Shenzhen cross-border big sale Zebao parent company loss of more than 1 billion, cross-border e-commerce business is still good to do?

On February 8, Guangdong Xinghui Precision Manufacturing Co., Ltd. (hereinafter referred to as "Xinghui Shares") issued a reply to the inquiry letter of the Shenzhen Stock Exchange. Previously, the Shenzhen Stock Exchange asked Xinghui to explain the number of stores seized by the e-commerce platform for violating the platform policy by the end of 2021, the amount of frozen funds, the impact on operating income and net profit, and the progress of resolving the violations.

According to the disclosure of Xinghui shares, Zebao Technology continued to rise in the sales scale before the tide of banning in the first half of 2021, so the inventory was more stocked, and in the second half of the year, due to the closure of stores and brands, sales suddenly slowed down, so a large backlog of inventory was therefore large, so it had to make provisions for inventory price decline.

It is worth noting that shortly before (January 26), Xinghui Co., Ltd. filed a lawsuit against 7 restructured performance gamblers such as Sun Caijin, the original founder of Zebao Technology, and his consistent actors, pointing out the tax problems of Zebao Technology when it operated overseas before. According to recent relevant media reports, Sun Caijin and Cai Gengxi, the actual controller of Xinghui shares, have a control entanglement, and Sun Caijin has reported cai Gengxi in real name that cai Gengxi is suspected of hollowing out the assets of listed companies.

In terms of operating conditions, Xinghui shares told the "China Times" reporter that at present, the company's cross-border e-commerce business is mainly sold through third-party e-commerce platforms such as Amazon and Walmart, self-operated platforms (independent stations) and overseas offline channels, and there is no risk of further deterioration of the external operating environment. For the above-mentioned entanglement of the actual controller, the reporter of this newspaper asked for confirmation from the xinghui shares, but did not get a positive response.

The loss of Xinghui shares exceeded 1 billion, and it was suspected of being entangled in the actual controller

According to public information, Zebao Technology was founded in 2007, located in Shenzhen, is one of the largest domestic revenue of consumer electronics brand enterprises, focusing on small household appliances, intelligent audio, intelligent accessories and other equipment research and development, design and sales, its products are exported to the United States, Germany, the United Kingdom, Japan and other more than 60 countries and regions.

In 2018, Zebao Technology was acquired by Xinghui Co., Ltd. and became its wholly-owned subsidiary, with a transaction price of 1.53 billion yuan. In 2020, Zebao Group generated revenue of more than 4.8 billion yuan, occupying a far-leading industry market share on overseas large-scale e-commerce platforms such as Amazon, and its three major international brands include VAVA, TaoTronics, and RAVPower.

In addition, Zebao disclosed that there are four overseas subsidiaries, namely Sunvalley (HK) Limited, a company based in Hong Kong, Sunvalleytek International Inc. (STK) in the United States, ZBT International Trading Gmbh (ZBT) in Germany, and Sunvalley JAPAN Co.Ltd (JND) in Japan.

When Xinghui Acquired Zebao Technology, the two parties signed a profit VAM agreement, stipulating that the promised net profit of Zebao Technology during the performance commitment period was: not less than 108 million yuan in 2018, not less than 145 million yuan in 2019, and not less than 190 million yuan in 2020. In this regard, Zebao Technology has exceeded the performance betting indicators.

However, from the performance forecast, the performance of Zebao Technology in 2021 has obviously been impacted. Affected by the "Amazon suspension" incident, in 2021, Zebao Technology is expected to have an operating income of 2.55 billion yuan and a net profit loss of 740 million yuan. Its parent company, Xinghui Shares, lost more than 1 billion yuan, and its net profit turned from profit to loss, with a loss of 1.24 billion to 1.42 billion yuan (a profit of 212 million yuan in the same period last year), and the operating income is expected to be 2.6 billion yuan, down 46% year-on-year.

According to the disclosure of Xinghui shares, as of the end of 2021, zebao technology has been suspended by Amazon platform sales for suspected violations of platform policies, and the operating income of the blocked sites in 2021 accounts for about 72.52% of Zebao Technology's operating income on Amazon platform in 2021, and the balance of frozen funds at more than 2021 is equivalent to about 32.2492 million yuan. The emergency response team set up by Zebao Technology is still communicating and appealing with Amazon, but there has been no substantive progress so far.

In addition, Zebao Technology in the first half of 2021 before the wave of suspension sales continued to rise, so the inventory is more stocked, in the second half of the year, due to the store, brand is sealed, resulting in a sudden slowdown in sales, inventory therefore a large backlog, so had to prepare for inventory price decline.

Shortly after the beginning of 2022, Xinghui Co., Ltd. filed a civil lawsuit with the People's Court of Qianhai Cooperation Zone in Shenzhen, Guangdong Province, pointing directly to the tax problems of Zebao Technology's previous overseas operations, requiring 7 restructured performance gamblers, including Sun Caijin, the original founder of Zebao Technology, and his co-actors, to pay RMB49,195,568.54 and the entire litigation costs of the case, involving an amount of nearly 50 million yuan.

It is worth mentioning that recently there are media reports that Sun Caijin has gone to the Securities Regulatory Commission, the Securities Regulatory Bureau and other relevant departments to report in real name Cai Gengxi, the actual controller of Xinghui shares, who is suspected of hollowing out the assets of listed companies. According to Sun Caijin, when Zebao injected 1.53 billion yuan into Xinghui shares, the actual controller of Xinghui shares stated that he would transfer the control of the listed company to him in the future, but later Cai Gengxi explicitly denied the commitment to transfer the actual control, and under the entanglement of control, Sun Caijin finally decided to go out.

As for the commitment of control, the reporter of China Times asked Xinghui for verification, but did not get a positive response. In this regard, a former employee of Zebao Technology revealed to reporters: "The two of them often fight lawsuits. ”

After the "wave of suspensions", is the business of cross-border e-commerce still good in the future?

The recent 2021 can be described as an unforgettable year for cross-border e-commerce sellers.

Since the end of April 2021, a number of Chinese cross-border e-commerce seller stores have been shut down by Amazon's platform. Amazon said that the main reason for the suspension was censored by the platform for violations such as "improper use of the review function", "asking for fake reviews from consumers", and "manipulating reviews through gift cards".

Under the "wave of banning", tens of thousands of cross-border e-commerce sellers have been affected. According to statistics, since May 2021, more than 50,000 Chinese merchants have been negatively affected by Amazon's crackdown, and the losses suffered by China's cross-border e-commerce industry have exceeded 100 billion yuan.

Many head merchants have also suffered heavy blows as a result. In addition to the above-mentioned Zebao technology, cross-border e-commerce outlets in Shenzhen have been banned by amazon platforms, including nearly 340 sites of "Youshu" and 130 million yuan of funds have been frozen.

According to the performance forecast of Tianze Information, the parent company of "Youshu", the estimated loss in 2021 is expected to exceed 1.8 billion yuan. The company's operating income in 2021 is expected to be 1.6-1.9 billion yuan (2020 revenue is 5.027 billion yuan); net loss attributable to shareholders of listed companies is expected to be 1.8-2.5 billion yuan (2020 loss of 871 million yuan).

However, incidents such as the "wave of suspensions" have further promoted the healthy compliance of the cross-border e-commerce ecosystem. A Shenzhen cross-border e-commerce practitioner told the "China Times" reporter that last year's cross-border e-commerce sellers were indeed not easy, but this reflects that the era of barbaric growth of the industry has passed, and the traffic of novice sellers and high-quality sellers can also be released. As the development of the industry continues to move towards standardization, the whole industry chain of cross-border e-commerce in the post-epidemic era will show a new situation.

On the other hand, the support of relevant policies and regulations for cross-border e-commerce is also increasing. In August 2021, the Shenzhen Bureau of Commerce announced that it would provide a subsidy of 2 million yuan to the affected Amazon China sellers for these cross-border sellers to start self-built website sales. In October 2021, the Ministry of Commerce, the Cyberspace Administration of china and the National Development and Reform Commission jointly issued the 14th Five-Year Plan for E-commerce Development, which clarified the guiding ideology, basic principles and development goals for the development of e-commerce, and put forward seven main tasks, 23 special actions and six safeguard measures for the development of e-commerce.

As the main battlefield of cross-border e-commerce, the development of Guangdong's cross-border e-commerce industry will also usher in new opportunities. On February 8, 2022, the State Council issued the Reply on Agreeing to Establish Cross-border E-commerce Comprehensive Pilot Zones in 27 Cities and Regions including Ordos, agreeing to establish cross-border e-commerce comprehensive pilot zones in 27 cities and regions, including Shaoguan, Shanwei, Heyuan, Yangjiang, Qingyuan, Chaozhou, Jieyang and Yunfu. So far, Guangdong has achieved full coverage of cross-border e-commerce comprehensive test areas listed at the 21 prefectures in the province, ranking first in the country.

The above-mentioned industry insiders told reporters that the epidemic has set off a "wave of online shopping", and cross-border e-commerce has also begun to rise at an alarming speed. Although last year's "wave of suspensions" made the entire industry experience a reshuffle, the industry is still worth sticking to, and it is not too late to do cross-border e-commerce in 2022. But behind the opportunities, there are still many challenges that cannot be ignored: stricter compliance requirements, the rise in platform fees (such as distribution fees, warehousing fees, advertising fees), international logistics costs and transportation timeliness.

The person pointed out that under the premise of compliance development, in addition to enriching product categories and improving product quality, cross-border e-commerce sellers can continue to add Amazon stores, or turn to other e-commerce platforms, such as Cdcount in Europe, Lazada in Southeast Asia, shopee, etc. The new platform also means new development opportunities; it can also tap some emerging blue ocean markets, such as the Middle East and Latin American markets.

At the same time, the Shenzhen Cross-border E-commerce Association Research Institute believes that the lack of industry standards for cross-border e-commerce enterprises nationwide has greater problems in formulating relevant policy initiatives. In particular, there is a lack of unified standards for the identification of cross-border e-commerce import and export transaction entities, cross-border e-commerce third-party platforms and other related market entities. In the future, it is necessary to increase the formulation of industry standards and increase the regulation of industry self-discipline.

Responsible Editor: Xu Yunqian Editor-in-Chief: Gong Peijia