Shenzhen Dama became the defendant after losing the bet and had to pay 70 million yuan in compensation

There are very few successful bets in the cross-border circle, and most of them are a mess behind the scenes.

At the beginning of 2022, the "marriage" between Shenzhen's big seller "Zhengniao Chuhai" and the well-known domestic integrated marketing communication company "Insai Group" was talked about by industry insiders. However, just when people were expecting the two sides to create different sparks, recently, Insai Group took Zhengniao Chuhai to court.

In less than a year and a half, the two parties went from a partnership to a plaintiff and defendant relationship, which was somewhat unexpected.

Involving a dispute over equity repurchase funds, a listed company sued Shenzhen Dashang

On June 6, Insai Group issued an announcement stating that it had taken Wuhu Xingzhou Dayang Information Technology Consulting Service Partnership (Limited Partnership) (hereinafter referred to as "Xingzhou Dayang"), Shenzhen Zhengniao Chuhai Technology Co., Ltd. (hereinafter referred to as "Zhengniao Chuhai"), and Zhengniao Chuhai management Li Bin, Lin Min, and Li Yawei to court.

The reason that prompted it to do so can be traced back to the acquisition in 2022.

In January 2022, the cross-border e-commerce industry has already felt the "chill" of the market, but in such a market environment, an exciting news came from the industry: Shenzhen's big seller Zhengniao Chuhai has obtained a strategic investment of a "small goal (RMB 100 million)" from the listed company Guangdong Insai Brand Marketing Group Co., Ltd. (hereinafter referred to as "Insai Group") Insai Group will obtain 11.4259% of the equity of Zhengniao Chuhai after the capital increase.

However, there are conditions for getting this money. Li Bin, Lin Min and Li Yawei, the core management of Zhengniao Chuhai , promised that Zhengniao Chuhai 's net profit attributable to shareholders after deducting non-recurring items from 2021 to 2025 will be: 52 million yuan, 71 million yuan, 93 million yuan, 121 million yuan and 156 million yuan respectively .

In 2021, Zhengniao Chuhai achieved a net profit of 53.7187 million yuan , only 1.7187 million yuan more than the promised amount , with a commitment completion rate of 103.31% . The first year's gambling performance was completed without any major problems.

However, 2022 is not so lucky.

Due to the impact of the Russia-Ukraine conflict, inflation, and inventory backlogs, most cross-border e-commerce sellers had unsatisfactory performance in the first half of 2022, and Zhengniao Chuhai was no exception.

In the first half of 2022, Zhengniao Chuhai only achieved a net profit of 23.6787 million yuan after deducting non-recurring items. Compared with many sellers who lost money, Zhengniao Chuhai made money, but it still did not meet the requirements of Insai Group.

Insai Group and Zhengniao Chuhai have signed a supplementary agreement. The agreement stipulates that if Zhengniao Chuhai 's net profit after deducting non-recurring items is lower than 35% of the performance commitment for 2022 in the first half of 2022, Insai Group has the right to require Zhengniao Chuhai to repurchase all its shares .

Although Zhengniao Chuhai is only 1.1713 million yuan away from achieving its target, Insai Group still requires Zhengniao Chuhai and its management to fulfill the terms of the supplementary agreement.

Previously, Insai Group had paid a capital increase of RMB 70 million as agreed . Therefore, Zhengniao Chuhai needed to use RMB 74.2694 million ( with interest calculated until January 30, 2022 ) to repurchase all the shares of Zhengniao Chuhai held by Insai Group.

In December last year , Insai Group received the first equity repurchase payment of 5 million yuan . The remaining 69.2694 million yuan for bird-recruiting at sea needs to be paid before April 30 , 2023. However , until the above announcement was issued, Insai Group had not received the money.

Hence this lawsuit.

Now, the cooperation between Insai Group and Zhengniao Chuhai is obviously no longer possible. In fact, from the perspective of both parties' business, they can be said to be "best partners".

The two companies have complementary business types and should have been the best partners.

Many sellers have found that compared with previous years, the order volume this year has decreased significantly, and the survival period of new products has been greatly shortened. This is related to the economic downturn, but the deeper reason is that it is difficult for sellers to gain greater profits through traditional "traffic management" and "marketing efficiency". This problem is particularly evident in developed countries where brand and value awareness are relatively mature.

As competition continues to intensify, cross-border e-commerce companies' brand awareness is gradually increasing. However, most companies lack in-depth and systematic overseas market research capabilities, consumer insight capabilities, digital brand marketing methodology or systematic marketing experience, and need brand marketing communication service companies to provide corresponding supporting professional services.

Zhengniao Chuhai is a company that focuses on operations. Its predecessor was the platform division of Treader International, which was established in 2015. Over the years, relying on the dividends of China's supply chain, market first-mover advantages and efficient operation systems and operation strategies, it has achieved good market recognition and consumer reputation in overseas consumer markets, and its business has developed rapidly.

From 2020 to 2022, Zhengniao Chuhai's operating income was 552 million yuan, 617 million yuan, and 634 million yuan respectively, and its net profit was 64.33 million yuan, 53.73 million yuan, and 41.28 million yuan respectively.

Since its establishment in 2020, although its performance has been increasing year by year, its profits have been on a downward trend. For it, transforming into a brand is a good way to reverse this situation.

As an integrated marketing communication service provider with brand management as its core business , Insai Group can use its professional advantages in brand management, digital marketing communication and service innovation to help Zhengniao Chuhai enhance its brand value and reputation in the global market .

For Insai Group, it can also enter the overseas brand business through the overseas bird training program, accumulate practical experience in overseas brand operation and management, strategically explore new sustainable profit growth points, and enhance the company's sustainable operating capabilities.

In response to this, Insai Group also clearly stated in its reply to the Shenzhen Stock Exchange's letter of concern that it is trying to enter the cross-border e-commerce brand overseas market through its strategic investment in Zhengniao Overseas, using the rapidly growing cross-border e-commerce vertical market as a pilot to explore the growth points of the brand overseas market. Zhengniao Overseas mainly focuses on the European and American household goods market, which has strong market demand and continuously increasing scale. It will use this market segment as a pilot . After the successful trial in this market segment, it will systematically build a cross-border e-commerce brand overseas marketing and communication system to expand the brand overseas operation and management business in more market segments .

From a business perspective, the cooperation between the two parties can achieve strategic synergy and is a win-win situation.

For Zhengniao Chuhai, in-depth cooperation with Insai Group in multiple dimensions such as brand marketing and content marketing can supplement its own marketing shortcomings, quickly promote brand awareness and brand value, and increase revenue and profit levels .

For Insai Group, it has accumulated a large number of brand customers in its past operations. By combining with the sales and operation system of Zhengniao Chuhai, it will help existing customers to quickly sell their products overseas and increase the company's customer service stickiness. In addition, Zhengniao Chuhai's stable performance level can also enhance the company's profitability and improve its value.

From any perspective, the cooperation between the two parties is entirely beneficial, but unexpectedly it broke down because the performance commitments were not met, which makes people feel a little regretful.

Bird hunting at sea

Insai Group