The world of trading cards has evolved so dramatically in recent years that it has transcended mere childhood nostalgia to emerge as a sprawling market worth hundreds of billions of yuanFrom collectible cards featuring characters from classic Chinese literature such as "Water Margin" to high-profile athlete cards beloved by fans, the diversity of cards available today is staggeringPopular cards like Ultraman and My Little Pony, appealing to school-aged children, alongside a host of anime-inspired collectibles, showcase this booming industry that promises a significant economic footprint.

As the card economy grows, platforms for secondhand trading such as Xianyu and Jihuan She have reported a surge in transaction volumesRare cards that have been certified by grading institutions not only see increased value but also dominate sales charts, revealing how critical these ratings have become in the trading community.

However, the importance of these ratings begs a crucial question: What exactly do grading agencies assess? With many cards still seen as a niche hobby, the burgeoning secondhand market has nevertheless generated considerable interest in the process and implications of card grading.

Within the secondhand market: From speculation to established grading practices

According to a report from Citic Securities, the domestic IP sector is set to flourish further in 2024. The trading card market, a vital segment of the IP merchandise landscape, is expected to see a compound annual growth rate of 25%, potentially reaching a market size of 35.1 billion yuan by 2027. Collectible cards can generally be divided into trading card games (TCGs), based on competition and strategy, and collectible cards (CCGs), which function primarily as items of art or memorabilia.

Collectible cards often derive their value from being rare while also having cultural significance connected to popular IPs

This makes them both a personal treasure and a potential financial assetIn practice, however, many players do not differentiate between trading cards and collectible cards; daily transactions often blur the lines.

This year has seen a pronounced interest in trading cards, particularly the TCG genre, which has attracted many new fansNotably, Hasbro's My Little Pony card game, with its all-encompassing global marketing, innovative designs, and rapidly changing card collections, has captured a spectacular share of the marketAccording to trading platform Qindao's official account, as of August 19, 2024, the top five most popular IPs on their platform are My Little Pony, Yeluo Li, Naruto, Detective Conan, and Identity VNotably, My Little Pony dominated the top ranks, with its top card achieving 66,000 transactions.

On the Xianyu platform, sales of My Little Pony cards surged to over 30,000 in the past month, tripling the figures for the runner-up, Yeluo Li

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The average price for one of these cards was reported at 76 yuanIn July, a specific My Little Pony card even fetched an astounding price of 160,000 yuan in a rare case, although further investigations indicated this may have been more of a promotional stunt than a real transactionNonetheless, a limited edition card of which only 20 exist did sell for 255,000 yuan, setting a new benchmark.

Data from trading platform Qindao indicates that in the first half of 2024, the top-selling cards, particularly rare My Little Pony cards, consistently exceeded prices of 4,000 yuan, with the most expensive Naruto card reaching 7,000 yuan.

What these high-value cards share in common is their certification from professional grading bodies, attaching a layer of credibility and protectionGrading enhances a card not just by preserving its physical properties but also by establishing a standard for quality assurance

Graded cards are encased in protective shells and tagged with a score, providing buyers with a guarantee against misrepresentation.

As a prominent content creator on Bilibili, Shoumao Jun explains that players often seek grading for several reasonsFirstly, graded encapsulation protects the cards; secondly, it establishes authenticity, and thirdly, having a grade helps mitigate disputes in transactions regarding conditionSome collectors even send cards in bulk for grading to leverage that certification to drive up resale prices.

One avid card collector, known as Yuchuan Jun, especially enjoys assembling Pokemon trading cards and various anime collectiblesMotivated by the desire for preservation, display utility, and the allure of increased value, she frequently submits her cards for grading“Initially, my interest was driven by the higher perceived value of graded cards, but I found that premium international grading services often involve complex and long processes, so I shifted towards domestic services which provide convenience and rapid feedback,” she mentions.

To meet rising demands for card protection, many grading agencies are innovating in their protective shell designs, ranging from basic pressure and dust resistance to advanced UV and moisture protection

For instance, Baocui, a grading service, claims to utilize UV-resistant materials to shield cards from fading and oxidation caused by sunlight exposure.

The depths of the grading industry

In recent years, the rise of popular IPs such as Pokemon, Digimon, and One Piece have propelled the domestic trading card market into overdrive, causing valuation and grading sectors to expand rapidlyReports indicate that market size grew exponentially from 2021 to 2022, marking the beginning of a competitive grading space.

According to Jihuan She statistics published this year, over 68,000 vendors participated, and the platform facilitated more than 19 million card transactions in 2023 alone, a staggering increase of 145.31% year-on-yearThe majority of graded cards on the platform were certified by the overseas agency PSA, which comprised 52% of transactions, followed by CCG with about 32% and Baocui at 6%.

When submitting cards for grading, enthusiasts typically have two options: direct submission to grading agencies, which involves shipping the cards to a designated address or employing a proxy service that collects cards from multiple individuals and sends them for grading as a batch.

While using a proxy service might seem unnecessary, this method often provides better rates and eliminates the hassle of international shipping documentation when submitting cards to overseas agencies, translating to significant savings in both time and cost.

Grading fees vary among agencies based on card types, values, and turnaround times

Generally, international agencies like PSA and BGS command higher fees, while domestic services are comparatively affordable, with rates between 15 to 23 yuan per card, albeit with a recognition system still maturing among local players.

Colloquially known as "Trainee Card Player," an avid collector of various card types, insists that grading primarily exists to authenticate card conditions and ultimately determine their valueHe highlights that “based on rarity, cards with better conditions will always yield higher valuesHowever, individual definitions of condition differ among players, which necessitates the objective evaluation from grading agencies, directly impacting a card's market value.”

“Grading evaluations mainly focus on surface, edges, corners, and centering,” he adds, noting differences in how agencies utilize magnification or AI technology for assessments

However, the varying standards among grading institutions lead to discrepancies in evaluations, prompting some players to express dissatisfaction with inconsistent grading outcomes.

Expert analyst Yang Tangtang emphasizes the importance of professional integrity in grading, stating, “For high-value cards, many would prefer to send them internationally for evaluation, despite longer wait times, simply due to distrust of local grading agenciesSome worry about damage, loss, or untrustworthy evaluations, which could scale negatively against already fluctuating card values.”

Differences in evaluation can lead collectors to submit cards for grading multiple times or switch agencies to achieve a more favorable scoreGrading inherently carries a degree of subjectivity, which can lead to frustration and mixed feedback for grading companies.

Shoumao Jun believes “graded cards were initially meant to clarify authenticity and smooth transactions, but they have evolved into tools for speculation

Manufacturers like PSA have ambiguous standards with high subjective weight—players frequently see examples where cards graded 9 receive a bump to 10 upon resubmission, while some domestic agencies may hold higher consistency.”

Regarding grading standards, Yang notes, “Currently, each agency has distinct evaluation criteria since no universal benchmark for grading professionals exists within the industrySome domestic agencies have begun to implement machine learning and AI techniques in grading processes to minimize subjectivity.”

Partnering with CCG, Siwei underlines that “card grading resembles antique appraisals, demanding adaptation to variations in production techniques and printing discrepancies across types and eras,” indicating how challenges inherent in these evaluations can further complicate market dynamics.

Does the future of local grading agencies hold promise or pitfalls?

The rising trend of collecting items associated with pop culture influences the dynamics of trading card production and sales in China

Currently, the annual per capita spending on trading cards in China rates at an estimated 8.6 yuan, a stark contrast to Japan's 92.3 yuan and the United States' 50.7 yuan — indicating substantial growth potential.

From a breakdown of card package pricing, a basic card pack priced at 10 yuan sees about 40% of its value captured by retail stores, 30% to distributors, around 10% for logistics, and the remaining 20% allocated for production materials, IP licensing, and other costs.

High-value cards in the secondary market often realize considerable premiums beyond their original retail prices, suggesting that this secondhand market fuels card enhancementGrading agencies thus play a pivotal role in adding value to these collectibles.

“Grading has historical precedence in numismatics and antiques, establishing a foundation for card grading with entities like CCG and domestic brands branching from traditional appraisal practices,” notes Ishidan San, who views such agency origins as beneficial to the maturation of card grading in contemporary markets.

The competition is daunting, as multiple international grading agencies have increasingly moved to capitalize on the demand in China, including recent entrants like CSG and CGC while domestic institutions adapt quickly to combat this wave

The evolving scrutiny within the marketplace sees domestic grading agencies establish innovations through promotional events and exhibitions to create crossover opportunities.

With emerging institutions aiming to align their brand credibility, intensifying competition between domestic and foreign grading agencies has become more pronouncedFor example, educational outreach such as lectures at esteemed universities is becoming more common, encouraging interactions within the community to grow overall market enthusiasm.

As Siwei notes, “CCG aims to provide superior grading along with the spirit and tradition behind card collecting,” hoping to expand into various facets of pop culture, thereby encompassing a diverse range of collectibles.

Ultimately, the success of the trading card market largely hinges on licensed IPs that resonate with consumersThe commercial viability of card companies typically relies on acquiring established IPs rather than developing new ones internally, which results in a predominantly franchise-driven industry.

Yang summarizes this sentiment: “The most attractive trading cards in today's market primarily originate from foreign IPs, which trailback tangible benefits to domestic producers and distributors