A new smartphone begins its second-hand lifecycle from the moment it's first powered on. But in today's accelerating circular economy, old products are continuously finding "new life" through e-commerce platforms. Meanwhile, a capital race against time is quietly unfolding in this industry.

"My current Xiaomi phone was bought on a second-hand trading platform - 90% new condition but half the price of a new one, both cost-effective and convenient," said Ms. Wang, a resident of Haidian District, Beijing. Consumers like her are increasingly driving the rapid growth of China's second-hand trading market.

Shanhui Technology Co., Ltd. (hereinafter referred to as "Shanhui Technology"), established in 2016, is a key player in this sector. The company started by recycling and selling used phones and now has a valuation of approximately 2.4 billion yuan. It has recently submitted its third main board listing application to the Hong Kong Stock Exchange - its previous attempts in February and September 2024 both ended with prospectus expiration. According to its Series D financing agreement, the company must complete a qualified listing by December 31, 2025, or face investor redemption clauses with nearly 800 million yuan in repayment pressure.

Behind Shanhui Technology stand renowned investors including XIAOMI-W and Shunwei Capital. However, beneath the spotlight, the company has yet to achieve profitability, with 2024 revenue of 1.3 billion yuan but continued losses. Meanwhile, on platforms like Black Cat Complaints and Xiaohongshu, users frequently criticize the company for "malicious price suppression" and "passing off inferior goods as superior ones."

**Annual Revenue of Nearly 1.3 Billion from Selling Used Phones at Average 991 Yuan per Unit**

According to the prospectus, based on 2024 transaction volume for recycling and selling second-hand phones, Shanhui Technology ranked third in the industry with a 1.3% market share in both categories.

The company operates around two core brands - "Shanhui Recycle" and "Shanhui Premium" - covering phone recycling, second-hand sales, and related value-added services. The business process involves first recycling used consumer electronics, then selling them through proprietary platforms and third-party e-commerce platforms.

The company is also advancing offline expansion. In September and December 2023, it opened two offline stores in Shenzhen under the "Shanhui Premium" brand, exploring recycling and sales of used electronic products in physical retail settings. The prospectus indicates plans to further explore commercial possibilities for opening more branded retail stores.

As of August 2025, Shanhui Technology has partnered with over 170,000 stores covering multiple provinces and cities nationwide, serving over 10 million consumers cumulatively.

However, scale has not brought profitability. From 2021 to 2024, company revenue grew from 750 million yuan to 1.297 billion yuan, but cumulative losses over four years exceeded 300 million yuan. In the first half of 2025, revenue was 809 million yuan with losses still at 24.63 million yuan.

By product category, second-hand phone sales contribute the majority of Shanhui Technology's revenue. From 2022 to 2024, this business grew from 856 million yuan to 1.231 billion yuan, with its proportion rising from 93.2% to 94.9%. Sales volume increased from 1.057 million units to 1.243 million units, with average selling price rising from 656 yuan per unit to 991 yuan per unit.

During the same period, revenue from selling other used electronic products was 45 million yuan, 90 million yuan, and 47 million yuan respectively, with the proportion declining from 4.9% to 3.6%.

In the first half of 2025, revenue from second-hand phone sales was 773 million yuan, accounting for 95.5%; revenue from other used electronic products was 27 million yuan, accounting for 3.4%.

The difficulty in achieving profitability stems from rapidly rising sales costs. From 2021 to 2024, these costs rose from 688 million yuan to 1.235 billion yuan, nearly matching 2024 revenue (1.297 billion yuan), causing gross margin to decline from 8.2% to 4.8%. In the first half of 2025, gross margin slightly recovered to 6.3% but remained significantly below comparable industry companies. For example, in 2024, AiHuiShou's parent company Wanwuxinsheng had a gross margin near 20%.

Shanhui Technology attributes the declining gross margin to industry competition: the company must raise recycling prices to obtain used inventory from mainstream phone brands. It simultaneously acknowledges that Shanhui Technology cannot guarantee maintaining or improving gross margins in the future. Failure to maintain or improve gross margins would materially adversely affect the company's business, growth prospects, operating performance, and financial condition.

In procurement, from 2022 to 2024, the company purchased approximately 1.173 million, 1.505 million, and 1.286 million units of used consumer electronics (mainly phones) through "trade-in" channels, corresponding to procurement amounts of approximately 659 million yuan, 839 million yuan, and 1.036 billion yuan, increasing year over year. In 2024, procurement quantity decreased but amount increased.

From 2022-2024, the company's net current liabilities were 336 million yuan, 631 million yuan, and 700 million yuan respectively, mainly due to increased redemption liabilities. As of the first half of 2025, net current liabilities reached 722 million yuan, with total net liabilities of 713 million yuan. Operating cash flow remained negative, at -43.736 million yuan, -47.774 million yuan, and -18.449 million yuan from 2022-2024 respectively. 2024 saw significant improvement compared to 2023, turning positive to 43.718 million yuan in the first half of 2025, up 233.62% year-over-year.

For this IPO, Shanhui Technology states proceeds will be used to further enhance the company's technology and R&D capabilities and upgrade infrastructure; strengthen strategic cooperation with upstream procurement partners; and increase marketing and promotional efforts while expanding to sales channels with higher market potential to steadily increase sales volume and profit margins.

**Suppliers Include XIAOMI-W, Honor, and SF Express; Company Previously Faced "Price Suppression" Complaints**

The profitability essence of second-hand e-commerce is earning price differentials. Retail e-commerce industry expert and Baileen Consulting founder Zhuang Shuai explains that second-hand trading platforms operate on bilateral transaction models, with the price difference between recycling and resale transactions becoming platform profit. To maximize profits, platforms need to ensure lowest recycling prices and highest selling prices.

Shanhui Technology exemplifies this model. Regarding supply channels, the prospectus shows Shanhui Technology's second-hand phones come from three main sources: trade-in, idle recycling, and corporate clients. Trade-in is the primary source, accounting for 92.5% of total consumer electronics procurement value in 2024.

When consumers participate in trade-in at phone brand stores, carrier outlets, or online malls, Shanhui Technology receives old phones through its embedded "Shanhui Recycle" system and provides technical services like inspection and pricing to partners.

The company's supply side heavily depends on upstream partners. From 2022-2024, upstream partners supplied 1.737 million, 2.407 million, and 1.805 million units of used consumer electronics to Shanhui Technology. Additionally, Shanhui Technology pays promotional service fees and sales commissions, which have consistently exceeded 6% of revenue over the past three years, reaching 98.1 million yuan in 2024.

Notably, XIAOMI-W and Honor appeared among the top five suppliers in 2024.

According to prospectus information, Partner A (41.5% procurement share) is Beijing-headquartered, a consumer electronics and smart manufacturing company focused on IoT platform-connected smartphones and smart hardware, listed on the Hong Kong Stock Exchange, matching XIAOMI-W's profile. Partner J (8.7% procurement share) is registered in Shenzhen with 32.2 billion yuan registered capital, fitting Honor's business characteristics.

In the first half of 2025, SF Express also entered the top five suppliers, mainly providing delivery and logistics services, accounting for 0.7% of total procurement.

The prospectus warns that upstream supply channel stability is crucial for the company's resale business. Deteriorating business relationships with these partners would materially adversely affect operating performance and financial condition.

After procurement, on the sales side, Shanhui Technology sells function-tested used phones to consumers or enterprises through proprietary and third-party platforms. The company mainly relies on the "Shanhui Premium" mobile app and WeChat mini-program, while partnering with e-commerce platforms and live streaming channels like JD.com and Douyin.

The prospectus shows that from 2022-2024, revenue from selling used consumer electronics through sales platforms consistently exceeded 90%, indicating heavy C-end consumer orientation, meaning user reputation is crucial for long-term development.

Some consumers recognize the product's cost-effectiveness. Ms. Zhang from Beijing's Haidian District said that in 2023, she used "Shanhui Premium" to buy a Xiaomi 10 for her mother for under 700 yuan, considering the brand's phones to have relatively high cost-effectiveness.

However, on platforms like Xiaohongshu and Black Cat Complaints, consumers have questioned "Shanhui Recycle" and "Shanhui Premium" brands, including issues like malicious price suppression after phone recycling inspection, suspected phone swapping, and passing off inferior second-hand phones as superior ones.

On Xiaohongshu, a blogger shared that when trying to resell their Samsung phone on Shanhui Recycle, the platform found no scratches during in-person inspection but discovered side scratches during quality inspection, demanding a 500 yuan deduction. The blogger believed Shanhui Recycle engaged in malicious price suppression.

Jiude Positioning Consulting founder Xu Yongjun considers price suppression reasonable behavior. Second-hand e-commerce trading platforms inherently have conflicts with consumers. Platforms must maintain appropriate profits to survive and develop, while consumers want to sell second-hand products at the highest possible prices. "Malicious price suppression" might also result from consumers' excessively high price expectations.

However, testing, grading, and pricing standards for used electronic products have not yet been unified. Shanhui Technology states that despite using AI grading and pricing technology, it cannot guarantee that pricing for used consumer electronics reflects actual or fair value.

Zhuang Shuai also believes used products are "unique items" with inherently unstable markets, making price standardization difficult. From the second-hand trading market perspective, supply, demand, and prices mutually influence each other. If encountering "malicious price suppression" from second-hand trading platforms, dissatisfied consumers can vote with their feet.

Furthermore, price suppression can conversely affect platform revenue. Zhuang Shuai believes market validation is still needed: excessively low recycling prices make it difficult to collect more second-hand goods, leaving platforms without products to sell, thereby affecting revenue and forcing platforms to raise recycling prices.

**Carrying Betting Agreements; Shareholder XIAOMI-W Provides Both Funding and Personnel**

Before pursuing IPO, Shanhui Technology completed multiple financing rounds.

The prospectus shows that in 2018, the company received nearly 100 million yuan in Series A investment from XIAOMI-W and Shunwei Capital; 2019 brought Series B financing from Qingtong Capital; 2020 saw Series B+ completion with investment from Ganzhou Ganyue Fund; and 2021 introduced Series C funding from Shenzhen Guarantee Group, Tongchuang Weiye, and Shenzhi City.

In December 2023, just before submitting the prospectus, Shanhui Technology completed an 8 million USD Series D financing from Anji County Finance Bureau. The investor received 2.33% company equity, currently valuing Shanhui Technology at approximately 2.4 billion yuan.

However, this financing carries clear betting clauses: the company must complete qualified listing by December 31, 2025, or trigger repurchase clauses. Although the original end-2024 deadline was extended one year with investor consent, company pressure remains undiminished.

After all, Shanhui Technology's applications expired twice in February and September 2024. If this attempt fails again, investor redemption rights will automatically resume, requiring the company to pay nearly 800 million yuan in redemption liabilities, while its cash and equivalents total only 119.8 million yuan.

From the shareholding structure, pre-listing founder Liu Jianyi holds 32.47% through ShanHuiShou BVI and 10.97% through MGY Wisdom BVI under Menggongyuan, controlling over 43% total equity as the actual controller. Among institutional shareholders, Shunwei Capital holds 3.99% through Shanghai Wenwei, while XIAOMI-W holds 6.99% through Shanghai Jiaozeng.

The prospectus shows Liu Jianyi graduated from Jiangxi University with a food science degree and served as operations director at Shenzhen Yitian Mobile Digital Chain Company (a Tianyin Holdings subsidiary) for nine years. In 2015, he entered the used electronics trading industry as supervisor at Huishoubao Technology, then co-founded Shanhui Technology in 2016 with former Shenzhen Yitian colleagues Yu Hairong and He Xiaomin. Currently, Yu Hairong serves as CEO and He Xiaomin as Chief Production Officer, with the core team possessing deep industry co-working experience.

XIAOMI-W is not only a major shareholder but also appointed former Strategic Investment Department partner Jiang Wen as Shanhui Technology's non-executive director. Jiang Wen worked at XIAOMI-W from 2014 to January 2025, responsible for investment planning, later transferring to the ecosystem department as director. Since 2018, he has been on Shanhui Technology's board, mainly providing strategic advice and supervision.

Despite industrial capital backing, China Enterprise Capital Alliance Vice President Bai Wenxi warns that comprehensively speaking, although Shanhui Technology holds certain market share in phone recycling, its continued losses and persistent net operating cash outflows indicate significant uncertainty in the company's listing prospects. Investors considering investment need to carefully evaluate these risk factors.

Have you used "Shanhui Premium" or other second-hand trading e-commerce platforms? How was your experience?