Ten years after its establishment, huitongda went public in Hong Kong, and Wang Jianguo's second IPO story began

In the early 1990s, in Nanjing, Jiangsu Province, a 31-year-old young man left the government department where he had worked for ten years to go to the sea to do business. Thirty years later, in 2021, at the age of 61, he not only owns three companies with a valuation of more than $1 billion each, named Wang, Haoxiangjia and Huitongda, but also occupies a place in the venture capital circle - this behind-the-scenes big man, named Wang Jianguo.

At the end of 2021, the "rural version of Taobao", with Wang Jianguo as chairman, Huitongda, submitted a table to the Hong Kong Stock Exchange to sprint for an IPO, which was its second time in a year. This time Huitongda once again sprinted to Hong Kong stocks, can Wang Jianguo successfully usher in the second IPO in his life? In Wang Jianguo's commercial map, what position does Huitongda occupy?

Consecutive losses

In December 2010, when Wang Jianguo founded Huitongda, the competition for the first-line market of home appliance retail giant Gome Suning had just been extinguished, and the book price war between Jingdong and Dangdang was fighting fiercely, and the sinking market was not the main battlefield for e-commerce giants such as Ali and Jingdong. Huitong, which started from the township retail market and started with home appliances, has been able to expand its scale rapidly.

According to the "China Times" reporter, the reason why Huitongda is called the "rural version of Taobao" is because it is similar to Taobao's profit model: it is made through trading business and services. However, Huitongda's customers are mainly township mom-and-pop shops and individual industrial and commercial households. In the past three and a half years, the proportion of transactional business revenue has been more than 99%.

However, another difference from Taobao is that the products sold by Huitongda focus on six categories: home appliances, consumer electronics, agricultural materials, alcohol, building materials, and transportation. Home appliances have contributed most of the revenue in the past, but with the overall decline of the traditional home appliance industry, the proportion of this category fell from 56.7% in 2018 to 18.4% in the first three quarters of 2021, while the proportion of consumer electronics revenue increased to nearly 40%.

In the first three quarters of 2021, Huitong's revenue reached 46.5 billion yuan, which was only about 3 billion yuan less than the previous year. However, if you look at the net profit, Huitongda, which has been established for more than ten years, has not yet achieved profitability. Its updated prospectus shows that its total net loss from 2018 to the first three quarters of 2021 was 1 billion yuan.

But this does not prevent many star capitals from "helping" them. Public information shows that the National Adjustment Fund, Shunwei Capital, China Merchants Bank, etc. have all participated in Huitongda's investment. Its current second shareholder is Alibaba, which brought 4.5 billion yuan into the market in 2018. Huitongda's latest prospectus shows that Alibaba currently holds 19.08% of its shares, making it the second largest shareholder. The actual controller, Wang Jianguo, directly or indirectly holds a total of 32.56% of the shares of Huitong.

"Ali will invest in it, more is to have its own grip in the sinking market, although Taote has some development, but after all, it is not the same as the logic of Huitongda, and the overall market of Taobao special price edition is currently a big gap with top Ali e-commerce companies such as Taobao and Tmall." Jiang Han, a senior researcher at Pangu Think Tank, told the China Times reporter.

In the past two years, Alibaba, Suning, JD.com and other Internet manufacturers have gradually realized the importance of the sinking market and have laid out the sinking retail market. But the sinking market is still highly fragmented. In the Frost & Sullivan report cited by Huitongda, according to the scale of transaction business for the sinking market, Huitongda, which achieved a transaction scale of 32 billion yuan in 2020, ranked first in the industry with a market share of 0.7%. It is followed by Alibaba Retail Pass with a market share of 0.6%, Jingxi Tong and Suning Retail Cloud with a market share of 0.5%, and Tmall Premium with 0.3%.

"The population of the sinking market is not concentrated, the intensification is not strong, the centralized distribution efficiency is low, and the consumption capacity of the sinking market is limited, and the sensitivity to the brand is not high, which increases the difficulty of logistics distribution, warehousing and marketing." Internet analyst Ge Jia analyzed the reporter of China Times. He also said that Huitongda is mainly based on selling goods and will not compete directly with giants in the sinking market.

On January 6, a reporter from China Times contacted Huitongda by email on issues such as the progress of listing and the planning of self-operated business categories, but as of press time, it has not received a reply.

The merchant sea is floating and sinking

The sprint to Hong Kong stocks is only part of Wang Jianguo's huge commercial map.

Looking back on the past, around 1991, Wang Jianguo put down the iron rice bowl and came to Zhejiang Wujiaohua Company, which is mainly engaged in hardware, power tools and other products, and officially joined the commercial sea. In 1998, Wang Jianguo, who became the general manager, renamed Wujiaohua to "Five Star Electrical Appliances" and concentrated on making home appliance chains.

But in the same year, Suning, which has been established for eight years, opened the first comprehensive home appliance mall in Xinjiekou, Nanjing, and began to expand the category from air conditioners to integrated electrical appliances. In the same year, Gome, founded by Huang Guangyu, had more than 10 chain electrical appliance malls in Beijing. Unlike Wang Jianguo's strategic play, which is partial to an edge, his opponents are determined to be in the national market.

It was not until 2005 that Five Star Appliances began to move from a regional chain to a national chain. However, with the "big chaos" of the home appliance chain, the position of the industry boss has been firmly occupied by Gome and Suning. Just like the saying that "the eldest and the second compete, they can't hold on to the third", Wang Jianguo did not win the battle with Zhang Jindong and Huang Guangyu".

He chose to let go if he couldn't fight. In 2009, 50-year-old Wang Jianguo sold Five Star Appliances to The U.S. home appliance chain giant Best Buy. It was also in this year that Five Star Holdings was also established. Subsequently, Five Star Holdings made a child king for the mother and baby market, Huitongda for the rural market, and a smart home integrator in the high-end consumer market.

In 2018, Haoxiangjia completed the C+ round of financing. Publicly available sources show that at that time, its valuation was more than $1 billion. In October 2021, Wang Jianguo also received his first IPO in his life - Child King, who did the retail and service of maternal and infant products, and was listed on the ChiNext board of the Shenzhen Stock Exchange. Based on the closing price on January 7, the current market value of Kid King is about 17.7 billion yuan.

It should be mentioned that in addition to entrepreneurship, the venture capital circle also has the figure of Wang Jianguo. He not only participated in the establishment of Yunfeng Fund in 2010, but also in 2017, he led five-star holdings to establish Star Naher Capital, which invested in dozens of investment institutions including Dachen Caizhi, Black Ant Capital, Red Dot China, etc., and the current management scale has exceeded 10 billion yuan.

Also entrepreneurs in Jiangsu in the 1990s, Zhang Jindong and Wang Jianguo, who had competed in the light and dark, were either about to embark on the important life node of Huajia. The past "war" between them has long become the imprint of the times, standing in the present, each other's business story has not yet ushered in the end.

Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng