China’s sneakerheads go big
One of the hottest commodities in China right now is a pair of sneakers.
The SoleFly x Air Jordan 1 in black patent leather rocketed in value by 6,600% to a high of 75,999 yuan (R157,370) on the online marketplace Nice after its release in December. Only 223 pairs of Nike’s retro high-top were made for sale, according to online magazine Sneaker Files.
The model is among the most profitable sneakers traded on the exchange created by Beijing-based Nice App Mobile Technology.
Such outsize returns are hard to come by, but they’ve caught the attention of sneakerheads such as Lei Xiaoming, 20, a mechanical engineering student in Huangshi. Lei has collected limited-edition shoes for years but only started investing in them in April.
“Prices were surging so much I thought it would be a better choice to sell them rather than wear them,” he said. “It’s more exciting than trading stocks.”
Since then, he’s spent about 200,000 yuan buying more than 200 pairs — mostly Air Jordans and Adidas’s Yeezy line, a collaboration with rapper Kanye West. He’s earned profits of about 100,000 yuan by reselling some, he said.
Across China, more than 10-million monthly users frequent online-resale apps such as Poizon and Nice, according to Chinese data-mining company QuestMobile.
While many products suffer from the effects of the trade war, pairs of collectable sneakers are flying off the shelves, and that’s attracting the attention of US sneaker exchanges StockX and GOAT — as well as China’s central bank and state media.
China’s sneaker resale market exceeds $1bn in value, said Scott Cutler, CEO of Detroit-based sneaker exchange SoleTrade, known as StockX.
Unlike Chinese stocks, which can move only 10% in either direction, there’s no cap on shoe returns.
“As with all frothy assets, there’s no telling where the peak is,” said Yu Yingbo, investment director at Shenzhen Qianhai United Fortune Fund Management. “As long as there are high returns, there is going to be money chasing them.”
Sneaker collecting went mainstream in the US after Nike launched Air Jordans in the 1980s, and the trade went digital with eBay about a decade later.
Today’s technology makes the trade more sophisticated. Apps collect bids and asking prices, chart costs and volume in real time, and allow users to share investment advice. Some also let customers buy coupons that can be traded for shoes before coveted models arrive — in effect selling sneaker futures.
Now more-established trading sites in the US want a piece of the action in China.
StockX plans to introduce local payment and language support this year, said Cutler.
California-based 1661 Inc’s GOAT launched a mini-app on WeChat in July after receiving $100m (R1.46bn) in funding from Foot Locker. “China will soon become the sneaker capital of the world,” said Henek Lo, general manager of GOAT China.
Significant rewards typically are accompanied by significant risks, and sneaker trading is no different. Of more than 2,600 collectable models sold on Nice, 56% lost value, according to company data. Only 0.4% of footwear saw returns of more than 1,000%.
But Tian Hao, 27, is convinced he’s cracked the code. These days, his 90m² Beijing apartment is storage space for his inventory, which he estimates to be worth hundreds of thousands of dollars. As Tian runs low on space, he’s stashing sneakers with a friend. In return, Tian helped him invest 260,000 yuan in sneakers. After splitting the profits, they each cleared 90,000 yuan in two months. “This is one of my luckiest investments this year,” Tian said.
Poizon and Nice say they have strict processes to ensure they’re selling authentic products. Poizon hires “master-level sneakerheads” to inspect every shoe.
Lately, though, the Chinese apps are concerned about deflecting the government’s attention. It may be too late. An article published in June on state-run China Daily mentioned Poizon and StockX, calling out sneaker resellers for the “chaos” in surging prices.
Adidas discourages the reselling of its sneakers, the company said. Nike did not respond to a request for comment.
Poizon has since spoken out against flipping shoes. “Shoes are for wearing, not for speculation,” said Charles Xing, the head of marketing.