China's hottest investment: overpriced sneakers

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In China the craze is at fever pitch, with devotees driving soaring trading volumes on online “sneaker exchange” platforms, prompting warnings from authorities about dangerous speculation as resale profits approach 5000%.

Forget stocks, real estate, even cryptocurrencies — China’s hottest investment nowadays may be the Nike, Adidas, and Puma basketball shoes that “sneakerheads” like Hu Huaiyuan fight to get their hands on.

“The sneaker market is no longer just a game for enthusiasts. Speculators are flocking into the business now,” said Hu, who travelled 300 kilometres to Shanghai for the chance to buy the latest Nike Air Jordans.After winning an online lottery for the right to even show up at a Nike store along with around 400 others vying for limited supplies, Hu secured the right to plonk down 1 299 yuan for a pair.

The Shanghai branch of the central People’s Bank of China issued a warning last month about the financial risks of excessive sneaker speculation, and government-controlled media portray the phenomenon negatively. Focusing on only the most sought-after models such as Air Jordans or the Adidas Yeezy, a collaboration with American rapper Kanye West, Liu estimates his monthly net profit is 50,000 yuan per month.But he actually avoids China’s market due to the stiff competition.According to data-mining company iiMedia research, China’s secondary market for sneakers has passed $1-billion this year and is one of the fastest-growing components of a $6 billion global market led by the United States.

 

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