We don't have quite the same system here in Hong Kong, but similar in some respects. The stuff that doesn't get bought fairly quickly from the used-audio places where I "hunt" eventually gets sent across the border in bulk for tearing apart and crushing. Most of that has been well picked-over by various dealers and buyers before, though, so it would be difficult for good stuff to be "wasted" from there.
I've got a few decent things --like a higher-end vintage Denon Laserdisk player that they gave me free, because it had about a dollar scrap-metal recycling value. I cleaned out some grease that was clogged with cockroach droppings

puke: ) and it re-lubed it, and it works perfectly.
Yesterday a guy tried to give me a (reproduction, not genuine antique) cathedral-style radio, for free, because otherwise it was going to be crushed. I couldn't take it, but I made arrangements for it to be saved for later pick-up.
The cool thing is that anything REALLY NICE, like an SX-1980 will NOT be sent from there for recycling. It will end up in the hands of an audio buyer, whether an audiophile collector in the Mainland, or someone in Pakistan, or someone like me.

Only some boring-looking and obscure European or American brand stuff that people wouldn't know MIGHT be from time to time get tragically trashed, but not much, not likely and not often. Too many people in the market know their gear too well to let much get past them.
On the other hand, there is simultaneously some stuff getting taken every day to the scrap-metal collection places, instead of to the audio market. Some of that still gets picked up and taken to the audio market, so MOST of the decent audio gear ends up in the audio market, but SOME does not. Some of it still gets tossed in with the scrap metal and hauled away for crushing, because the guys at the scrap-recycling places generally know next-to-nothing about audio, and can't be bothered to separate stuff out unnless they think someone will come by and pay them more for it. Still, it won't sit and wait more than a day or two.
Fortunately, there are people like me --and a few poorer types who look for stuff they can resell in the audio market for a quick profit-- who swing through and look sometimes, so most decent stuff gets rescued from there.
So LOTS of junk gets recycled, and A LITTLE good stuff probably does, too. Still, the system is pretty efficient and effective, and not much good stuff would slip through the cracks here.
...especially not if I see it, first!
