG ) standards.

Re-mall and its wholly-owned subsidiary Shanghai Re-Ju have also publicize multiple management system and recycling certifications ( for example, ISO 9001, ISO 14001, GRS and UL2809 OBP ), as well as a No Objection Letter ( NOL ) from the US Food and Drug Administration ( FDA ) for 100% post-consumer rPP from food packaging, which are useful indicators of process control and regulatory engagement.

In particular, the FDA NOL is a critical tool for validating the safety and compliance of recycled plastics for food contact applications as it enhances market trust, supports sustainability and ensures consumer safety without constituting formal approval. For companies in China or globally, obtaining an NOL is a strategic step towards meeting regulatory expectations and competing in the growing market for sustainable packaging.

Precedent setting

In a broader context, Ingka’s investment in Re-mall sets a precedent for other foreign investors considering opportunities in China’s circular economy. It also demonstrates the viability and potential of investing in sustainable practices within the country, encouraging more capital flow into green technologies and waste management solutions.

Also, unlike other ESG investments by foreign entities in China, Ingka’s investment in Re-mall addresses the waste recycling sector that poses critical challenges in China’s sustainability agenda.

When compared with other ESG investments in China by foreign entities within the 2020 to 2025 period, the €1billion Ingka investment in Re-mall clearly stands out as the first large-scale ESG investment targeting high-value plastic recycling.

There are other publicized foreign ESG investments in China within the 2020 to 2025 period that are comparable with the Re-mall investment, but of far less monetary value. One example of these is a US$150 million investment by BlackRock into solar and wind projects in Jiangsu and Inner Mongolia in 2020.