How to Start a Second-Hand Shoes Business
2024 年 11 月 26 日
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The Story of a Company: A History of the Development of China’s Second-Hand Clothing Industry
- By dobirdking@gmail.com
- Company
Preface
As of 2024, China’s second-hand clothing industry has only been developing for a little over a decade. However, it has already become the largest supplier of second-hand clothing to Africa and Southeast Asia.
Kungfu KingAAA, as a participant in this industry, is a supporter and practitioner in promoting the healthy development of high-quality second-hand clothing. We are very pleased that this documentary article can objectively report and showcase the Chinese second-hand clothing industry. There is growth, gain, difficulty, pressure, detours, persistence, and above all, meaning.
The article contains many familiar scenes, with all the details forming the bittersweet experiences that we in the industry rarely share with outsiders. We hope that through this article, you can feel the charm of Chinese second-hand clothing and its practitioners from the scattered words and phrases.
The Story Begins
According to the United Nations Comtrade Database, the total global export value of second-hand clothing exceeded $5.4 billion in 2021. Data from Statista shows that by 2030, the global second-hand clothing market is expected to reach a value of $84 billion.
In this rapidly growing international trade of second-hand clothes, Chinese second-hand clothing enterprises play a significant role. In 2016, China’s second-hand clothing export value was 218 million yuan, ranking fifth in the world.
Between 2020 and 2021, China’s second hand clothing exports to Africa grew by 123%, making it the world’s largest exporter. China has also replaced Western developed countries as the largest supplier in the second-hand clothing markets of Africa and Southeast Asia.
Source：Visual China
Steven Lee’s company, Gracer Group, is the largest second-hand clothing export enterprise in China. Last year, their second-hand clothing export value exceeded 200 million yuan, with most of it being sold to Africa.
Second-hand clothing does not have commodity value before it enters the international market.Once discarded by their original owners, they go through professional sorting companies for disinfection, sorting, and packaging, thereby being re-endowed with commercial value and entering the international market. In some places, they even form a unique second-hand clothing consumption culture.
Over the years, the value of second-hand clothing has been repeatedly defined by different cultures, political stances, values, and business logic. Some view it as dumping garbage on underdeveloped countries, while others believe the second-hand clothing industry offers Africans more low-cost options, allowing them to allocate their limited income towards healthcare, education, and other needs.From the point of view of price and fashion trends, their acceptance of second-hand clothing is voluntary.
Stripping Away the Previous Owner's Aura
In the endless second-hand clothing market made of tin shacks in Maputo, the capital of Mozambique, a teenager named Kurt’s eyes lit up as he pulled out a jersey from a pile of clothes. It was indeed a basketball jersey with the number “24” printed on it.
However, the jersey was size “XXXL,” while the slim young man typically wore size “L.” Putting on the jersey, he looked like a child trying on adult clothes.Nonetheless, Kurt excitedly bought the jersey and saying to Steven, who stood nearby, “Kobe is my idol.” After purchasing the jersey, Kurt hurried to a nearby tailor market, gesturing and speaking a few words to a seamstress. The seamstress picked up her scissors and, with a quick “snip,” cut off pieces of fabric from both sides of the jersey, then began to sew it back together. In just a few minutes, the “XXXL” jersey was transformed into a size “L.”
Source: Interviewee
Watching the boy treasure his newly acquired jersey, Steven was deeply moved. “He should be happy for several days,” he thought.
The stall where Kurt bought the jersey was run by a downstream distributor of Gracer. Just hours earlier, the jersey had arrived among a batch of second-hand clothes on a cargo ship.
Before shipping, Gracer’s multiple agents in Africa place orders with them, measured in tons.Bales of clothes compressed into cubes are distributed among Gracer’s agents in Africa. These agents haul the goods back to their warehouses, where their wholesalers eagerly await. After being transferred through two or three wholesalers, the packages reach various cities and rural second-hand clothing markets or malls.
Source：Visual China
Steven Lee visits Africa annually to survey the market, often following the packages all the way to the second-hand clothing markets, which is usually by afternoon.
When wholesalers bring the clothes back to their stalls, retailers gather around, ready to “snatch the goods.” Before officially “unpacking,” wholesalers slit open a package, giving retailers a brief window of a few dozen seconds to quickly inspect the clothes inside with flashlights, swiftly scanning each item and noting their “targets.” Then, the wholesalers deftly cut the package straps, spilling the clothes out. Everyone rushes forward, jostling and cursing as they scramble for the “high-quality” items.
After securing the clothes, retailers settle accounts with the wholesalers. The leftover items, which no one showed interest in, are repackaged and distributed to the vast rural areas. There, these clothes undergo another round of unpacking and scrambling before finding new owners. Before being sold, the market’s cleaners wash the clothes thoroughly, then press them neatly, replacing buttons and zippers as needed. Some “high-end goods” are individually bagged, appearing no different from new clothes.
Most of these second-hand clothes bear Gracer’s brand labels. After being collected, sorted, cleaned, and disinfected, they completely shed the aura of their previous owners and become a new brand. For most African people, wearing second-hand clothes is not something noteworthy because “everyone is doing it.” The majority of Africans have a monthly income of $50-$100, and typically, African families have multiple children. Their meager income is almost entirely spent on food.
Source: Interviewee
During his market surveys, Steven Lee compared the prices of second-hand and new clothes in various African countries. A decent quality second-hand T-shirt usually sells for 5-10 yuan, while a new T-shirt of the same quality costs several times more.
Some Chinese social media influencers have filmed videos of themselves shopping in African second-hand clothing markets, showing that a sturdy pair of work pants can be bargained down to just 15 yuan. Apart from price, fashion trends also drive Africans to choose second-hand clothes. Steven often sees young people picking out stylish and flashy shirts and dresses at second-hand stalls, “spending just a few yuan to solve their party outfit needs.”
The Journey of Second-Hand Clothes
Before embarking on their long journey across the seas, second-hand clothes undergo a lengthy “transformation” process.
In various streets and alleys across China, many people ride tricycles to collect second-hand clothes. These individuals are known as “scattered dealer” within the old clothes recycling system. They need only a warehouse, a tricycle, and cash amounting to ten or twenty thousand yuan to get started. The upstream suppliers of these “scattered dealer” are local agents, while the upstream suppliers of agents are second-hand clothing sorting and export companies like Gracer.
In addition to offline recycling, Gracer has established 30,000 self-operated recycling bins nationwide, which contribute 20% of the company’s old clothes. They also recycle through internet platforms like Alipay and Xianyu, and many clothing brands purchase Gracer’s recycled fabrics to produce “recycled garments.” Gracer regularly collaborates with universities and social organizations, conducting lectures and collecting old clothes simultaneously. Users who sell their old clothes receive corresponding “environmental credits” and benefits in Ant Forest.
Gracer operates three factories in Guangzhou and Shandong, employing over 600 workers who sort, organize, disinfect, and package clothes daily. In the recycling phase, their principle is “collect as much as possible.”
Source: Interviewee
The first step involves workers distinguishing between “wearable” and “non-wearable” clothes.
Wearable clothes must be at least 60% new and free from damages or stains. Among the wearable clothes, workers classify each item. This classification process resembles the growth of a large tree, where each branch develops numerous sub-branches.
For instance, clothes are initially sorted into categories like tops, pants, outerwear, bags, and shoes. Pants are then divided into jeans, cotton pants, shorts, and long pants. Within jeans, further distinctions are made between men’s and women’s jeans, followed by subcategories such as “ripped jeans,” “skinny jeans,” “lightweight jeans,” and “bell-bottoms.” Material is another dimension for classification: down feather, wool, cotton, polyester, etc. Sorted clothes are fumigated, disinfected with ultraviolet light, compressed by hydraulic machines, and finally packaged and loaded into containers.
Clothes deemed unwearable are either sold to downstream companies for industrial raw materials or, through Gracer’s technological development, transformed into new fabrics and materials.
China has spent many years establishing a recycling system for old clothes. A major challenge within this system is how to “recycle” unwearable second-hand clothes. Gracer, established 12 years ago, nearly faced bankruptcy while navigating this path.
The Recycling System
In 2010, a young man named Guo Song, born in the ’80s, was admitted to a university in Guangzhou. After military training, he collected his classmates’ military uniforms and sold them to external training bases, using the profits as funding for his student organization. This first venture earned him tens of thousands of yuan.
Later, he organized his club to collect students’ everyday worn clothes and sold them to recycling companies. Part of the proceeds was donated to impoverished people in western China, while the rest supported his recycling projects. During those years, Guo’s school formed a university alliance, and even after he graduated, the project continued to thrive.
Around 2012, the domestic second-hand clothing industry was just beginning to take shape, with only a few dozen companies capable of handling the full process of recycling, disinfecting, and selling. Guo Song and his classmates co-founded a factory, riding tricycles through streets and alleys to collect clothes, and collaborated with recyclers nationwide.
In their first year, Guo and his team collected 2,000 tons of second-hand clothes, selling them to overseas markets through Alibaba International. By the time Steven Lee joined the team in 2014, they were processing 10,000 to 20,000 tons of clothes annually, “with only three to five people in the office.” Over the next two years, the company grew rapidly, and a full team was established.
The entire old clothes recycling system is divided into collection, processing, sales, and reproduction stages, forming a resource recycling system. Most domestic second-hand clothing companies are involved in only one or two of these stages, but Guo and his team aimed to integrate the entire chain.
Source: Interviewee
In 2017, due to chaos in the domestic recycling industry, many companies used the guise of charity to collect old clothes and sell them for profit, causing residents to lose trust in the recycling process. Additionally, the frequent occurrence of “sell seconds as best quality price” led to declining profits.
As a result, Gracer began expanding its collection channel, investing heavily to build its own recycling system. However, they overestimated the maturity of the domestic market and lost over 20 million yuan in more than two years.
While expanding online recycling channels, they also invested heavily in the “reproduction” phase, developing new materials. Of all their old clothes inventory, 60% were “wearable,” and 40% were “non-wearable.” Previously, they sold non-wearable clothes to processing factories for industrial raw materials, but they couldn’t rely on this forever.
For nearly three years, the company focused on “how to effectively utilize non-wearable clothes.” They built factories, bought equipment, and hired talent, making significant strides. They developed technology to transform old clothes into car insulation, thermal cotton, industrial cleaning cloths, mops, labor gloves, and raw materials for new clothes.
“One step forward makes you a pioneer, but too many steps forward make you a martyr.” Reflecting on those years, the team often joked that they were “the most successful company with the most failures.” The materials made from old clothes had no market, leading to high costs and no buyers. At that time, no other company in China was developing new materials from second-hand clothes, and the market’s acceptance was low.
Source: Interviewee
Over two years, Gracer lost more than 30 million yuan, with a significant loss of team members. They eventually scaled back, retracting their northern collection network, and took two years to outsource new material production to partner factories to reduce costs while gradually waiting for the market to mature.
In 2020, the government began to strongly support the second-hand clothing industry, encouraging companies to establish old clothes recycling systems. This marked a peak period for Guo Song and his team. Last year, their company’s second-hand clothing sales exceeded 200 million yuan.
What is the Standard?
In the international market, Chinese second-hand clothing has risen quickly. According to UN trade data, it wasn’t until 2009 that Chinese companies began exporting second-hand clothing. By 2010, many sorting and packaging factories for second-hand clothing had appeared in the Pearl River Delta. Guo Song and his team entered the industry in this same year.
By 2021, Africa’s imports of second-hand clothing reached $1.84 billion, with $624 million coming from China.
In just ten years, China’s second-hand clothing trade grew from nothing, surpassing the decades-long presence of Western countries in Africa.
Compared to second-hand clothing from Europe, America, Japan, and Korea, Africans indeed prefer Chinese clothing.
Source: Interviewee
China’s large population and diverse clothing styles, which closely follow market trends, appeal more to African consumers. While Western countries have entered a phase of low consumption desire with generally plain styles, Chinese clothing is “colorful enough,” aligning better with African tastes.
To Steven’s surprise, Chinese clothing sizes also fit Africans better. “In recent years, more Westerners have become obese, making their clothing sizes too large. Although Africans appear tall and strong, their average physique is quite lean due to limited living conditions.”
In reality, the retail prices of most Chinese second-hand clothes are not lower than those from other countries, “because they are popular, so there’s room for premium pricing.” There has been online buzz about the presence of “Meituan,” “Ele.me,” and “school uniforms” in African second-hand markets, but it’s not true that “as long as there are Chinese characters, Africans love to wear them.” Instead, such clothes are durable and meet their work needs.
During the COVID-19 pandemic, China’s second-hand clothing market grew rapidly internationally, and Guo Song’s company became the largest second-hand clothing trade enterprise in China. Sixty percent of their second-hand clothes were exported to Africa, and some high-end dresses and skirts sold to Europe.
The extensive network of agents, distributors, and retailers, along with associated washing, sewing, and transport roles, has created numerous jobs for African people.
Source: Interviewee
However, Guo Song and his team still face many challenges. As the domestic second-hand clothing market develops rapidly, the phenomenon of “bad money driving out good” has emerged. Overall, the industry is still in a “chaotic stage.” A direct manifestation of this is that “second-hand clothing lacks standards.”
Gracer’s second-hand clothes bear their brand labels, ensuring the value of each package is stable within a certain standard. “For example, a large package contains both high-value and affordable clothes, but rarely includes unwearable items.” This guarantees that agents can profit after reselling, which in turn enhances the brand’s image in Africa.
Source: Interviewee
In recent years, the team frequently receives orders through Alibaba International from people who have searched for their labels for a long time. A Kenyan young man who worked as a translator for Gracer in Guangzhou returned to Africa during the pandemic and became Gracer’s agent in Kenya. By reselling second-hand clothes, he built a villa in Kenya within two years.
Achieving standardization requires substantial investment. Guo Song’s company incurs much higher operational costs than its peers to ensure compliance, but they have tried to save costs in their management processes. They have also become the standard-setter in the domestic idle textile resource processing industry.
Yet, disorderly competition prevails in the face of profit, coupled with the low added value and thin margins of the second-hand clothing industry. The supply-demand relationship remains chaotic, with “every participant in each stage engaged in mutual bargaining.”
This results in the varied quality of exported second-hand clothing. “What constitutes 70% new, what is 80% new? Each company has its own definition.” Steven revealed that most companies only deal with certain categories or participate in specific stages, which is fine from a profit perspective but seems insufficient from a recycling chain viewpoint. As the industry matures, compliance is essential and will ultimately benefit long-term development.
For Steven, he travels abroad every year for market research, seeing high-quality Chinese second-hand clothes being worn by others is his proudest moment.
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