⚠️ Three deadly sins of the Chinese consumer market: big narratives, copycatting trends, state subsidies | Following the Yuan
Their perils stand out even more in a downturn market environment.
Walking into China’s largest second-hand luxury store, ZZER, starts as a novel experience. You store all of your belongings, slide on two gloves — one with two finger holes so that you can still use your phone to scan QR codes for prices — you feel like a luxury connoisseur.
But soon, you realize you are visiting a 10,000m² graveyard of China’s consumption upgrade era. Here, the handbags and accessories are sorted by brand. Aisle by aisle, you get to see what Chinese consumers bought when they believed that every tomorrow was better than yesterday.
Today no longer feels that way, and as many of them return to necessary spending, they consign the pieces to ZZER rather than let them collect dust at home. Once projected to be the world’s largest luxury market in 2021 by Bain, China’s luxury market performance has trended downward post-COVID due to economic slowdown. Will the circular economy, which hints both at a favorable policy narrative and consumer readiness, make the business work?
⚠️ Warning: Correlation between favorable policy narratives and an addressable market
Of a dozen recent media reports in Chinese and English that I came across — the user size of 12 million users, which was released in 2021 around the latest C fund-raising round, China’s $74-billion luxury goods market according to that 2021 Bain report, and the forecasted number of second-hand luxury market size of $30 billion in 2025, according to iResearch in 2021. None of the articles mention its recent performance or sales.
ZZER feels like a reincarnated Secoo.
Secoo, also a used luxury goods platform with physical stores, became public 2017 on Nasdaq, selling the rising middle-class story to American investors. Hit by COVID after overexpansion, it has been practically malfunctioning since 2020 and was eventually delisted in Aug. 2025.
To me, ZZER is ‘old wine in new bottles,’ a reference popularized by Lu Xun that means something appearing to be innovative on the surface. In fact, it also applies to other platforms like Ponhu, Feiyu and Plum (acq. by Zhuanzhuan in 2024); it’s not a scalable business.
The real need of luxury goods owners is along a spectrum of maintaining value and sell within a reasonable amount of time. While there are young luxury consumers who are happy to find some of their first luxury purchases at ZZER, its three main areas of complaint are also the forces that hold it back:
the logistics process and public exposure devalue their goods;
high commission (15%-22%, depending on how much they sell)
Verification and disputes around the process in a counterfeit-heavy market
In comparison, selling on Alibaba’s Xianyu and consigning with local second-hand luxury stores may take longer, but it makes more economic sense. Perhaps Plum’s new home is the best destination for such platforms.
Second-hand luxury is part of China’s circular economy, but the nature of luxury defies the main point, which is to address the nation’s mass production, mass consumption and mass waste issue. ZZER is not the worst example, but investors and media should be aware and skeptical about the correlation between big narratives and the actual business.
⚠️ Warning: What’s copied faster fades faster
Trends in China are easy to copy, and there’s every reason to do so. If something proves to be successful, businesses don’t need to go through the trial-and-error period or investing money and energy in R&D.
I see that in how every China trend develops from online to offline. And group livestreaming (团播) is one of the more recent examples for online channels.
After the ‘Leg-Sweeping Dance’ went viral this summer, the average number of daily group livestreams in 2025 reached around 8,000, more than 20% higher year-on-year compared with 2024, and the revenue this year estimated to exceed 15 billion RMB, according to China Association of Performing Arts. Another viral format is five to seven girls/guys collectively give users personal compliments when they buy digital gifts.
On the physical product side, those who spend Christmas in China in recent years may recall these wall-climbing Santas across the streets (they may be more prevalent in higher-tier cities), they largely took off in Shanghai in the winter of 2021 after a resident of Wukang Mansion decorated their window with a wall-climbing Santa. In 2023, they became widely copied by storefronts, thanks to #citywalk, a post-Covid entertainment trend that encourages urban exploration on foot. [Read more below]
Zooming out to retail environment that is commercial real estate, one trend that first emerged before COVID was developers helping local governments revamp industrial or residential blocks. These days, the market is overflowing with such small-volume commercial projects (小体量商业项目, typically under 50,000m²).
Take my old neighborhood as an example, across the distance of 500 meters, three such projects popped up in the last three years:
WYSH翡悦里 (No. 168, Wuyi Road). Developed by Hong Kong realtor KWah Group. Opened in late 2024.
LINK新秀汇 (No. 200, Wuyi Road), Developed by ocal realtor Tianfan Tech. Opened in late 2024.
Wuyi Mix 320 (No. 320, Wuyi Road), Developed by a local realtor under state-owned enterprise New Changning Group. Opened in 2021.
One can argue that success depends on execution but when trends are copied and pasted, they disperse traffic and create fatigue.
There is an additional level of influence in real estate: the government’s decisions. It’s part of the district-, municipal-, and provincial-level governments’ KPI to make these projects happen, but it’s not their responsibility to keep the businesses there and keep them thriving.
⚠️ Warning: Temporary boosts don’t support long-lasting confidence
In the third warning, I want to zoom out to consumption stimulants that are created either by governments or platforms.
This year, Chinese consumers have no reason to not spend: state subsidies, consumption vouchers from regional governments, price wars between delivery platforms...That has driven volume and has lead to good-looking stats.
In August 2025, China’s total retail sales of consumer goods reached 3.97 trillion RMB, a year-on-year increase of 3.4%.
The top five high growth categories are: home appliances & AV equipment (+28.4%), cultural/office supplies, including computers (+22.3%), furniture (+22.0%), communication devices (+21.1%) and sports & entertainment products (20.6%).
Of these, the first four are all benefiting from varying levels of state subsidies, making consumers want to purchase now instead of later. It has been more or less this case since a year ago when Beijing first implemented subsidy initiatives.
Will people still spend after the subsidies and price wars end? Or have these stimulants done more harm in anchoring people’s exception on prices?
While pointing out these sins, I don’t have quick fixes myself — replacing real estate investment as the foundation of consumer confidence takes time and trial and error.
But for now, I believe much of this is going against the fundamentals of business. I’m curious to hear your thoughts. 🔚