Speculation on Nike sneakers in China drives astronomical prices

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American sports brand Nike released the fragment x Travis Scott x Nike Air Jordan 1 (Air Jordan 1) sneaker on July 29. The shoe sold in China for $ 247, but after a series of reversals on the shoe trading platform, the highest price hit $ 10,819. , exceeding the list price by more than 40 times. This unusual market phenomenon has raised public concern.

Chinese sports shoe trading platform Dewu said on September 21 that $ 10,819 was just the seller’s price and no transactions at that price had taken place. The platform deleted the ad.

However, according to JMedia, a Chinese commercial media outlet, Air Jorden 1 transactions have occurred more than 1,100 times, and the average price of high-end models has exceeded $ 1,546, with the best-selling shoe sizes ranging over $ 4,637.

Air Jordan 1 is co-branded by a collaboration between American rap musician Travis Scott, Japanese “fashion godfather” Fujiwara Hiroshi and Nike brand Air Jordan. Co-branding products are a marketing model in which brands work together to support each other, create impact and compete in the market. It is very popular with luxury fashion brands.

Wealthy Gorilla made a list of the 20 most expensive sneakers in the world in 2021, of which 17 were Nike and 11 were Nike Air Jordan (AJ).

In 1984, Nike recruited NBA superstar Michael Jordan on a high-paying contract, and Nike released the first AJ basketball shoes in 1985.

Capital intervention in the sports shoe market

In the late 1980s, the NBA was broadcast in China, and in the 1990s, the Japanese anime “Slum Dunk” made its way among Chinese students, then in the 2000s, Chinese sports stars have joined the NBA league. By this time, some Chinese fans had started to collect basketball shoes.

In the 2010s, with the popularity of hip-hop culture in Western countries, Chinese actors started showing their sneakers in public and “sneaker culture” exploded in China.

Distributors of branded products tend to sell in limited quantities to create “hunger marketing”. To get the sneakers they want, fans line up outside stores early in the morning or even all night.

This situation resulted in the sale of scalper tickets. Scalper in China refers to a person who earns money by buying and selling; but today’s scalper is not a peddler, the person often has the power of capital behind him.

In November 2018, an AJ co-branded shoe went on sale in Kunming, southwest China’s Yunnan Province. A scalper arrived from northeast China and hired 50 people to stand in line, paying them 200 yuan (about $ 31) each. Finally, the scalper, thanks to his numerical advantage, bought 21 of the 26 pairs of shoes on sale in Kunming after a 24-hour wait, Chinese state media First Financial reported.

Once the capital kicks in, it’s even more difficult to buy designer shoes. When a shoe is sold out, scalpers are happy because there are fans who will spare no money to get a pair. In September 2017, AJ collaborated with international luxury fashion brand Off-White to design a sneaker called OWAJ1, which sold for $ 230 to $ 1,860 in a short period of time.

Seeing the profitability, some fans also joined in and became “retail investors” in the shoe speculation. In China, stock market speculation is capped at 10% per day, but there is no limit for shoe speculation, which can be multiplied several times a day.

According to Wealthy Gorilla, the most expensive sneaker sought on the internet is the joint limited edition “Solid Gold OVO x AJ”, priced at $ 2 million.

The speculation on branded sneakers has become a kind of investment.

The shoe trading platform becomes a “stock exchange”

In 2015, Hupu, a Chinese sports-focused online forum, created an interactive community called Du (which means toxic) specifically for athletic shoes. The community was originally designed to offer trendy fashion to young people. It was named Du because it is said to have an “addictive” connotation.

In August 2017, Hupu officially launched its standalone app Du (Dewu’s predecessor), and the Du app quickly became the largest platform for chatting and exchanging trending shoes. In addition to Du, several other shoe trading platforms have sprung up in China.

Meanwhile, counterfeit shoes triggered an authentication request. To ensure the fairness of the transaction, each platform provides an authentication service. That is, the seller puts the shoes on the platform and the buyer pays the platform to confirm their intention to purchase, the seller then sends the shoes to the platform for authentication. The platform confirms the authenticity of the shoes before shipping them to the buyer and takes a percentage of the sale for the handling fee.

To improve the efficiency of the transaction, each trading platform has successively put the hosting function online. In other words, the retailer can drop off the shoes sold in the platform’s warehouse, and the platform will keep them for the retailer and can put them directly on the shelf. In this way, the retailer can make an instant buy and sell, the sneakers just don’t need to be sent, and can easily complete a lot of transactions. This provides the greatest convenience for shoe speculation, and the trading platform has thus become a kind of “stock exchange”.

After several rounds of funding, the Du application was valued at $ 1 billion in 2019. In August 2019, its registered users exceeded 100 million.

“At the end of the day, we all lose money”

In 2019, a small highlight appeared in China’s shoe speculation industry. Back then, looking for news on related topics, the article titles were amazing. For example, “13-year-old boy, earns 3,000 yuan [$465] per day from a pair of shoes, “” Speculating on shoes to achieve freedom of wealth, 95 generations earn a million [$155,000] a month, “A shortcut to earning a sequel per night is to enter a shoe exchange,” and so on.

But in recent years, more negative news about shoe speculation has surfaced. In April, a TMTPost article titled “Self-Report of Shoe Speculators” cited the experiences of five shoe speculators.

In the article, Xiao Kang, a sneaker entrepreneur born in 1995, said, “Shoe speculation is the same as futures speculation, something like gambling.

“We placed an order a month or two in advance, we can’t guess which pair of shoes will explode, nor guess which stars will wear them, it’s a blind order.

“Big profits depend on luck; big losses are fate.

“From my observations, the shoe speculators, at the end of the day, are basically losing money,” Xiao said. “Shoe speculation is very dependent on capital turnover, storing a few thousand pairs would cost millions, so once the price of the shoe goes down, it’s a big loss.”

But those who can make money are generally not afraid of losses, said Xiao, “because they are backed by a lot of capital.”

Another born from the 90s, Li Dong, has been a shoe speculator for seven years. Li stored thousands of pairs of imported brand shoes in his warehouse, but did not expect the cotton incident in Xinjiang in March, after which Chinese consumers boycotted foreign brands, and no one would buy them.

“If I treat the goods cheaply, my seven years of work are wasted,” Li said.

Li said, in this line, it is difficult to establish a sense of security; shoe speculation is a very unsustainable business model.

Another famous story concerns Liu Cookie (nickname), a shoe speculator born in the 90s in Chengdu, Sichuan Province, who fled despite unpaid debts of $ 1.59 million in July 2019. Police l ‘then stopped.

“Everyone like me would have thought that it is not us who lose in the end,” Liu told local Chengdu media.

“I would like to say to all shoe speculators, especially young people, don’t play with your youth like I did,” Liu said.

The opinions expressed in this article are those of the author and do not necessarily reflect those of The Epoch Times.

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Shawn Lin is a Chinese expat living in New Zealand. He has contributed to The Epoch Times since 2009, focusing on topics related to China.


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