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Secondhand luxury a niche in domestic market

By ZHU WENQIAN | China Daily | Updated: 2021-12-03 09:04
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Customers visit a secondhand luxury store on Nanjing West Road in Shanghai. [Provided to China Daily]

China's secondhand luxury market has been growing rapidly in recent years, as more retailers are joining the sector. The growth in return has fueled the momentum of secondhand luxury good identification agencies.

Young Chinese consumers who were born in the 1980s and 1990s have become the main demographic for luxury spending in China. The trend has also been prominent in secondhand luxury market. The fast growth of e-commerce business has fueled the development of the sector, said a report by market research firm iResearch.

Still, compared with Europe, the United States and Japan, the transaction scale of China's secondhand luxury goods market is still relatively small.

Currently, China's secondhand luxury market accounts for 5 percent of the total luxury goods sector, lower by 20 percent to 30 percent than the figures seen in some developed countries, said a research report by the University of International Business and Economics and Youshe Yipai, a platform for secondhand luxury deals.

China Origin Inspection Co Ltd (COIC), a major luxury identification agency in China, now provides services to thousands of enterprises, such as video-sharing apps Douyin and Kuaishou, the auction unit of Alibaba Group, and are tapping the increasing number of secondhand retailers that emerged in the country in recent years.

The company receives luxury items for identification, including those of Louis Vuitton, Chanel and Prada.

"Consumer perception has changed a lot compared with the past, and more people began to accept secondhand luxury goods, given their high cost-effectiveness. The sector shows a significant growth potential," said Zhang Lei, director of the company.

"For some iconic styles, some manufacturers are more likely to make counterfeit products to imitate them, and there are times that the products we inspected were fake. Besides, for light luxury brands, the costs of production are lower, and the costs of making frauds are also lower. There are higher possibilities that the goods of such brands could be fake," Zhang said.

Globally, luxury brands are showing an increasing interest in the secondhand luxury market. This year, French luxury group Kering made investments in European secondhand clothing platform Vestiaire Collective and luxury bag rental startup Cocoon, as it is bullish in their growth prospects.

Meanwhile, more luxury brands such as Valentino and Jean Paul Gaultier have launched their own secondhand products trading platforms. Valentino said the secondhand platform could help attract more consumers to buy its products, including some vintage styles.

For luxury brands, one of the biggest benefits in actively joining the secondhand luxury sector is to know more about the authenticity of secondhand products circulating in the market, as numerous counterfeit products remain the biggest pain point of the secondhand market, industry experts said.

China's secondhand luxury sector has also experienced a reshuffle over the years. Secoo Holding Ltd, a luxury e-commerce company, became quite popular a few years ago and went public in New York in 2017, becoming the first listed Chinese luxury e-commerce platform.

Yet, as of November, an accumulated 160 million yuan ($25 million) of its equity has been frozen, as its services cannot operate regularly and the company encountered several operational problems.

At this time, luxury good appraisal mainly relies on manual identification. COIC said it would use specialized instruments for detailed observation and compare the identification information with its database. For bags, it mainly inspects parts like logos, metals, the textile technology and the paint edge.

"We were not affected by the COVID-19. Most of our growth was fueled by the business growth of secondhand luxury products trading platforms," Zhang said. "There is still a shortage of luxury appraisers, and we are training more professional talents. Next, the identification process will increasingly need the assistance of scientific instruments".

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