The storm continues! The "cross-border leader" is in trouble again

In recent years, the cross-border e-commerce industry has experienced rapid development. Under the influence of fierce market competition and the general environment, some people have made a lot of money while others have suffered heavy losses and fallen from grace.

Since its creditors applied for reorganization in May , Cross-Border Link, a well-known retailer , has faced a new round of major crisis.

Some of the shares of the largest shareholder of Cross-border Communication will be auctioned off by the court

Recently, Cross-Border Tongbao E-Commerce Co., Ltd. (hereinafter referred to as Cross-Border Tong ) issued a cautionary announcement regarding the judicial auction of some shares of its largest shareholder .

The announcement stated that Cross-Border Link recently received the "Auction Notice" from the Shenzhen Intermediate People's Court of Guangdong Province . The Shenzhen Intermediate People's Court of Guangdong Province will conduct a public auction of 11,051,200 shares of Yang Jianxin, a shareholder holding more than 5% of the company's shares, on the JD.com judicial auction platform on July 27, 2023.

According to the announcement , the shares auctioned this time by Yang Jianxin account for 6.40% of his shares and 0.71% of the company's current total share capital. The reason for the auction is a debt dispute.

Data shows that as of 2022, the total liabilities of Cross-Border Link have reached 2.539 billion yuan.

On May 10 this year , because Cross-Border Link was unable to repay its overdue debts, creditor Yin Jie applied to the Taiyuan Intermediate People's Court for reorganization of the company, claiming that Cross-Border Link obviously lacked repayment ability but still had reorganization value, and at the same time applied for pre-reorganization registration.

On May 12, Cross-border Communication received the "Notice Letter" regarding the reorganization application. On May 16, Cross-border Communication issued an announcement stating that it had not yet received a notice from the Taiyuan Intermediate Court, and there was still uncertainty as to whether the application would be accepted by the Taiyuan Intermediate Court and whether the company would enter the pre-reorganization and reorganization procedures.

On June 16, Cross-Border Link responded again, saying that it had not yet received any relevant notice from the court .

Today, Cross-Border Link has reached the stage of auctioning its shares.

Many people began to worry that if the shares of Cross-Border Link ’s largest shareholder were auctioned off, it would have various negative impacts on the company.

However, Cross-Border Link stated that the judicial auction of shares will not lead to a change in the company 's control.

Nor will it have a significant adverse impact on the company 's production and operations.

It is understood that the auction of Cross-Border Link's shareholders' shares is still in the public announcement stage. Subsequent steps may involve bidding, payment, court execution of legal procedures, equity change and transfer, and there is still uncertainty as to whether the auction will be successful.

Cross-border Link has fallen from the altar of "the No. 1 cross-border company"

It is regrettable that Cross-Border Link has gone from being a well-known and popular brand in the industry to being heavily in debt and having its shares auctioned off.

The predecessor of Cross-border Link was Baiyuan Pants , which was established in 1995 and mainly engaged in clothing business. It was listed on the A-share market of Shenzhen Stock Exchange on December 8, 2011. In 2014, it acquired 100% equity of Shenzhen Global E-Commerce Co., Ltd. and officially entered the cross-border e-commerce industry. In 2015, it was renamed Cross-border Link.

In 2015, Cross-Border Link entered a period of rapid development, with revenue soaring from 841.8 million to 3.961 billion , a substantial increase of 370%, and net profit increasing from 33.45 million to 164.8 million , a rapid increase of 403%.

The peak period of Cross-Border Link's development was in 2018, when Cross-Border Link acquired a wholly-owned stake in Shenzhen Qianhai Paton Network Technology Co., Ltd., which specializes in 3C electronic products, and acquired Shanghai Youyi E-Commerce Co., Ltd., which specializes in maternal and infant products .

At that time, Cross-Border Communication's annual revenue reached 21.53 billion, 25 times that of 2014; net profit increased to 622.8 million, 18 times that of 2014. That year, Cross-Border Communication's market value once reached 35.6 billion yuan.

Currently, the main business of Kuailetong is cross-border export e-commerce business and cross-border import e-commerce business. The company's main products are clothing and home furnishings, electronic products and maternal and child products.

After 2018 , affected by the external trade environment , Cross-Border Link’s operations began to encounter difficulties.

In 2019, affected by inventory backlog and goodwill impairment , Cross-border Link suffered a huge loss in net profit . In 2019, Cross-border Link's revenue was 17.9 billion yuan, and its net profit began to lose money, with the loss amount reaching 2.7 billion yuan. This year, Cross-border Link's export business was 11.4 billion yuan, a year-on-year decrease of 26.27% .

In 2020, due to the impact of the global COVID-19 pandemic, Cross-Border Link's performance further declined . In 2020, Cross-Border Link's total revenue was 16.4 billion yuan, with a net loss of 2 billion yuan; Cross-Border Link's export business revenue was 10.1 billion yuan, a year-on-year decrease of 11.72 % .

In 2021, Global Easy Shopping, the core subsidiary of Cross-Border E-Commerce, announced bankruptcy and reorganization, and was visited by a large number of suppliers demanding payment for their goods.

The troubled Cross-Border Communications transferred 100% of the equity of its wholly-owned subsidiary Shenzhen Qianhai Paton Network Technology Co., Ltd. for RMB 2.02 billion . The transferees included Xiaomi and several other companies.

In 2021, Cross-Border Link's revenue was no longer in the tens of billions scale, but it turned losses into profits, with a net profit of 673 million yuan; this year, Cross-Border Link's export business revenue was 2.7 billion yuan, a year-on-year decrease of 73.41% .

In 2022, Cross-Border Link's revenue scale decreased again, and its net profit began to decline again. The annual revenue was 7.254 billion yuan , and the net profit attributable to shareholders of listed companies was 17.8423 million yuan. This year, Cross-Border Link's export business revenue was 490 million yuan , a year-on-year decrease of 81.85% . Regarding the reasons for the decline in performance, Cross-Border Link explained that it was due to the poor performance and losses of the export business mainly based on Zaful.

It should be noted that recently, Cross-Border Link also received a regulatory letter from the Shenzhen Stock Exchange regarding Cross-Border Tongbao E-Commerce Co., Ltd.

The main problem is that there is a large gap between the company's actual net profit in 2022 and the net profit in the performance forecast.

In January 2023, Cross-Border Communication released its 2022 annual performance forecast , and it is expected that the net profit attributable to shareholders of the listed company in 2022 will be between 5 million yuan and 7 million yuan.

In April 2023, Cross-Border Link released its 2022 annual report , and the company 's audited net profit was 17.8423 million yuan.

The Shenzhen Stock Exchange believes that the disclosure of Cross-Border Communication’s performance forecast is inaccurate , which violates Article 1.4, Article 2.1.1 and Article 5.1.3 of the Shenzhen Stock Exchange’s "Stock Listing Rules (Revised in 2022)".

The Shenzhen Stock Exchange hopes that Cross-Border Link can make timely rectifications to prevent the above problems from happening again.

Over the past five years, Cross-border Link has continued to go downhill. Inventory backlogs and goodwill impairment have caused performance losses. Its core subsidiaries, Paton and Global Easybuy, have been sold or liquidated, and many independent websites have been closed one after another. In addition, its senior management has been constantly at odds and entangled in lawsuits, and the company has also faced multiple lawsuits.

According to Tianyancha, Cross-border Communication has had as many as 252 legal disputes in recent years , many of which are due to financial disputes, mainly debts owed by Cross-border Communication. The plaintiffs are mainly suppliers such as toy companies and logistics companies.

Today, Cross-border Link is burdened with huge debts , its shares are facing auction, and its subsidiary Global Easybuy is "infamous"... It has fallen from the altar of the "cross-border leader" and is experiencing a major defeat. It is still unknown whether Cross-border Link can make a comeback in the future ...

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