The heavy metals, which do not break down over time, can contaminate underground water, Xu said, adding that the substances, when accumulated in the human body, may trigger blood diseases and renal failure.

Although there are no precise data on how many small electronic goods reach the end of their lives every year in China, a 2013 report issued by the Solving the E-Waste Problem Initiative, a partnership of UN organizations, industry, governments, non-government and science organizations, showed that China put the highest volume of electrical and electronic equipment on the market in 2012 with 11.1 million tons, followed by the United States at 10 million tons.

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According to the report, the United States generated the largest total volume of e-waste per year at 9.4 million tons in 2012, while China generated the second-highest amount of 7.3 million tons.

However, end-of-life gadgets can be valuable if recycled and technologies are mature, according to Xu.

"For example, the content of cobalt in the battery is 15 percent, far higher than the 3.7 percent in the ore," he said.

In addition, precious metals such as gold, silver, palladium and tin can be extracted from the circuit boards of cell phones.

Stumbling block

Recycling companies are not blind to the economic potential of recycling small electronics, but they complain that the business is not cost-effective without government subsidies.

Since July 2012, the government has begun to collect funds from manufacturers and importers of TV sets, refrigerators, washing machines, air conditioners and computers to subsidize licensed recycling companies. However, disposal of small electronic items is not included in the subsidy program.

"In terms of small gadgets, without government support we can't compete with the unlicensed waste collectors. They use primitive but low-cost dismantling and disposal methods," said a manager with Shandong Zhonglv Eco-Recycle Co Ltd, based in Shandong's Linyi city.

The investment and operation costs for qualified recyclers are too high to be covered by yields if they cannot collect enough small gadgets, Xu said.