While exploring the narrow alleyways, or hutongs, of Beijing, it is easy to spot locals twirling a pair of walnuts across the palm of their hand while walking. They gently play with the walnuts, not for crushing them to eat the edible meat, but for training their hands and also polishing the outer shell by rubbing.
The hobby of rotating walnuts, and treating them almost like pieces of jewelry, has a long history that can date back to the Ming dynasty or even earlier. Wenwan walnuts have been collected by noblemen and aristocrats for more than 2,000 years. These walnuts were used for their medicinal qualities, but also offered as gifts or used to create nut-based sculptures. Today, quality walnuts are rare and pricy, yet, demand is still high, which has also led to the creation of a counterfeit market.
Wanwu Dezhi, an Hangzhou-based e-commerce platform that specializes in Wenwan products, or traditional Chinese goods such as walnut jewelry, jade pieces, wood carvings, and other collectibles, wants to provide users with certified goods while reducing the risk of encountering counterfeit products.
“As China’s economy continues to rise and Chinese residents are living a better life, the appreciation of cultural inheritance is reviving, which reflects a pride in Chinese people’s national identity,” Tang Jinshang, founder and CEO of Wanwu Dezhi, told KrASIA.
“However, the market for Wenwan products lacks transparency and standards,” he added. Tang, himself a Chinese handicraft enthusiast, hopes to leverage the format of livestreaming and standardize the authenticity verification to make shoppers feel comfortable when buying Wenwan goods.
Founded in 2018, Wanwu Dezhi went online in 2019 and has gained 42 million registered users so far, according to Tang. Its average monthly transaction volume has exceeded RMB 1 billion (USD 151.2 million) as of October, and Tang predicts to surpass the annual gross merchandise value (GMV) goal of RMB 10 billion by the end of 2020.
In November, Wanwu Dezhi raised USD 80 million in its recent Series C round, from investors including China Renaissance’s Huaxing New Economy Fund, Source Code Capital, GGV Capital, and United Media FOFs.
Creating a trusted Wenwan marketplace
Wanwu Dezhi’s app provides an e-commerce platform with a wide range of traditional Chinese goods including walnuts, jade, tea, Yixing clay teapots, calligraphy items, Chinese paintings, and porcelain. The company also organizes auctions and sales, as well as livestreaming sessions on the platform.
“To be a senior collector of Wenwan, previously, you had to pay for counterfeits,” Tang said, mentioning that people in the sector call this “tuition.” Wanwu Dezhi tries to solve this pain point for new collectors, Tang explained.
To ensure the authenticity of products, Wanwu Dezhi has set up several depots, with the main center near Hangzhou, where the company’s staff will conduct authenticity tests on the goods from sellers. If approved, the firm will then re-package the vetted goods and send them to customers with a certificate. If a user still finds a fake product, he can report it to Wanwu Dezhi’s customer service, and the firm will refund the full purchase price, Tang told KrASIA, adding that sellers promoting fake products could be temporarily removed from the platform.
In addition, shoppers and merchants can also request online verification on the app to get professionals to check their Wenwan items through livestreaming. Overall, Wanwu Dezhi has around 500 appraisers, Tang specified.
The company generates revenue by charging merchants an average of 3% to 5% of sales, while Wanwu Dezhi’s product verification service also contributes to the firm’s income, although Tang didn’t mention more details.
Wanwu Dezhi is also betting on livestreaming to boost sales. “Although e-shopping was popularized in China for a while, the Wenwan industry went online in 2018 when livestreaming e-commerce became a trend,” Tang said, adding that livestreaming offers viewers a more direct and interactive experience.
Physical store owners, who used to do their businesses in traditional Wenwan marketplaces, such as Beijing’s Panjiayuan flea market or professional clubhouses, can reach more users by listing their products online on the platform, he said.
On the back of Chinese traditional aesthetics
Most of the platform’s customers are people born in the 70s, 80s, and 90s, with men accounting for around 70% of total users, Tang told KrASIA. However, he explained that demand for Wenwan products is also growing among younger generations, as products like clothing and accessories incorporating unique Chinese cultural elements have become trendy.
“It’s a consequence of the nation’s financial growth and soft power,” said Tang, who positions Wanwu Dezhi as a marketplace for all cultural goods.
“However, to transform the old Wenwan market, aside from our efforts, producers and designers also need to be more innovative to meet younger consumers’ tastes,” Tang said.
Wanwu Dezhi is not the only player in the Wenwan e-commerce sector. Competitors include Tencent-backed collectible auction platform Weipaitang, ByteDance investee Tiantian Jianbao, and BAI-invested jewelry marketplace Zhizun Baowu. Top e-commerce platforms such as Taobao, instead, don’t focus on such a niche market, where goods are unique and therefore less salable in high volume than standard products like T-shirts or smartphones.
When asked about competitors, Tang highlighted his platform comprehensive verification system for sellers and the background of the firm’s team members in Wenwan and technology companies. Tang himself previously worked for JD.com and Alibaba, responsible for retail businesses.
The firm has set a sales target of between RMB 20 billion (USD 3.02 billion) and RMB 30 billion for the next year, two to three times this year’s figure. The fresh capital secured in Wanwu Dezhi’s recent Series C round will go towards platform upgrades as well as talent recruitment and training, Tang said, to reach the company’s ambitious goals.
This article is part of KrASIA’s “Inside China’s Startups” series, where the writers of KrASIA speak with founders of tech companies in the country.