Two years ago, Xu Wei, the founder of Chinese secondhand luxury goods platform Plum (also known domestically as Hongbulin), had grand ambitions. Fresh from raising approximately USD 100 million in Series C funding, Xu envisioned a major overhaul of Plum’s platform infrastructure, focusing on improving everything from service standardization to user experience.
However, Xu is now stepping aside, as Zhuanzhuan is poised to take full control in an imminent merger between the two companies. Xu will no longer serve as CEO, transitioning to an advisory role while Zhuanzhuan co-founder and COO Hu Weikun takes the helm.
Zhuanzhuan had been Plum’s sole investor in the Series C round but sought more than a financial stake from the outset. A source close to Plum’s former investors told 36Kr that negotiations began in 2023, as Zhuanzhuan aimed to enter the secondhand luxury market, making Plum a strategic acquisition target.
For Xu, relinquishing control wasn’t an easy decision. According to multiple sources, protracted negotiations over price and Xu’s reluctance to step down caused significant delays. Nevertheless, Zhuanzhuan remained steadfast, ultimately securing full control.
Zhuanzhuan had been eyeing acquisition targets in the secondhand luxury space since 2021, and Plum wasn’t its only option. Its primary goal was control, not just investment.
Founded in 2017 by Xu Wei, Yang Bin, and Pang Bo, Plum saw all but Xu exit by 2023. Longtime investors, including Matrix Partners, K2VC, IDG Capital, Unity Ventures, and Sinovation Ventures, had also exited.
For many investors, the acquisition is viewed as a favorable outcome for both parties. “Platform companies tend to do well when they integrate,” a private equity insider said. Zhuanzhuan’s focus on secondhand 3C products complements Plum’s luxury goods offering. In the e-commerce space, niche platforms often struggle to generate sufficient traffic to achieve profitability, and Plum likely faced similar challenges.
The acquisition price, according to one investor, was within a fair range.
This deal aligns with a broader trend in the industry. While consumer venture capital surged in 2021, the market has cooled significantly, leading acquisitions to become the preferred exit strategy. Notable examples include Miniso acquiring a 29.4% stake in Yonghui Superstores, JNBY’s buyout of OMG and its sub-brand On My Game, and earlier deals like Kidswant purchasing Leyou and Anta Sports acquiring Maia Active. Larger players continue to absorb smaller companies at an accelerating pace.
Lower valuations in the consumer sector have prompted more buyers to act, while startups missing growth targets often face lawsuits from investors due to buyback agreements. In this environment, securing a buyer can be the best possible outcome.
Yet, as in marriage, the right acquisition deal is rare. The truth is, while there’s no shortage of sellers, finding a capable and willing buyer is another matter entirely.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Yang Yafei for 36Kr.