How China’s top electronics recycling platform ATRenew is giving used gadgets a new life
- ATRenew hopes to cash in on China’s growing pre-owned electronics market as people cut down on spending and give a boost to the circular economy
- The company saw trade-ins of consumer electronics jump over 60 per cent year on year on its platform, and double on JD.com, during the 618 shopping festival
ATRenew, the operator of China’s largest trading platform for pre-owned electronics, hopes to cash in on the growing resale market as people cut down on spending amid a slowing economy and give a boost to the circular economy, an executive said.
As the pre-owned market still has much room to grow given the increasing consumer awareness in China, ATRenew is looking to expand AHS Recycle – better known in China as AiHuiShou – to other segments like clothing and luxury goods, and even sell products made from recycled waste, said Jeremy Ji, director of corporate development and investor relations.
“Consumers have slowed down their spending, especially this year,” said Ji. “Under the current economic conditions, people will have stronger motivation to reuse or [go for] trade-ins. ”
The company also saw growing demand from consumers in trading more categories of pre-owned products, he added.
The Shanghai-based company saw trade-ins of consumer electronics jump over 60 per cent year on year on its platform, and double on JD.com, the Chinese e-commerce giant that owns a 33 per cent stake, during the recently concluded midyear 618 shopping festival.
The Chinese government has been actively promoting a circular economy to support the country’s sustainability goals and achieve net-zero emissions by 2060. The National Development and Reform Commission (NDRC), China’s top economic planner, made the circular economy a priority in 2021 with the release of a five-year plan, calling on society to recycle and reuse materials to conserve water and energy as well as reduce greenhouse gas emissions.
China’s domestic second-hand consumer market exceeded 1 trillion yuan in 2020 and is expected to cross 3 trillion yuan by 2025, according to a report by Tencent-backed second-hand e-commerce platform Zhuanzhuan and consultancy Frost & Sullivan in 2021.
Buying a used smartphone can reduce carbon emissions by at least 25 kilograms, compared with buying a new phone, according to the report.
Last month, ATRenew posted first-quarter revenue of 2.87 billion yuan (US$399.8 million), a 30 per cent increase year on year. Net profit rose to a record 44.4 million yuan, a third consecutive quarterly profit since its debut on the New York Stock Exchange in June 2021.
“We believe consumers’ willingness and demand for purchasing pre-owned products will remain strong in the long term,” said Ji.
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Under a slowing economy and with youth unemployment hitting a record 20.8 per cent last month, consumer attitudes are shifting. E-commerce firms such as Taobao, owned by Alibaba Group Holding, and JD.com experienced a relatively quiet 618 shopping festival. The companies did not release gross merchandise value numbers due to weak consumer spending this year.
“Price remains a dominant factor when Chinese consumers make purchase decisions,” said Ji, adding that second-hand trading platforms allow consumers to make purchases at a much lower price and trade-in programmes help society to put idle goods to better use.
ATRenew wants to utilise its 1,935 stores and 2,015 self-service recycling facilities in 269 cities across China and its AiHuiShou platform to provide consumers with a one stop for trade-ins and services for pre-owned electronic products, such as quality check, data migration, personal data erasing and cashbacks, to populate the concept of a circular economy, he added.
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Finding fakes among the real Hermes, Prada and other luxury items in China’s second-hand market
Last year, ATRenew expanded its product recycling categories to include pre-owned cameras, luxury bags, watches, gold as well as high-end liquor, shoes and clothing in its stores. It also partnered with companies such as Nestle and Chinese sportswear maker Li Ning to produce coffee mugs, T-shirts and bags made from recycled waste such as coffee residue and plastic bottles.
“Compared to mature pre-owned markets like in the US and Japan, China’s circular economy still has much to develop,” said Ji, pointing to sales of pre-owned smartphones, which account for about 5 per cent of the total for the segment on JD.com.
With the upgrading of technology and acceleration of product iteration, there is a lot of room for development in China’s pre-owned trading market, Liu Rui, director of the Institute of Ecology and Environment under the Yangtze River Delta Region Institute of Tsinghua University, said at the Two Sessions meeting this year.
Financial rewards could encourage more people to take in the second-hand goods market, she said.
