Selling Second-Hand Clothes in Africa: This Company Earned 400 Million Yuan Last Year | 出海New Land
Lin Qingqing | October 15, 2024
Chinese second-hand clothing enters African households.
Introduction:
Global commerce is experiencing turbulence and upheaval, and going abroad has become an unavoidable topic for many Chinese companies. The overseas market, with 6.5 billion people spread across nearly 200 countries and regions with highly uneven development, presents challenges that may far exceed entrepreneurs’ expectations or imaginations.
For a long time, 硬氪 (hardkr) has been focused on overseas markets and companies that are expanding internationally. Based on this, 硬氪 (hardkr) has launched a new column: “出海New Land.” We will cover developed countries and regions such as Europe, the United States, Japan, and Australia, as well as emerging markets like Southeast Asia, Latin America, the Middle East, and Africa.
This column will focus on companies and products, analyzing the practical operations of successful companies abroad from a professional perspective. We aim to shed light on the reasons behind popular products in specific countries or regions. More importantly, we hope to identify and communicate emerging trends.
The following is the sixth article in this series.
Author | Lin Qingqing
Editor | Yuan Silai
Walking down the streets of Africa, you will often spot some eye-catching Chinese characters. A young man doing business by the roadside wears a blue T-shirt with a familiar phrase in Chinese on the back: “Order food, go to Ele.me.” A girl riding a bike wears a bright yellow T-shirt with the words “Crossing Shenzhen,” while her black pants bear the print “Running Man.”
These clothes, emblazoned with Chinese characters, are second-hand garments that have traveled all the way from China.
In Africa, millions of tons of second-hand clothes flow into the apparel market every year, driving a business worth billions of dollars.
In 2023, the global second-hand clothing sales reached $211 billion, a year-on-year growth of 19%. In 2024, the market size of Africa’s clothing sector alone is expected to hit an astonishing $70.58 billion, with a compound annual growth rate of 5.16%.
Naturally, this market hasn’t gone unnoticed by Chinese entrepreneurs.
In 2010, Guo Song, while still a university student, collected or purchased military training uniforms discarded by classmates after training exercises. After gathering a certain amount, he bundled them and sold them to other military training bases, earning his first pot of gold. It was then that Guo began to contemplate entering the second-hand clothing industry.
In 2016, Guo Song and his team founded 格瑞哲 (GRACER) in Guangzhou. Utilizing a big data system and a logistics recovery network, they collected, sorted, and packaged idle textiles from across China, eventually selling them to countries and regions such as Africa (Cameroon, Kenya, Congo) and Southeast Asia (Thailand, Cambodia).
According to statistics, 格瑞哲 (GRACER) processes tens of thousands of tons of second-hand clothing annually, with over 60% of it exported to Africa. Last year, 格瑞哲 (GRACER)’s second-hand clothing exports reached over 400 million yuan.
A Massive Domestic Market
“In Africa, buying second-hand clothes is all about ‘grabbing’ them,” Guo Song told 36氪 (36kr).
Africa, home to nearly one-sixth of the world’s population, has now become the largest importer of second-hand clothing globally. Nairobi, the capital of Kenya, hosts East Africa’s largest second-hand market, where tens of thousands of second-hand garments are gathered and transshipped daily, making it a critical part of Africa’s second-hand market.
In 2021, China became the largest exporter of second-hand clothing to Africa, with Kenya as the main importer. More than 40% of Kenya’s second-hand clothes came from China. A report by the China National Garment Association shows that in 2021, Africa imported $1.84 billion worth of second-hand clothing, with China contributing $624 million in exports.
For many people in Africa, buying new clothes is considered a luxury. In the economically disadvantaged countries of Africa, only 10% of consumers can afford new clothes, while 50% wear second-hand clothing. The remaining 40% cannot even afford used clothes, relying on donations from overseas charities.
Compared to second-hand clothes from Europe, North America, Japan, or Korea, Chinese second-hand garments are more affordable and stylish, better meeting the growing demand for clothing and becoming a more practical and popular choice.
Before reaching the international market, these used clothes are often found in waste disposal sites, neighborhood recycling bins, and other collection points. After being recovered by sorting companies, disinfected, cleaned, and packaged, they are sold to second-hand clothing export companies. These companies classify the clothes by quality, type, and seasonality, compress them into blocks, and ship them to Africa. Local agents then transport them to towns and villages across Africa, where they are sold.
“Agents can see the clothes through the compressed packaging and assess whether they are new-looking, colorful, or trendy. Even after buying once, most people still shop around, sometimes spending an entire morning choosing a single package because the money they have can only afford one bundle. If they lose money, their four or five children might go hungry for the next few days. It’s a matter of survival,” Guo Song told 36氪 (36kr).
Second-hand clothes are not only a necessity for many Africans; they have also become ingrained in the local economy. Kenya, with a population of 54 million, has millions of people working in the second-hand clothing industry, accounting for nearly 10% of the country’s labor force.
“Previously, countries like Uganda, Kenya, and Tanzania talked about banning the import of second-hand clothes, arguing that they were hurting the local textile industry. However, the opposite is true. Second-hand clothes not only meet people’s daily needs but also provide jobs and keep society functioning. As long as social problems persist, second-hand clothing will remain a necessity. The market will always exist because policies alone can’t stop it. Local textile production is too expensive for ordinary people, with most new clothes produced for export to earn foreign exchange. Only when the economy improves, incomes rise, and basic needs like food, healthcare, and education are met will people be able to afford new clothes,” Guo analyzed.
Challenges in Africa: Goods Can Sail Out, but People Can’t
Doing business in Africa, rushing to set up a company locally isn’t always the smartest move.
During 格瑞哲 (GRACER)’s years of rapid expansion, Guo Song and his team debated whether to establish a local team in Africa.
“Business is booming, so why not follow the typical path of most companies, setting up branches overseas, reducing costs?” Eventually, after considering the company’s future, Guo compromised.
That year, 格瑞哲 (GRACER) chose Uganda as its first overseas site.
One reason for selecting Uganda was the relatively stable market environment. Another was the customs policies, which were a major headache for Guo’s team during the decision-making process.
“Customs policies change frequently. The high customs costs were one thing, but they also created many other problems to make things difficult. For example, it’s tough to clear second-hand clothes in Zambia. Customs officials could hold your goods at the border for one or two months. After that, the goods might just ‘disappear,’ and the answer you’d get is either ‘the roads were slippery due to rain, and the goods were lost’ or ‘they were robbed along the way.’ We had no way to get help and could only take the loss.”
These losses had to be borne by Guo’s team. To enter the market, they prepared to “sacrifice one or two containers.” Additionally, they urged local customers to get on the customs clearance whitelist to reduce losses. “We taught our clients: first, follow the rules and pay taxes; second, avoid tax evasion; and third, cooperate when tax or customs authorities inspect. By doing this, you can avoid paying unnecessary ‘bribes,’ and customs clearance becomes less of a problem.”
After resolving these issues, Guo’s team set up a base in Uganda.
“I thought that by selling the clothes ourselves while maintaining a good relationship with local dealers, we could avoid conflicts.”
However, this approach initially met with resistance from local dealers, who saw it as “taking their livelihood.” Many stopped cooperating with 格瑞哲 (GRACER). Although the customers eventually returned after repeated explanations, the initial work in Uganda faced significant obstacles.
Within less than half a year, Guo’s team was handling transactions of up to 10 million yuan per month, with an annual gross profit of 20%.
However, by the third year in Africa, the base collapsed, and Guo’s team fully withdrew back to China.
There were many reasons for the collapse, and even now, Guo feels uncomfortable recalling that period.
Guo told 36氪 (36kr) that managing personnel and actual operations overseas revealed many gray areas. “First, there were large loopholes in sales pricing. Second, the inventory in warehouses had to be manually checked. Third, in many African countries, there aren’t enough foreign exchange reserves in the banks, so you have to buy U.S. dollars on the market, and whether it’s legal or not, this process is almost always in the gray zone. Employees could easily exploit this, creating huge problems.” Guo reflected.
In addition to difficulties in work processes, life in Africa was monotonous and lonely, with some employees even frequenting casinos.
Moreover, Africa lacked a regulated business environment. Under such conditions, it was difficult for the company to register, so they couldn’t operate through official accounts and had to rely on manual processes, which exhausted Guo’s team. “We did consider hiring locals, but we could only find laborers. Truly educated, knowledgeable talent was rare.”
After shutting down the base and returning to China, Guo shifted focus to improving the handling of second-hand clothes at the source. “If we can’t solve the people problem, we’ll focus on the goods.”
Guo admits that when he first entered the industry, he was riding a wave. Now, the entire market is saturated, and the biggest challenge is not finding buyers but increasing sales.
This means refining the supply chain, improving the processing of clothes, enhancing service standards, and moving away from traditional, rough business practices.
After years of effort, 格瑞哲 (GRACER) has established a streamlined recycling process. The group includes 鸥燕 (OOUYAN) for front-end recycling, 格瑞哲 (GRACER) and 普衣国际 (PUYI) for mid-stream processing, 渡渡鸟 (DODO Bird) for overseas distribution, 格永 (GERYON) for domestic distribution, and 普联新材料 (PURELINK) for recycling and reuse. With recycling sites covering 245 cities across China, the company handles over 200 product varieties, and it takes just 10–20 days to complete an international order from raw materials to shipment.
Guo hasn’t given up on the idea of opening physical locations in Africa, knowing that overseas businesses eventually need to deepen their presence locally. “Once we’ve fully completed our domestic digital transformation, we might reconsider expanding abroad.”
Reprint Disclaimer:
This article was originally published by 硬氪 (hardkr) and authored by Lin Qingqing. It has been translated with permission for blog purposes. For the original article, please refer to the following link: https://36kr.com/p/2949665811423365?channel=copy_url.
#SecondHandClothing
#AfricaMarket
#SustainableFashion
#ClothingExports
#ChineseEntrepreneurs
#RecyclingEconomy
#CircularEconomy
#GRACER
#EmergingMarkets
#TextileIndustry
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