China Daily - 30.07.2019

BUSINESS

CHINA DAILY Tuesday, July 30, 2019 | 15

By CHENG YU
[email protected]

The secondhand economy, sup-
ported by the consumption upgrade
and advanced internet technolo-
gies, is set to create a trillion-yuan
market in China, according to
industry insiders.
In the internet era, selling a sec-
ondhand smartphone no longer
involves face-to-face negotiations.
Today, all you need to do is to put a
used phone into a machine that uses
big data to determine its value and is
able to erase all your personal data.
The secondhand economy in the
internet era will “enable more con-
sumers to enjoy added value
through new modes of business,
advanced technologies and upgrad-
ed experiences”, according to indus-
try insiders.
According to a report from mar-
ket consultancy Big Data Research,
the market volume of the country’s
secondhand economy reached
202.54 billion yuan ($29.5 billion) in
the first quarter of this year, a 5.
percent increase year-on-year.
“One important reason for the
market rise is that the consumption
upgrade is driving changes in the
consumption habits of younger gen-
erations, especially those born after
1990,” said He Fan, founder and
CEO of Huishoubao, an app ena-
bling the recycling of electronic
devices online.
They tend to pursue lifestyles and
have consumption habits that are
more environmentally friendly, sus-
tainable and fashionable, he said.
Another reason, according to Li
Renjian from CITIC Capital, is that
the use of advanced internet tech-
nologies including big data and arti-
ficial intelligence has boosted the
competitiveness of the whole sector.
Huafer, an online platform for
secondhand maternity items devel-
oped by Parterre Beijing Technology
Co Ltd, is riding the wave by focus-
ing on female users.
Huafer offers new mothers a plat-
form to buy and sell products that
their babies no longer need.
“Unlike other secondhand prod-
ucts, those used by new mothers
and babies are useful only for a
short period of time,” said Zheng
Xiaowen, CEO of Huafer.
The Beijing-based company has
proved a hit. Two years after it was
established, the firm has more than
1.9 million registered users and over
80,000 users have made transac-
tions through its platform.
Notably, Huafer is also a shining
example of how a platform for sec-
ondhand goods can make use of
KOLs, or key opinion leaders, and it

has cooperated with a string of pop-

ular stars to attract more users.

Famous actresses including Sun

Li, Xie Na and Deng Sha as well as

renowned television presenter Zhu

Dan are among those selling their

secondhand goods on Huafer.

In addition to being famous, they

are also mothers, which boosts their

appeal to other users.

“Mothers are seen as loving and

trustworthy, which is important for

secondhand trading platforms if

they want to benefit from word-of-

mouth recommendations,” Zheng

said.

Sun Li, an actress who has

appeared in a series of TV dramas

including Empresses in the Palace

and who is also a mother of two,

sells her children’s toys, clothes and

shoes on the platform.

With most things being in good

condition but priced much lower

than new items, Sun has successful-

ly attracted more than 1.6 million

fans and sold over 1,000 products.

According to a report from lead-

ing investment firm Cyanhill Capi-

tal, China’s secondhand market is

growing rapidly at 30 percent year-

on-year and is expected to reach a

value of 1 trillion yuan next year.

“The market will have great

potential in the future compared

with developed countries. The mar-

ket size of used goods in the United

States is 2 trillion yuan while in Aus-

tralia and Canada it is about 200 bil-

lion yuan,” said the report.

He from Huishoubao agreed.

“Compared with developed coun-

tries, China’s secondhand economy

is still at an early stage,” He said.

The handset recycling rate in

some leading countries, for exam-

ple, accounts for 40 to 50 percent of

total sales, while in China the figure

is less than 10 percent.

“The industry will continue to

boom over the next three to five

years or even more,” he predicted.

Demand for used cars is also gain-

ing momentum.

In the first half of 2019, a total of

6.86 million used cars were sold

across China, up 3.9 percent year-

on-year. Overall sales hit 43.4 bil-

lion yuan, according to the latest

data from the China Automobile

Dealers Association.

Luo Lei, deputy secretary-general

of the China Automobile Dealers

Association, said earlier that the

booming market is thanks to the

central government’s decision to

remove limits on the flow of used

vehicles across regions.

Since last year, China has ramped

up efforts to scrap limits on cross-

region flow of used cars, as part of

the country’s broader push to make

the automobile industry globally

competitive.

“This will encourage consumers

to switch cars more frequently and

help enterprises to adjust their

plans and explore untapped

demand,” Luo said.

China has about 240 million cars

on the road, data from CADA

showed, yet about 78 percent are

from first- and second-tier cities.

“But demand for used vehicles

chiefly comes from consumers in

small cities, resulting in huge

demand-supply imbalances geo-

graphically,” according to data from

Youxin, an online used car dealer.

To tap into the demand, major car

dealers including Renrenche, Youx-

in and CARS are all gearing up to

enter more cities and provinces to

boost market share.

Major ride-hailing firm Didi is

also entering the market by buying

used vehicles directly from Renren-

che in a bid to lower costs.

“The transaction volume between

the two sides is likely to exceed 2

million vehicles in three years,” said

Renrenche in an earlier statement.

Major internet behemoths are

also joining the fray.

In June, JD announced plans to

inject more than $500 million into

the secondhand platform Aihuish-

ou, which is reported to bring the

valuation of Aihuishou to more than

$2.5 billion.

Alibaba Group has invested in

Xianyu, a major secondhand firm,

while Xianyu’s archrival Zhua-

nhuan is backed by Tencent Hold-

ings Ltd.

With the secondhand market

continuing to boom, Zhang Li, head

of the e-commerce division at the

Chinese Academy of International

Trade and Economic Cooperation

affiliated with the Ministry of Com-

merce, noted that the new business

model has also brought about many

problems.

“Most platforms in the field lack

sufficient appraisal procedures,

leading to the presence of many

counterfeit or fake goods on those

platforms,” Zhang said in a report.

“Also, as with other e-commerce

platforms, sellers have more infor-

mation than buyers, which results

in the frequent occurrence of fraud-

ulent behavior in transactions,”

Zhang said.

Zhang added that it is also diffi-

cult for the government to supervise

as the secondhand market involves

numerous types of small platforms

and applications.

High-tech spurs growth of

secondhand goods market

Consumption upgrade, internet technologies set to create trillion-yuan business

A person uses the mobile app of secondhand car trading platform Renrenche in Guangzhou, Guangdong province.PROVIDED TO CHINA DAILY

Online sales platforms

helping make luxury

brands more affordable

By CHENG YU

Half-price Prada, discounted

Louis Vuitton and cut-price Cha-

nel — thanks to the rise of plat-

forms selling secondhand goods

in China, luxury brands are no

longer out of reach.

Wang Xingyang, a 29-year-old

financial consultant from Bei-

jing, bought an Yves Saint Lau-

rent shoulder bag through

Xinshang, an online platform

selling secondhand luxury bags

and clothes.

“I was so glad not only

because I bought it for 5,

yuan ($770), which was nearly

one-third of its original price,

but also because I don’t need to

spend time looking for a reliable

daigou,” she said.

Daigou refers to buying

agents on e-commerce plat-

forms like Taobao who help cus-

tomers buy products abroad at

lower prices.

According to Wang, she chose

to shop on the platform as it pro-

vides a 100 percent guarantee and

a well-rounded procedure for buy-

ing, authenticating and maintain-

ing products.

“Our core competitiveness is

that we leverage technologies to

build an all-in-one platform

where consumers can buy, sell,

recycle, authenticate and evalu-

ate the price as well as enjoy aft-

er-sales services such as

cleaning and maintenance,” said

Dong Bowen, founder of Xin-

shang.

“More importantly, by building

such a system, we have accumu-

lated a huge amount of data that

will help us improve our business-

es; for instance, allowing us to

evaluate prices more accurately,”

Dong said in an interview with

China Daily.

Xinshang, founded in 2014, is a

platform where nearly 80,

professional merchants are sell-

ing secondhand luxury goods.

Once the goods are uploaded to

the platform, Xinshang dispatch-

es its own experts to confirm if

they are real or not. If real, the

products are approved for sale to

customers.

Chinese consumers spent a

record high of 770 billion yuan

on luxury goods abroad and

accounted for one-third of the

total luxury spending world-

wide last year, according to a

McKinsey report. The figure is

expected to hit 1.2 trillion yuan

by 2025.

The biggest challenge facing the

secondhand market is the process

of building trust between sellers

and buyers, according to Industry

insiders.

To tackle the problem, Dong

said each product will go through

six levels of checks by experts with

professional certification from

China and Japan.

“We guarantee products are

real. If they turn out to be fake, we

offer the customer compensation

three times the original price,”

said Dong.

To date, the platform has sold

500,000 products with users

exceeding 6 million.

Tommy Tang, senior invest-

ment manager at GGV, pointed

out that in China, the secondhand

house and vehicle markets are

now relatively mature.

“The secondhand luxury goods

market, on the other hand, hasn’t

been explored much and is still in

its infancy. Given its huge scale,

we believe that there are opportu-

nities for the sector to develop,” he

said.

Most people haven’t realized

that their luxury goods can be

sold. Once demand rises, the sec-

tor will generate a big platform

that will dominate the field, Tang

said.

Customers select goods at a secondhand luxury store in

Beijing.CHEN XIAOGEN / FOR CHINA DAILY

Our core

competitiveness is

that we leverage

technologies to build

an all-in-one

platform where

consumers can buy,

sell, recycle,

authenticate and

evaluate the price as

well as enjoy after-

sales services such

as cleaning and

maintenance.”

Dong Bowen, founder of

online secondhand luxury

platform Xinshang

One important reason

for the market rise is

that the consumption

upgrade is driving

changes in the

consumption habits

of younger

generations,

especially those born

after 1990 ...

Compared with

developed countries,

China’s secondhand

economy is still at an

early stage.”

He Fan, founder and CEO of

Huishoubao, an app enabling

the recycling of electronic

devices online

Secondhand luxury bags are sold at a Milan Station store in Shanghai.

PROVIDED TO CHINA DAILY