Suppliers blocked the door and shouted "pay back the money": Shenzhen's big seller went bankrupt, leaving a mess

A: "Why do you pull my plug?"

B: "So what if I pulled it out?"

A: "I said it will only take 1 minute. Will you die if you wait?"

Person B: "I've been waiting for over a year. Isn't that long enough? I unplug every computer I see turned on."

…

On June 16, the editor saw this scene in the Shenzhen office of SAFU. The quarreling parties were suppliers and SAFU employees. Such quarrels have occurred many times in the past week. The supplier came to ask for the payment owed by Global Easybuy. In addition to him, there were dozens of people who came for the same purpose that day.

At this time, there were very few employees coming to work in the entire office area, and even a large part of the area had the lights turned off, leaving it pitch black.

The agreement expired and the supplier came back to collect the debt.

More than a week ago, there were more than 170 employees working in SAFU. On that day, there were only more than 30 people left. Some employees worked from home, and some could not stand it and resigned. Although there were employees coming to work every day, and SAFU's chairman, CEO, and HR director of K-Link also came, it was obvious that this was no longer a normal office environment.

In fact, the reaction of suppliers was even more intense in the first few days. They blocked the door, refused to let employees in, and shouted "Yang Jianxin, give me back the money" and even played funeral music.

"We cleared out all the employees at one point. Now we have people taking turns guarding here every day. Some people also spend the night here. We stop people from coming to work here," Yang An (pseudonym), a supplier who has been following up on this matter, told the editor. They have no choice but to do this now.

In 2021, the situation of suppliers asking for payment for goods from Global Easy Shopping is still vivid in our minds. Now, such a thing is happening again at Safu (Shenzhen Safu Commercial Co., Ltd.), because the repayment agreement signed between Cross-Border Link and the supplier at that time was not fulfilled as scheduled.

At that time, some suppliers (more than 120 companies) who were owed money by Global Easy Shopping signed a debt agreement with Yang Jianxin, the largest shareholder of Cross-Border Link. The agreement stipulated that on December 31, 2022, Cross-Border Link needed to pay all of the more than 70 million yuan owed by Global Easy Shopping to these suppliers. At the same time, 10% of the equity of Shenzhen Zaful would be pledged as collateral.

Most of them thought that they would be paid for the goods when the time came, but they never expected that something unexpected would happen at the end of last year.

Yang Jianxin told them that because Global Easybuy had gone bankrupt and was no longer a subsidiary of Cross-Border Link, he had no reasonable and legal channels to pay the money. The suppliers needed to sue in court to get the pledged shares of Safu, and then Cross-Border Link would pay to redeem them.

"At first, Yang Jianxin told us to sue in court and he would send people to mediate. But in March this year, he changed his mind and said that the court must make a judgment," Yang An told reporters.

But when the suppliers went to court to initiate legal proceedings, new problems arose.

"The court refused to file the case because Global Easybuy and SAFU are highly related and are both subsidiaries of Cross-border Communication. Global Easybuy has now entered bankruptcy liquidation procedures. You can only sue after its bankruptcy liquidation is completed and you don't get full compensation." Yang An said helplessly: "The end of Global Easybuy's bankruptcy is nowhere in sight. Failure to file a case means no judgment, but Cross-border Communication is unwilling to mediate. This matter has almost reached a dead end."

It is worth noting that in December 2021, the Taiyuan Intermediate People's Court ruled that Global Easy Shopping should be bankrupt and liquidated. Immediately afterwards, a third-party bankruptcy administrator took over Global Easy Shopping. The second creditors' meeting has been held. After participating in the first and second bankruptcy creditors' meetings, the suppliers learned that Global Easy Shopping's assets after inventory were insufficient to pay off the first and second priority claims. The suppliers are third-priority persons and have no property to distribute.

"We've reached a dead end." Yang An said with a tired face.

He told Ennet that Cross-border Communication had changed its mind repeatedly and had lost the trust of suppliers. Even if it cooperated with the mediation and transferred the equity pledged by Safu, they would not accept it. "Based on their previous operations, this equity will most likely not be redeemed, so this time they will definitely not leave until they get the cash."

There are not many cards left to play, and the "Achilles' heel" of Cross-border Communication has been caught

Following the bankruptcy of Global Easybuy and the sale of Paton, Cross-border E-commerce only has SAFU and Youyi E-commerce left. However, the latter's business model is to act as an agent for foreign infant products to enter the domestic market for sales, and the initiative is not in its own hands. Therefore, even if its business scale is large, Cross-border E-commerce does not dare to bet its future on it, which further highlights the importance of SAFU.

Clearly, suppliers are taking advantage of this now.

SAFU, formerly known as the Global Easybuy apparel division, and SHEIN were once known as the "two most popular fast fashion brands" and have a very high reputation in the fast fashion field. The 2020 "BRANDZ Top 50 Chinese Overseas Brands" list shows that SAFU ranks 38th in the overall ranking of Chinese overseas brands and 2nd in the online fast fashion category, second only to the industry leader SHEIN.

Previously, SAFU's performance has always been excellent. Even though Global Easybuy and Cross-border Link suffered huge losses for two consecutive years in 2019 and 2020, it still remained profitable. Some industry media have estimated that in 2020, SAFU's annual revenue may reach 5.613 billion yuan. What does this mean?

The financial report shows that in 2020, Anker Innovations had a revenue of 9.353 billion yuan. This means that SAFE, with the strength of a clothing division, has a revenue of 60% of Anker Innovations.

Because of this, when Global Easy Shopping collapsed in 2021, Cross-border Communication divested it from Global Easy Shopping at a low price and made it its second-tier subsidiary. However, Cross-border Communication obviously underestimated the "sensitivity" of debt collection suppliers.

When they learned that Cross-Border Link had secretly transferred the high-quality asset Safu, they immediately shifted the debt collection position from Global Easy Shopping to Safu.

Li An recalled: "We requested that SAFE be returned to Global Easybuy for bankruptcy liquidation, and all the materials were ready, but because the legal process took a long time, we did not do so later."

At that time, after three months of stalemate and negotiations, in early September 2021, Cross-Border Link and suppliers made a compromise, that is, Cross-Border Link took out SAFU as a "proton", and the suppliers accepted the repayment deadline of the end of 2022. The two parties signed an agreement, and the suppliers no longer gathered at SAFU.

In fact, during the months of stalemate and negotiation between the two sides, SAFE's revenue suffered a major blow. Li An said that before June 2021, SAFE's daily turnover was close to 2 million US dollars (based on the annual average exchange rate of 6.45, the annual revenue was about 4.7 billion yuan). In early September, when the negotiations between the two sides ended, the turnover was only 40,000 US dollars, a sharp drop of more than 1 million. And the decline in 2022 is even worse.

The financial report shows that in 2022, the scale of Cross-Border Link's export business shrank sharply. Last year, the total revenue of Cross-Border Link's export e-commerce business, mainly ZAFUL, was only 470 million yuan, accounting for only 6.77% of the total revenue (still 30.39% in 2021), and the net loss reached more than 80 million yuan.

Today, the situation where suppliers come to collect debts has occurred again, and the losses will be immeasurable. If it continues, it is likely to extinguish the increasingly weak "flame" of cross-border export e-commerce.

However, since June 6, suppliers have been coming to collect debts for nearly 20 days, but no one from K-Link, including Yang Jianxin, Li Yong and other leaders, or shareholders, has stepped forward to resolve the issue. Is it because they have no money to repay?

The financial report shows that in 2021 and 2022, Cross-border Communication achieved net profits of 673 million yuan and 17.8423 million yuan respectively. From this, it can be seen that it is not short of money.

So why not "the father pays the son's debt" and pay off the debt with 70 million? After all, if the supplier continues to blockade, the revenue loss of SAFU will likely be far greater than 70 million.

"The crux of the matter is that Cross-Border Link needs to obtain authorization from the board of directors to come up with the money." Li An said that the top three shareholders of Cross-Border Link are Yang Jianxin, Guangzhou State-owned Assets Supervision and Administration Commission, and Xu Jiadong, and the current situation shows that they have not reached an agreement.

From the supplier's perspective, they have been tricked by Cross-border Communication once, and they will obviously not compromise again this time. "We are putting pressure on them now. If they still want to keep SAFU, they should come out and solve the problem as soon as possible," Li An told Ennet.

At present, due to the blockade of the office space by suppliers, SAFU, as an important card, no longer has the conditions to continue operating and its operations have been affected. But what is interesting is that in its reply to the Shenzhen Stock Exchange's 2022 annual report inquiry letter on June 13, K-Link stated that there is no uncertainty in the company's ability to continue operating within 12 months from the end of the company's 2022 annual report period.

Now the suppliers have set their sights on SAFU, and Cross-border Communication has been caught in a weak spot. If it wants to continue to hold this important card in its hand, it must resolve the overdue payments to suppliers.

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