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Much has been made in the immediate wake of the COVID-19 pandemic of how the significant spending power of consumers in Asia – China, in particular – has helped luxury brands to rebound from plummeting sales. Gucci’s parent company Kering pin-pointed the “robust and encouraging sales momentum with local customers, especially in Mainland China” in helping the Italian fashion brand to bounce back in the second half of 2020. At the same time, Hermès revealed that sales in Asia spiked by a whopping 47.4 percent for the 3-month period ending in December 2020 (for a point of comparison, sales in France for the same time frame were down by 18.2 percent), and LVMH similarly asserted that “strong recovery in revenue beginning in April” was due, in large part, to sales in China. 

While the sale of new luxury goods on the Chinese mainland continues to command the focus of brands and analysts, alike, China’s secondhand luxury market warrants increased attention, “as young and internet-savvy consumers, who are also environmentally conscious, are looking for affordable high-end goods through secondhand luxury trading platforms,” China Daily revealed recently. To date, the pre-owned luxury market in China has lagged behind those in the U.S., for instance, where the sale of pre-owned luxury goods accounted for 31 percent of the overall luxury market in 2019 thanks to the likes of The RealReal, ThredUp, Depop, and co., and in Japan, which boasted a luxury resale industry with 28 percent market share, according to a 2020 report released by the luxury research center at the University of International Business and Economics and secondhand luxury platform Isheyipai.

Accounting for just 5 percent of its overall market for luxury goods as of 2020, China’s luxury resale segment may be in its infancy – and still in the process of shedding a largescale consumer aversion to pre-owned products – but the University of International Business and Economics and Isheyipai report foresees that changing, with the industry ultimately expected to scale to 1 trillion yuan ($154.6 billion). The same report also found that more than 50 percent of second-hand luxury goods consumers in China are below 30 years old, thereby, making up “a segment that is bigger than the entire U.S. population,” per Reuters. 

As younger generations of Chinese consumers are readily ditching previously deep-seated stigmas attached to used goods, particularly clothing, and in light of the sheer “abundance of luxury goods located in the country” given that China is home to leading consumers of luxury goods (the country is slated to account for half of all sales of personal luxury goods by 2025, according to Bain & Co. projections), “explosive” growth is on the horizon for pre-owned luxury products. This is only bolstered by the fact that the majority of Chinese consumers are keeping their luxury products for just one to three years, Kering revealed in its 2021 environmental impact report. 

With the foregoing in mind, China’s mainland is ripe for an influx of luxury resale, something that is not going unnoticed by “start-ups and tech giants, alike, [which] sense the potential market for resale,” according to CNN. Transactions on Idle Fish, the second-hand marketplace that Alibaba launched in 2012, generated $14 billion in sales in 2019, making it the largest consumer-to-consumer community and marketplace in China for long-tail products. 

Meanwhile, CNN notes that “a number of fashion-focused platforms like Plum” – which raised a reported $20 million in a series B+ funding round in 2019, prompting media to question whether it could become China’s version of The RealReal – “and Secoo have also emerged in recent years, in addition to individual vendors now selling second-hand goods via live-streaming apps like Douyi.” 

One still-very-relevant – and yet, unsolved – issue that has “somewhat stunted” the embrace of pre-owned goods, and thus, the Chinese resale market boom remains: counterfeit goods. As indicated by both headline-making lawsuits and in-depth media investigations, U.S. resale sites have faced enduring issues over product authentication, particularly as resale pioneers scale in size (and simultaneously, aim for profitability). This is a problem that is similarly faced by burgeoning Chinese resale entities, as well. Several years ago, Chinese luxury goods authentication service Yishepai found that 40 percent of the items it appraised were fakes, reflecting on the sheer scope of the counterfeit trade, and making it very clear that when it comes to buying pre-owned luxury goods “the first step in Chinese people accepting the idea of buying second-hand is consumer trust,” Austin Zhu, co-founder of Chinese consignment platform Zhi Er, told CNN. 

As for how resale companies are endeavoring to build much-needed consumer trust, their efforts are multifaceted. “Primary market platforms and resale players in China are [working to] improve their authentication systems to combat the threat from sophisticated counterfeits,” Vogue Business recently reported

At the same time, giants like Alibaba are looking to solicit brand partnerships in order to benefit from increased authentication expertise. The Jack Ma-founded behemoth’s Idle Fish marketplace has expanded beyond its purely consumer-to-consumer roots to include business-to-consumer elements, such as providing companies with the opportunity to launch “brand certified” stores on its site, not terribly unlike how swiftly-growing French resale company Vestiaire recently launched its new “Brand Approved” program, which will see it work directly with brands to offer up pre-owned items to the consuming public. 

Brand collaboration is certainly a coveted concept when it comes to pre-owned goods given the growing sophistication of counterfeiters and the consistently increasing quality of their offerings, which are, in at least some cases, made in the very same factories as the real thing, making authentication a markedly difficult task. (DLA Piper attorney Mehdi Kettani revealed that in addition to luxury goods, themselves, “the serial number inside designer handbags and authenticity cards” are often replicated “on the same production lines as the major brands in places like Morocco). 

As for the impact of COVID, just as it has accelerated existing trends across the board, it is expected to bolster the appeal of pre-owned luxury for Chinese consumers, who were already embracing the segment before the onset of the pandemic.