Japanese Business Perspectives: Taking the Pre-owned Luxury Goods Trade Global Via Hong Kong
Japan-listed Valuence Holdings Inc. Centres Global Expansion around Hong Kong
29 July 2022
The pre-owned luxury market has seen considerable growth in recent years, thanks in part to efforts to increase sustainability, changing consumer preferences and the rise of online trading platforms. The US-based management consultancy firm Bain & Company estimated that in 2021 the global second-hand luxury market reached a size of €33 billion (HK$300 billion), with a compound annual growth rate of 13.3% between 2017 and 2021 – a rate significantly higher than the 2.9% for first-hand luxury goods. 
Valuence Holdings Inc. is a Japan-listed pre-owned luxury goods trading company, dealing in high-value products such as accessories, watches, jewellery, antiques and art pieces. Its wholly owned Hong Kong subsidiary, Valuence International Ltd, was established in 2008, and has since acted as the company’s overseas headquarters, managing its branches in several regions, including mainland China, ASEAN, the US, Europe and Middle East & Africa.
In an interview with HKTDC Research, Susumu Muguruma, Chief Operating Officer (COO) of Valuence Holdings, and Leo Ng, Business Development Manager of Valuence International, spoke to us about why the company chose Hong Kong as its first and main overseas base, and also about the new opportunities that the city provides for global business expansion.
Valuence was established in Japan in 2011. Its main business line uses a C2B2B model, whereby the company purchases pre-owned luxury goods from consumers, inspects and authenticates them, and then sells them to other businesses, mainly through online auctions.
Under its C2B buying brand Nanboya, Valuence currently has over 130 stores in Japan and more than 25 overseas, including three in Hong Kong. These stores give customers the opportunity to sell their luxury items in a comfortable and private salon-like setting. The stores’ staff spend as much as 30 minutes in each transaction talking with the customer, so as to provide a personalised service and get an understanding of the product being sold.
Highlighting some of the main reasons for setting up Nanboya’s first overseas location in Hong Kong, Muguruma said: “Hong Kong is a small place with a strong demand for and awareness of luxury products. Setting up here makes it convenient for customers to bring in high-value and high-quality items such as watches, handbags and jewellery to our stores. More than 40% of our customers are repeat customers, who also introduce their friends to our stores through word-of-mouth and social networks.”
Muguruma added that Hong Kong also helped prepare the group to go global, saying: “We want to deliver the same experience at our stores overseas as we do in Japan, and luckily consumers in Hong Kong are very welcoming to Japanese culture, so we are very successful with our stores here. This helped us gain the confidence to expand to Southeast Asia, the Middle East, Europe and other places in a similar way.”
Jewellery trade hub
Star Buyers Auction, Valuence’s auctioning brand in Japan and Hong Kong, is responsible for selling the purchased products through B2B online auctions. Auctions for watches, designer bags and apparel are based in Japan, while the Hong Kong platform focuses on diamonds and jewellery.
Hong Kong’s position as a leading international jewellery trading hub, as well as its active conventions and exhibitions scene, was what led the company to centre its jewellery trade around Hong Kong. Explaining why these factors were important, Ng said: “Taking part in exhibitions in Hong Kong, such as HKTDC’s Hong Kong International Jewellery Show and Hong Kong International Diamond, Gem & Pearl Show, has been incredibly helpful to us in building our business networks and connecting with buyers from around the world.”
Another key reason for locating in Hong Kong was the ease of doing business. Elaborating on this point, Muguruma said: “Hong Kong has a very well-developed business environment. The business licensing process here is simple, and tax rates are low. This is important for the luxury goods trade, which faces high duties and complicated licence requirements in many other places.
“Professionals here are also international and capable. People in Hong Kong can speak English, Cantonese and Putonghua, and some of our employees here can even speak Japanese. This makes it easy to work with the Japanese headquarters and manage the global business.
“Hong Kong’s proximity to Japan, being only a four-hour flight away, is also a plus. Before the pandemic, our employees in Hong Kong would travel to Japan regularly for training and meetings. This helped to improve our cooperation and communication.”
Popularity since pandemic
Muguruma pointed out that that the pre-owned luxury goods trade remained surprisingly resilient during the global recession caused by the Covid-19 pandemic, saying: “Initially, Covid-19 did affect our business when lockdowns forced people to stay home. We took the opportunity to introduce online purchasing and valuation services, allowing customers to sell their items without leaving their homes.
“In an economic downturn, people tend to sell their luxury items for cash, which benefits our buying business. In fact, we have been breaking purchasing records in recent months. Now that the economy is recovering, people are selling their old items to buy new ones, so either way, our business is growing.
“Moving forward, we plan to expand our B2C e-commerce business. Online shopping for luxury goods has become much more popular since the pandemic, and our consumer brand ALLU has had great success in Japan. We hope to extend this line of business in Hong Kong and globally.”
ESG has gained considerable momentum during the pandemic. Ng believes that Valuence’s business is likely to benefit from this, saying: “We have seen a growing awareness of sustainable fashion in Hong Kong, in line with global fashion trends. The pre-owned luxury goods trade is by its nature a recycling business, helping reduce waste in the entire value chain from resource procurement to disposal. We are keen to play a bigger role in promoting sustainability in the fashion industry.”
In 2021, Valuence collaborated with Japan’s MAGO Gallery to initiate a global roll-out of sustainability-themed art exhibitions from Hong Kong, with the artwork raising awareness about the problems of electronic waste. Following the Hong Kong exhibition’s success, other galleries were opened in Paris and New York. Ng noted that this demonstrates Hong Kong’s potential to curate and showcase sustainable art projects, and Valuence is eager to venture into this growing area.
He also said that Valuence aims to launch new business initiatives in Hong Kong in tandem with the Japanese headquarters, supporting the group’s global expansion. For instance, the company hopes to leverage its partnership with Nankatsu SC (a Kantō Soccer League club) and the merchandising rights of popular soccer manga series Captain Tsubasa for overseas expansion. Emphasising Hong Kong’s role in this, Ng said: “We are currently looking to capitalise on this initiative in both Japan and Hong Kong. We hope that the popularity of manga culture in Hong Kong, as well as the city’s position as a leading international intellectual property (IP) trading hub, will present us with more opportunities for global business development.”
 Bain & Company, From Surging Recovery to Elegant Advance: The Evolving Future of Luxury, December 2021
 Further calculations made by HKTDC Research
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