Li Xiaoya has made a business out of the throwaway society with one of China’s biggest online trading platforms for second-hand mobile phones. Called Huishoubao, which means “recycling treasures” in Chinese, the Shenzhen-based start-up is now betting that the transition from 4G to the superfast 5G telecommunication networks would bring about a new wave of gadget upgrades as consumers go for the shiny new gear. “The arrival of 5G will push for further upgrade in hardware, and make room for innovations in new applications,” Li, in her 30s and a former product manager at Tencent Holdings before she started Huishoubao, said in an interview in Hong Kong earlier this month. “When big players in the smartphone industry are gearing up for 5G, it naturally becomes a growth engine for supplementary industries like ours.” Huishoubao raised a Series C round of funding last September from Alibaba, which owns the Post . The start-up did not disclose the funding size or its valuation. The fortunes of the second-hand trading market are tied closely to first-hand sales. And China’s smartphone makers are undergoing a sluggish phase as consumers postpone their upgrades to wait for new 5G-enabled phones to hit the market. Smartphone shipments for China fell 14 per cent to about 396 million units last year, according to Canalys, an industry research company. For more insights into China tech, download the 2019 China Internet Report Major Android smartphone vendors including Huawei and Samsung have all tested and some have even released 5G-enabled devices. 5G smartphone shipments are expected to expand 255 per cent by 2021, almost reaching 110 million units, according to a research note from Counterpoint in April. The researcher expects growth to be slow during the initial commercialisation phase in 2019, but sees an uptick in sales once countries have the necessary 5G infrastructure in place. Smartphone manufacturers have run into a bottleneck in recent years in terms of rolling out major innovations and improvements in performance. The coming era of 5G echoes the opportunities back in 2014, when Li and co-founder He Fan, a serial tech entrepreneur, started the company. Back then, the two saw an opportunity in the smartphone becoming a necessity with the transition from 3G to 4G. They also saw how continuous improvements were rendering devices obsolete much faster than before. Around 10 to 15 per cent of the used phones Huishoubao received are of top condition and ready for resell, and only 5 per cent would be discarded and recycled, according to Li. The rest of the handsets would be stripped for their parts by Huishoubao’s partners to be used in repairs. The platform has recycled millions of smartphones with the transaction value in the billions of yuan, Li said, declining to be more specific. To make better use of the used phones that are still in a good condition, last year Huishoubao established its own site Cola Goods to sell second-hand handsets. While Li described users who trade-in their smartphones as mature, more affluent users from China’s major cities, customers of the Cola Goods tend to be younger users in their early 20s in the less developed cities across China. Apple’s iPhone is the most popular brand and accounts for about half of the platform’s sales. A check with Huishoubao showed that a 512G iPhone Xs Max in good condition can fetch a trade-in price of 7,016 yuan (US$1,020) and a 256G iPhone 8 for 2,606 yuan. The trade-in price drops with each month as the model gets older. The same iPhone Xs Max may be sold from 7,000 yuan to 10,399 yuan on Cola Goods. Buying used items have been gaining popularity in China in recently years with the rise of a crop of second-hand trading platforms such as Xianyu, Zhuanzhuan and used car dealers Guazi and Renrenche, Li noted. Huawei CEO sees 30 per cent gain in handset shipments despite US ban “They have all contributed to the education of second-hand economy for Chinese consumers, deepening people’s understanding of the value in goods that are not in use,” Li said. Second-hand sales in China are still in the early stage but already booming, reaching 500 billion yuan in market size in 2017. This is expected to double by 2020, according to the China Centre for Internet Economy Research, a Beijing-based research think tank. China’s internet giants have set their eyes on this field. Xianyu, the second-hand goods platform by Chinese e-commerce giants Alibaba Group, competes neck and neck with Tencent-backed Zhuanzhuan, while Alibaba-backed SouChe competes with Tencent-backed Renrenche and Guazi in used car dealing. This year, Huishoubao will expand its presence in Southeast Asia, North America and European countries by working with China’s phone manufacturers and local carriers, it said in a release in January. The company said its platform directly drove the sales volume of Vivo, OPPO, Xiaomi and Huawei.