In the dynamism of China’s consumer landscape, a significant shift has been observed in recent years: the strong emergence of the luxury second-hand market. As the personal luxury goods market surged to an all-time high of EUR 362 billion, the Chinese segment itself has a substantial share, reaching an impressive EUR 53 billion in 2023. In the meantime, the second-hand luxury goods market in China was evaluated at around EUR 25 billion in 2023.
How China has emerged as a key market for second-hand luxury products
Second-hand purchases: from shameful to trendy
The shift to second-hand items is quite new. For a long time, Chinese consumers were reluctant to buy used luxury products. Buying pre-owned items used to feel shameful to many people, in a country where “keeping the face” is important and economically successful individuals are socially more accepted.
Nowadays, Chinese consumers are increasingly embracing the purchase of second-hand luxury goods as a way to access premium products at more affordable prices. Factors such as environmental concerns, desire for unique products, and changing attitudes towards luxury consumption have also contributed to the rise of this segment. The second-hand luxury market was only USD 8 billion in 2020 and is expected to reach USD 32 billion in 2025.
Social media users and defenders of second-hand luxury also highlight how buying these items is a synonym of good taste. They argue that it allows one to find rare products with original designs that were discontinued years ago, but often have better craftsmanship and quality than modern goods, because nowadays luxury houses seek profit. For example, Chanel stopped plating their bags’ hardware with 24-karat gold after 2008 to optimize production costs. The resale market allows fashion enthusiasts to find and buy these rare, high-quality vintage bags.
Source: Zhihu, “买二手奢侈品真的很丢人吗？”(“Is Buying Second-Hand Luxury Really Humiliating?”)
High taxation on luxury goods in China pushes consumers to buy second-hand
High taxes on imported luxury goods, coupled with strict regulations on import duties and consumption taxes, make luxury goods prohibitively expensive for many Chinese consumers. The estimated price difference between Europe and China for new luxury items is 30% on average. For example, a Louis Vuitton Speedy 25 handbag in Europe would cost EUR 1,550 against RMB 17,600 (around EUR 2,260) in China, which is 31.4% more expensive. As a result, savvy shoppers who cannot go overseas to buy brand-new bags turn to the second-hand market to access luxury goods at more affordable prices.
Source: Louis Vuitton, Price comparison of the Speedy 25 handbag in China (RMB 17,600 = EUR 2,260) VS in France (RMB 12,000 = EUR 1,550)
Social media are a catalyzer for second-hand’s success in China
Studies showed that Gen Z and Millennials together account for more than 80% of the total number of second-hand luxury customers. In a country where 1.02 billion people use social media, and around 60% of them are under 40, platforms like Xiaohongshu and Douyin became essential to the second-hand market in China.
Many stores decide to operate online, hosting livestreams on Douyin where they present their pre-loved handbags’ stock and showcase the price difference with brand-new products from the store. In China, two-thirds of people buy on livestreamings.
In addition, luxury-focused influencers like Mr. Bags (包先生), 6.67 million followers on Weibo, and Sun Shaqi (小小莎老师), 6.5 million followers on Douyin, contribute to drawing attention to second-hand products. Recently, in one of her livestreams, the latter highlighted that “For the price of one single new bag, you can buy three or four pre-loved. It’s a good deal, isn’t it?”
Source: Xiaohongshu, Stores promoting their stock of second-hand luxury bags
Such a rise led to million-dollar investments, starting in 2021. Other than social media, e-commerce platforms specializing in second-hand luxury gained importance and were able to thrive thanks to these investments. From Secoo, Feiyu, Ponhu, Erluxe, and Plum, to Xianyu – Alibaba’s second-hand marketplace – they gather a vast selection of luxury goods and aim to offer a convenient and trustworthy platform to buy and sell pre-owned items. Some of these platforms are even trying to take a step further by providing an innovative customer experience thanks to AI technology.
Source: Plum app (红布林), Comparison between Louis Vuitton Speedy prices for monogram (RMB 3,000 to 10,000 on average) VS leather (RMB 1,000 to 3,000)
However, the sale of pre-loved luxury items makes up only a small fraction – less than 5% – of the total luxury market in China. This is much lower than the approximately 30% seen in the US and Japan. This disparity can be attributed to the earlier maturation of these markets and the long-standing affluence of their populations, who began acquiring luxury goods in large numbers as early as the 1970s, thus creating a larger pool of pre-owned items available for resale.
Consumers’ trust and concerns: Challenges to China’s second-hand luxury market
The importance of authentication due to the lack of trust
In a country where counterfeit goods, unmet delivery promises, and lack of after-sales services fuel users’ mistrust of resale apps, the focus on authenticity cannot be overlooked. Thus, some companies are trying to fight against the general idea that second-hand luxury items are synonymous with “scams”. For example, Dewu – an online shopping app offering a marketplace and social media platform for purchasing, reselling, and discussing trendy products – has a unique “authenticate first, ship later” process, providing official certificates, anti-counterfeiting sets, and unique digital IDs for verified products.
Environmental concerns: a motivation for buying second-hand luxury products?
Overall, a growing interest in sustainable fashion and social responsibility is evident. In China, 72% of consumers give preference to environmentally conscious businesses, higher than the global average of 54%. However, they still won’t pay extra for environmentally friendly goods. Even while environmental challenges are becoming more widely known, Chinese consumers are more focused on the direct, palpable effects on their daily lives.
For second-hand luxury platforms to market their services properly, they need to understand how Chinese consumers feel about sustainability. Although the average Chinese consumer is still only marginally involved in environmental issues, wealthy, urban residents of elite cities tend to be more ecologically sensitive. Therefore, despite initial enthusiasm, these factors contribute to the immaturity of the Chinese second-hand market.
Source: Xiaohongshu, store “东古名品奢品回收” (Donggu Luxury Products Recycling) in Shenzhen, a 10-year-old chain store that recycles various luxury items
Growth Opportunities and Challenges
Despite its rapid growth, the luxury second-hand market in China faces several challenges, including concerns about product authenticity, the lack of environmental concerns of Chinese consumers, and regulatory hurdles. However, with advances in technology, such as blockchain and artificial intelligence – which would allow better traceability of the items – platforms are working to address these challenges and enhance transparency and trust in the market.
Additionally, collaborations between luxury brands and second-hand platforms present new opportunities for growth and innovation in the industry. Indeed, luxury brands themselves are sensing the need for them to capitalize on this growing trend by implementing their own, trustworthy and “brand-approved” stores or platforms to sell pre-loved items from their House.
Source: Xiaohongshu, A second-hand luxury bag store in China
What do you need to know about the Chinese second-hand luxury market?
- China’s luxury second-hand market emerges as a shift in consumer habits is happening: Chinese buyers increasingly embrace second-hand luxury for affordability and sustainability, with sales jumping from USD 8 to 30 billion between 2020 and 2025.
- Millennials and Gen Z alone drive over 80% of sales.
- High taxes on new luxury goods in China, making them 30% more expensive than in Europe, drive consumers towards the second-hand market.
- With over 1 billion users on Chinese social media and two-thirds buying through livestreams, platforms like Douyin and influencers with millions of followers are propelling the second-hand luxury market.
- Challenges such as the lack of trust towards whether platforms are offering authentic products with quality after-sales services are raising concerns among the most skeptical customers.
- Despite growing environmental awareness, Chinese consumers prioritize affordability over eco-friendly luxury goods, highlighting challenges in promoting sustainability in the second-hand market.
Reviving riches: navigate the growth of the second-hand luxury market in China
The second-hand luxury market in China is experiencing significant growth, driven by sustainability trends, changing consumer attitudes, and economic factors. Daxue Consulting offers targeted consumer insights into this burgeoning market, helping businesses understand the unique motivations and behaviors of Chinese consumers in the luxury resale space. Our market research in China equips companies with the knowledge to adapt their strategies to meet evolving demands and capitalize on emerging opportunities. By leveraging our consulting services, you can gain a competitive edge in this dynamic market. Reach out to us to explore how we can assist your business in navigating the complexities of China’s second-hand luxury market.
