On September 12, one day before the much anticipated new iPhones were scheduled to launch, the secondhand trading unit of Chinese Craigslist 58.com Zhuan Zhuan (meaning to pass on in Chinese) sealed a deal with Foxconn, the Taiwanese electronics manufacturer behind Apple and other tech giants, to work on vetting used phones exchanged over the platform.
The news comes at a critical time as consumers are projected to sell off old handsets during the big launch season. Xiaomi rolled out Mi Mix 2 a day before the new iPhone reveal, and Samsung, Vivo, and Huawei are in line to release their new models in the following weeks. In August, transaction volumes on Zhuan Zhuan reached 2.48 billion RMB ($380 million) with cellphones taking up the majority at 31% (in Chinese). When the iPhone 7 was released last year, trading volume for iPhones on Huishoubao (meaning treasure of recycling in Chinese), a recycling service startup started by former Tencent employees, surged by 300%. Increases for Samsung and Xiaomi reached 500% over the same period as Android users looked to convert to iOS.
Chinese consumers crave new phones. A survey by iiMedia shows that nearly half of the participants buy a new phone within 1-2 years. In total, Chinese consumers replace 400 million to 500 million phones a year, according to the China Academy of Information and Communications Technology. Around the world, there have been 7.1 billion smartphones manufactured since 2007—the year when the first iPhone came out—according to Greenpeace. This is enough to equip nearly every person in the world with a device.
But financial returns for smartphone manufacturers is giving rise to ever mounting environmental costs generated by e-waste. When it comes to recycling, Chinese people are hardly the biggest proponents.
“There are currently about 1 billion discarded cellphones in China,” said Xiong Zhou, partner at Huishoubao, to Xinhua News, adding that less than 2% are being recycled. Unlike in the US, where carriers and chains such as Best Buy run disposal programs, there haven’t been easy ways to deal with old phones in China until recent years.
Over 75% of recycled goods on Huishoubao come from megacities Shenzhen, Guangzhou, Shanghai, and Beijing. Consumers in big cities have higher purchasing power to chase after fancier gadgets, but they also tend to be more environmentally conscious. Moreover, a well-developed courier network in big cities makes recycling much easier. With recycling apps like Zhuan Zhuan, users can request to have their used phones pick up with just a few taps on the screen.
Another hurdle to phone recycling is security concerns. Most consumers lack general knowledge over personal data protection, and rather than risking information leakage, they let their handsets languish in the drawer. This is why a strategic partnership with Foxconn—who Apple designated as the official reuse and recycle channel in China—will help inject trust into Zhuan Zhuan’s peer-to-peer platform. The manufacturing giant will undertake Zhuan Zhuan’s phone inspection service and hand pick used iPhones dropped off at offline Apple Stores to put on sale via the online trading platform.
As smartphones in China become increasingly affordable and people continue to pursue new, sleeker designs, tech giants are eyeing the largely untapped market for used gadgets. In April, Tencent invested a hefty $200 million in Zhuan Zhuan in exchange for a minority stake. Its arch-rival Xianyu (meaning idle fish in Chinese, homophonic for “salted fish”) was acquired by Alibaba for a $15 million price tag in March 2016. Aihuishou, who runs Xiaomi’s smartphone trade-in program, is backed by JD.com from its early days and announced plans to go IPO following its series D round of 400 million RMB financing last December. As the electronics recycling market in big cities becomes saturated, Aihuishou is expanding to China’s lower-tier cities where smartphone penetration rate is growing rapidly.