Every second counts

Largest trading platform for used electronics goods files for New York IPO


AiHuiShou can recycle iPhones

Smartphones, laptops and other connected devices are the lifeblood of the digital economy. Yet they are also adding to the world’s rubbish dumps at an alarming rate. A report by the United Nations last year found that a record 53.6 million metric tonnes of electronics waste was discarded in 2019, equivalent to the weight of 350 cruise ships.

If only more of this junk was being properly collected and recycled – just 17% of the total was in 2019 – there would be less of a risk of cadmium, lead and mercury leakage going into our soil and water. Similarly problematic is the incineration process for much of the waste, which releases dioxins and other greenhouse gases. Additionally at least $57 billion of precious metals including gold and platinum could potentially be recovered, reducing some of the need to hunt for newer resources.

China is the biggest generator of e-waste – accounting for 19% of the global total. A company there that focuses on reusing or recycling second-hand mobile devices is looking to raise between $500 million and $1 billion in an IPO in the US, Reuters reported. Called AiHuiShou, meaning “love recycling” in Mandarin, the Shanghai-headquartered firm collects used electronic goods from 755 self-operated stores and 1,500 self-service kiosks. It then sells them to third-party merchants on its Paijitang platform, as well as to retail customers via marketplace Paipai.

In its IPO prospectus, the 10 year-old recycler said that its business is capitalising on some key characteristics of the China market.

First, the wide range of electronic brands means that product variety is huge and rollout of new models is frequent. That creates strong replacement demand (hence waste).

Second, consumers typically acquire mobile phones from an array of retailers ranging from e-commerce platforms to mom-and-pop stores. Service contracts are limited in scope. As a result, trade-ins during contract renewals are uncommon, which hampers the ability of the nation’s big three telecoms operators to foster a centralised recycling system for smartphones.

Third, demand for second-hand goods in China is growing. With lower disposable incomes in relative terms, residents in lower-tier cities are natural buyers of pre-owned goods from wealthier, top-tier cities. Better understanding of sustainability trends has contributed further to new habits, as evidenced by the boom in second-hand goods trading platforms such as Alibaba-backed Xianyu and Tencent-backed Zhuanzhuan.

In 2020, about 23.6 million electronic goods were traded on AiHuiShou’s platforms. They grossed Rmb19.6 billion in transaction value, helping AiHuiShou report 24% growth in revenues to Rmb4.86 billion for the year.

AiHuiShou’s rapid expansion has been underpinned by a strategic partnership with, its largest shareholder with a 34.7% stake. Since 2015, it has provided the e-commerce platform with trade-in infrastructure for electronic gadgets. In 2019 it also bought the B2C marketplace Paipai from to broaden its distribution platform.

AiHuiShou has completed eight rounds of fundraising, tapping over $1 billion from investors including the World Bank’s IFC, Morningside Group, Tiantu Capital, Guotai Junan International and Kuaishou. However, an unclear path to profitability (Rmb$1.4 billion in losses and negative cashflows from operating activities in the last three years) still makes it a hard sell even to ESG investors, notes Sohu, an online news portal. But co-founder and CEO Chen Xuefeng wants the IPO proceeds to help it expand globally. “We estimate that an iPhone’s life cycle typically lasts for several years, where each device can be transacted a few times from developed economies and top-tier cities in China to lower-tier cities in China, and to other developing economies in the world,” he said.

Using Hong Kong as a hub, the company is already selling second-hand devices to resellers and customers in Southeast Asia, Latin America and Africa.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.