Generation Z consumers in China are tightening their belts in the face of a challenging economy and high unemployment and buying what they need on the secondhand market, from cellphones to clothes to cosmetics and collectibles. And its millennials are continuing their love affair with used luxury goods - online and at resale stores - in a market expected to be worth over US$32 billion (HK$249.6 billion) by 2025.
The trends are propelling China's secondhand economy to new heights while also supporting the government's drive toward a circular economy. Thrifty youngsters The market value for secondhand goods in China is expected to exceed 3 trillion yuan (HK$3.25 trillion) next year, according to a report by the Institute of Energy, Environment and Economy of Tsinghua University and Frost & Sullivan.
As the number of secondhand consumers grows steadily, there's been a notable demographic shift with younger individuals leading the trend, the report says. Chinese youngsters are spending less and saving more amid the slow economic recovery and high unemployment. Last year, youth unemployment skyrocketed to a record 21.
3 percent last year in June, leading authorities to suspend the release of figures for several months, citing a need to change the way it was calculated. Under the new methodology, which now excludes students, the jobless rate for people aged 16 to 24 was 14.2 in May and slightly lower at 13.
2 in June, but still more than double the general jobless rate of around 5 percent. The need to save has become a hot button issue on social media and the topic of "consumption downgrade" has gained over 1 billion views on Xiaohongshu, China's Instagram. Among those going down the secondhand route is Gen Zer Liu Ling from Beijing, who recently bought a wooden kitchen cabinet on a secondhand trading platform.
Liu told the China Consumer Journal that she forked out just 500 yuan for the cabinet, one fourth the price of a brand new one. Booming market Propelled by the wave of cost-conscious youngsters, China's secondhand e-commerce is thriving. The value of transactions in the secondhand market grew by 14 percent to 548.
7 billion yuan in 2023 over the previous year with the number of users up by 33 percent to 620 million, according to data from 100EC.cn, an e-commerce media platform. Goofish, a secondhand platform under Alibaba (9988), said its average gross merchandise value exceeded 1 billion yuan a day over this year's Chinese New Year.
Over 100 million people put their goods up for sale on Goofish in 2023, and about 4 million products were available daily. A majority of Goofish's 500 million users are Gen Zers with 43 percent of them born after 1995 and 22 percent born after the turn of the century. Among them, those who worked earned an average of 2,700 yuan a month.
The goods on the Goofish are varied and range from toys, sports goods, plants and digital equipment to electrical appliances, clothes and more. When Eddie Wu Yongming took over as Alibaba chief executive late last year, he said Goofish, with its large market and unique positioning, was one of four businesses that are key to the tech giant's future. Another secondhand platform, ATRenew, the largest pre-owned consumer electronics goods and services platform in China and listed in New York, said its revenue increased 27 percent year-on-year in the first quarter of this year to 3.
7 billion yuan amid a steady growth in business. Its adjusted operating profit increased 80.8 percent to 80.
2 million yuan in the first three months, and it was profitable for a seventh consecutive quarter. Taste for luxury The market for used luxury goods is also buoyant, with young buyers snapping up secondhand bags, dresses and other items made by the likes of Hermes, Louis Vuitton, Chanel, Gucci, Dior, Burberry, according to reports. Qianbaohe, a pre-owned luxury chain with 15,000 followers on Douyin, now has three brick-and-mortar stores in Wenzhou.
Its business has grown threefold since 2019, reports say, with luxury handbags the mainstay of its sales. Another major player is luxury resale platform Hongbulin, also known as Plum, which secured a US$100 million C series funding from Zhuanzhuan, a marketplace backed by tech giant Tencent (0700), back in 2022. Launched in 2017, Plum has more than 2,000 brands on its site and professes to be committed to making the earth's environment more sustainable.
Millennials, or buyers under the age of 40, are said to comprise the luxury resale market's core group and Gen Zers and millennials together account for more than 80 percent wof the total number of secondhand luxury consumers, according to reports. Overall, the secondhand luxury market in the mainland was worth US$27 billion last year and expected to be worth more than US$32 billion by 2025, according to consultancy iResearch. Meanwhile, China is encouraging the secondhand economy to get close to its target of reducing carbon emissions per unit of gross domestic product by 18 percent between 2020 and 2025.
To this end, the State Council released an action plan to promote large-scale equipment renewals and trade-ins of consumer goods earlier this year. It called for efforts to promote trade-ins of consumer goods, including vehicles, home appliances and home decor goods, and also encouraged improving the recycling network of waste and used products, and circulation of secondhand goods. Secondhand platforms and major e-commerce giants are embracing the trend.
While Goofish launched a trade-in program last year, Tmall under Alibaba, JD.com, and social media platforms Kuaishou (1024) and Douyin, China's TikTok, have entered the recycling and trade-in business. However, not all shoppers are happy with secondhand online markets.
Data on China's online public complaints platform Diansubao shows that one in five complaints are about product quality (21 percent). Other complaints include problems over refunds (18.6 percent), lack of conformity of goods (10 percent), counterfeits (9.
79 percent) and online fraud (8.56 percent). Zhang Qian, a young online shopper, feels that both buyers and sellers need to be more aware of their rights and exercise better judgement, while secondhand trading platforms should improve their rules.
City gets circular The secondhand market and circular economy is also gaining momentum in Hong Kong. Producer responsibility schemes call on everyone - from manufacturers to retailers and consumers - to join forces to recycle or dispose of old goods and help save the environment. The green@community initiative is a recycling network that has recycling stations and stores spread across all 18 districts.
It includes about 380 points for paper, metals, plastics, glass bottles, rechargeable batteries, fluorescent lamps and tubes, regulated electrical equipment, small electrical appliances and beverage cartons. Last year, four organizations - Friends of the Earth, Christian Action, The Salvation Army and The Conservancy Association - collected 711.66 tonnes of used clothes, and the recycling rate of used clothes reached 11 percent in 2022, the government said.
Fast-fashion retailers including Uniqlo, Zara and H&M also have recycling initiatives in place. Globally, sales of secondhand clothes rose 19 percent year-on-year to US$211 billion in 2023, and secondhand clothing is expected to account for 10 percent of the global fashion market this year, according to research from GlobalData. And by 2027, the research shows this market could be worth as much as US$350 billion, giving the secondhand and circular economy a further shot in the arm.
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