VC Liu Bo: The Future of Second-Hand Luxuries in China

This post originally appeared on Tech Node, our content partner.

China’s luxury goods sector has received a steady stream of investment money in recent years. TusStar is one such capital investor to pour money into the sector acting as an angel investor for second-hand high-end goods marketplace operator Ponhu-Luxury back in 2015.

Building an integrated offline platform for second-hand luxuries is what the market needs in the future, TusStar Venture General Manager Liu Bo told TechNode.

“In Japan, the penetration rate for second-hand luxury goods has reached 1:1, which means that every time a new bag is purchased, an old one will be resold,” she said. “In China, when I carried out due diligence in 2015, only 3% of goods are sold on. Basically, no one bought second-hand luxuries,” Liu said.

Liu expects to see growth in the market for selling on used high-end products in China. “But you have to think that one day if an economic recession hits in China, second-hand luxuries will maintain their value as has happened in Japan in the past,” she said. “East Asian cultures are similar. We see promising growth points in China’s second-hand luxury business.”

In her current role, Liu keeps an eye out for investment opportunities in TMT, energy-saving and environment, as well as the new economy and new services.

TusStar invests in high-tech, high-growth start-ups, mainly focused on TMT, mobile internet, cleantech, new material, healthcare, advanced manufacturing, education, intelligent hardware, and consumption area. The firm has inked deals with more than 300 startups and invested over RMB 2 billion so far, according to its website.

Some say digitalization is the major engine powering luxury sales in China, but Liu contends that offline is the real arena. “Only outsiders will consider buying luxuries online,” she said. “Most customers care little about the discount, they crave brands and quality.”

According to a report published by Bain Analysis in 2019, even though online luxury sales outgrew the overall market in 2018, online penetration in other luxury categories remains very low, with the exception of cosmetics.

JD.com sold its luxury e-commerce platform Toplife to its biggest partner Farfetch in February for $50 million in February this year after two years of operation. The deal raised the question of whether or not the Chinese market is ready for establishing platforms for the luxury sector.

“There are still plenty of opportunities to build platforms in this industry,” Liu said. “But it’s not the kind of e-commerce platform on the internet that people talking about today, but actually an offline platform which knits every key node together in the entire trading chain.

”This platform can then provide a variety of services to different roles in this industry,” Liu added.

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