Friday, 2024 October 11

What are billions of used phones worth? China’s tech giants want to find out

China’s enormous smartphone market, which saw 366.7 million units shipped in 2019, raises an unexpected question for a society normally focused on the newest models and sales figures: What should be done with used phones?

Most people in China keep their retired phones at home due to privacy concerns and lower-than-expected resale prices. Hardly any recycle them either—only 2% of used phones are dismantled and recycled according to a report published by Greenpeace and the China Association of Electronics for Technology Development in March 2019.

While collecting metals from used devices is not currently a cost-effective solution, some companies have been trying to bring them back to the second-hand market to recoup their remaining value. Venture capital funds and tech giants including Alibaba (NYSE: BABA), Tencent (HKSE: 0700), and JD.com (NASDAQ: JD) are also backing the growth of this market, estimated to be worth RMB 100 billion (USD 15 billion).

China digest

One company tackling this problem is Shanghai-based Aihuishou. Founded in 2011 as an online platform to sell used electronics to second-hand resellers, it merged with JD.com’s used goods marketplace Paipai in 2019. Aihuishou now has about 700 brick-and-mortar stores nationwide where people can deposit used phones, and it also offers online post-and-sell services, according to a 36Kr report.

On Tuesday, Aihuishou closed a USD 105 million Series E+ round led by JD.com and securities company Guotai Junan International, according to a Weibo post from the platform. Following the fundraising, Aihuishou rebranded as Wanwu Xinsheng. The name means “a new life for everything” in English.

Aihuishou is not China’s largest marketplace for used phones—that title belongs to Zhuanzhuan, a second-hand goods trading platform that merged with Zhaoliangji, a similar firm that focuses on used handsets, in May. Before the merger, Zhuanzhuan raised USD 300 million from investors including Tencent in a Series B round.

Alibaba has its own platform targeting the second-hand phone market as well, called Xianyu. The online trading marketplace, which is open to all sorts of used items, started offering a post-and-sell service for iPhone owners wanting to get rid of their devices, KrASIA reported last year. In 2018, Alibaba also invested an undisclosed amount in Huishoubao, a Shenzhen-based used gadgets platform.

A report released in February by research firm Aurora Mobile focusing on the second-hand phone market in China found that 64.7% of people surveyed heard about Zhuanzhuan. The next best-known platform is Zhaoliangji, with 46.8% of respondents familiar with the name. Aihuishou followed with a 17.4% heard-of rate, Huishoubao with a 13.4% rate, and finally Paijitang with 4%.

Jingli Song
Jingli Song
I believe Chinese innovation at various level needs to be known by the world.
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