China’s gadget recycling company Huishoubao is eagerly awaiting the launch of 5G smartphones
Smartphone makers have been stuck for the last few years, rendering them unable to keep rolling out powerful improvements and innovations in performance and function.
The dawn of the 5G era is reminiscent of the prospects that appeared 5 years ago. Back then, He Fan, who was a tech entrepreneur and Li began their company. The two of them realized that smartphones would soon become a necessity as the world moved from 3G services to 4G speeds. They understood that continuous upgrades were making devices obsolete at faster speeds than ever before.
Over 10% - 15% of all used phones received by Huishoubao happen to be in top condition. They are ready to be resold and only around 5% of them end up recycled or discarded, as per Li. All remaining handsets get stripped down to obtain their parts and are sent to Huishoubao’s partners, who use them in product repairs.
Li stated that her company had recycled over millions of phones, with transaction values touching billions. However, she refused to get more specific.
Huishoubao also built its own website Cola Goods for selling second-hand phones, ensuring that used phones, which are in working condition, are not wasted.
Li stated that users who traded-in smartphones were often mature and more affluent, hailing from major cities in China. However, Cola Goods’ customers tend to mostly be young users, currently in their 20s, living in less developed locations across China. iPhones by Apple were highly popular, accounting for around 50% of all platform sales.
An iPhone XS Max, with a 512 GB storage capacity and in great condition, may fetch a price of around 7016 yuan or $1020, as per price data from Huishoubao. An iPhone 8 with a 256 GB storage capacity may fetch 2606 yuan. Prices keep dropping with every month that goes by as the model’s only getting older. These iPhone XS Maxes are resold for prices ranging between 7000 – 10399 yuan via Cola Goods.
Purchasing used goods is a popular trend in China due to the increasing popularity of used goods trading platforms like Zhuanzhuan, Xianyu and second hand car dealers like Renrenche and Guazi, stated Li.
Li Xiaoya made a steady business from the throwaway culture of today’s society by establishing China’s largest online trading website for used smartphones.
Named Huishoubao, which translates to ‘recycling treasures’, this Shenzhen-based company is betting on that fact that the move from 4G services to superfast 5G telecom networks would unleash a wave of new smartphone upgrades as customers would be looking forward to purchasing new gadgets.
The 5G movement will cause smartphone hardware upgradation, making way for new innovations in applications. Li used to be a product manager working at Tencent prior to her time at Huishoubao. She stated previously this month that when big smartphone players started launching products with 5G technology, this also promoted growth in supplementary industries connected to the smartphone sector like the recycling industry.
Huishoubao raised its Series C funding round during last September, supported by Alibaba who is also the owner of the Post. Huishoubao hasn’t yet disclosed its valuation or the size of the funding.
The used goods trading market’s prospects are closely linked to the original product’s reception. China’s smartphone manufacturers are currently facing a slowdown due to customers postponing their upgrade plans, waiting for the enhanced 5G-capable handsets to be launched. Smartphone shipments headed for China declined by 14% to around 396M units in 2018, as per Canalys, a research company.
Android smartphone giants including Samsung and Huawei have tested 5G-capable devices, with some even releasing a few of them. 5G-capable smartphone shipments will expand by 255% by 2021, as per reliable estimates, reaching 110M units by then as per a research report from Counterpoint that was released in April. Counterpoint expects sales growth to turn sluggish during the commercialization phase during 2019. However, sales will head north once the requisite 5G infrastructure systems have been installed.
Li stated that all firms have contributed equally to educating Chinese consumers about the used goods economy, helping them understand better about the value of goods that aren’t being used.
Used goods sales in Chinese markets are in their early stages but have begun booming now, with the total market size estimated at 500B yuan in 2017. The figure is projected to increase 2x times by 2020, as per CCIER, a research thinktank based out of Beijing.
Chinese Internet giants are already moving into this sector. Xianyu, a used goods platform backed by the Alibaba Group, a prestigious e-commerce Chinese giant, is in cutthroat competition with Zhuanzhuan, backed by Tencent. SouChe, backed by Alibaba is competing with Guazi and Renrenche in the used cars sector, backed by Tencent.
In 2019, Huishoubao is looking to expand its outreach to markets in Europe, North America & Southeast Asian countries by collaborating with local carriers and Chinese phone makers, as per a release issued in January. Huishoubao stated that its platform had directly driven the sales volumes of Huawei, Xiaomi, OPPO and Vivo.Source