Net profit plummeted for three consecutive years! East China's largest seller plans to take new actions

In recent years, with the rapid development of the cross-border e-commerce industry, more and more sellers have entered the market. Market competition has also begun to shift from commodity competition to supply chain competition, and the establishment of an integrated cross-border supply chain system has become the key to the breakthrough of cross-border e-commerce companies.

Annual profit loss of 30 million! Daye shares plans to transfer supply chain

Recently, Daye Co., Ltd. issued an announcement stating that it plans to establish an overseas production base in Mexico through its wholly-owned subsidiary Daye Mexico SAde CV.

Daye Group stated in the announcement that the project plans to add an additional investment of US$45 million on top of the original US$10 million, bringing the total investment to US$55 million.

It can be seen from this move by Daye Co., Ltd. that it has begun to transfer its supply chain overseas and intends to expand into new markets.

Daye Co., Ltd. stated that in addition to expanding new markets, the other purpose is to enhance the competitiveness of garden machinery products and improve the company's ability to deal with future trade risks.

After establishing a production base in Mexico, we can make better use of local resources, reduce transportation costs, and deliver goods faster. After expanding into new markets, we can better serve overseas consumers.

Daye Co., Ltd. was established in 2006 and is headquartered in Yuyao City, Zhejiang Province. It is a garden machinery design and manufacturing company. The company's main products are lawn mowers, in addition to lawn mowers/brush cutters, and other power machinery (snow sweepers, grass combers, micro-tillage machines, leaf suction blowers, etc.). According to the power source, its products can be divided into gasoline-powered, AC-powered, and lithium-powered.

It is understood that more than 90% of the company 's products are sold abroad, mainly in Europe and the United States. Its main customers include international brands or retailers such as Walmart and Home Depot. It owns its own brands such as "MOWOX" and "Green Machine".

From 2019 to 2021, Daye Group's operating income was 987 million yuan, 1.001 billion yuan and 1.607 billion yuan respectively.

From 2019 to 2021, Daye Co., Ltd.'s net profit attributable to shareholders of listed companies was RMB 81.48 million, RMB 76.70 million and RMB 55.52 million respectively.

According to the 2022 performance forecast released by Daye Co., Ltd. , the company expects to make a profit of 20 million to 30 million yuan for the whole year of 2022, a year-on-year decrease of 45.97%-63.98%.

Judging from Daye's revenue in the past three years, although it has increased year by year, the net profit attributable to shareholders of listed companies has been declining. The net profit in 2022 directly dropped from 55.52 million yuan to 20-30 million yuan, a direct decrease of nearly 30 million yuan.

Daye shares stated that the main reason for the decline in the company's net profit was the impact of the international political and economic environment. Europe and the United States have seen relatively serious inflation. At the same time, the extreme high temperature weather has led to a decline in demand for related products such as lawn mowers, affecting the company's revenue in 2022. On the other hand, the company is actively exploring the US market to promote new products, and promotional expenses have also increased compared to the previous year. At the same time, in order to adapt to market demand, the company has increased its R&D investment in new products such as riding lawn mowers and new energy garden machinery products, and R&D expenses have increased to a certain extent compared to the previous year.

The changes in the market environment and the decline in net profit year by year also made Daye shares realize that they must start to adjust the company's operating strategy. Therefore, transferring the supply chain externally became the first important measure for Daye shares to cope with market changes.

Optimizing the supply chain is actually crucial for cross-border e-commerce sellers.

Because in the current fierce market competition of cross-border e-commerce, the supply chain is the origin of international trade, and the continuous development of the supply chain will play an important role in the future development of enterprises.

Supply chain generally refers to the flow of business, information, logistics and capital. From the raw materials of the product to the intermediate products and then to the final product, then to the channel, to the retail terminal, and finally to the consumer, the whole process is called supply chain.

In the entire cross-border trade process, the supply chain management system is particularly important. Establishing a sound supply chain management system can enhance the competitiveness of enterprises in the international market. The B2B supply chain management system mainly includes supply and demand procurement management, bidding and centralized procurement, inquiry and quotation, electronic contracts, enterprise orders, credit payment and supply chain finance.

Many well-known domestic retailers have established a complete global supply chain management system. East China's largest retailer Superstar Technology has achieved a global layout. It currently has 21 production and manufacturing bases in the world and has established cooperative relationships with thousands of suppliers around the world, which can ensure that the company's production capacity is not subject to various restrictions.

It is also worth mentioning that six years ago, Giant Technology had established factories in Cambodia, Vietnam and Thailand, and its production capacity layout in Southeast Asia has been initially completed.

With the support of the global supply chain system, Giant Star Technology can respond quickly to market demand and complete the delivery of various large orders.

In 2022, Giant Star Technology's revenue saw rapid growth, with revenue in the first three quarters alone reaching nearly 10 billion.

According to its third quarter report, Giant Star Technology 's operating income in the third quarter of 2022 was 3.60 billion yuan, a year-on-year increase of 11.47%; net profit attributable to shareholders of listed companies was 622 million yuan, a year-on-year increase of 47.06%. In the first three quarters of 2022, the company achieved operating income of 9.835 billion yuan, a year-on-year increase of 28.06%. Net profit attributable to shareholders of listed companies was 1.222 billion yuan, a year-on-year increase of 47.06%.

The continuous growth in performance and profits of Giant Star Technology year after year is also inseparable from its powerful global supply chain system.

The market size has reached nearly 30 billion US dollars! The Mexican market is experiencing a big boom

Daye Co., Ltd. built its overseas production base in Mexico this time, and on the other hand, it also saw the development potential of Mexico's blue ocean market.

Mexico, the second most populous country in Latin America, currently has a population of 128 million and is the largest e-commerce market in Latin America.

In recent years, Mexico's e-commerce market has experienced rapid development. According to statistics from the Mexican E-Commerce Association (AMVO), Mexico's total e-commerce retail sales reached 528.1 billion pesos (about 28.3 billion U.S. dollars) in 2022, a year-on-year increase of 23%, of which online store sellers increased by 24% and online & physical store sellers increased by 22%.

Currently, there are more than 88 million Internet users in Mexico , which is close to 70% of the total population of Mexico. The Internet penetration rate is high and mobile terminals are the mainstream. A total of 95.9% of Internet users access the Internet through mobile terminals. The huge potential of the e-commerce market is self-evident.

It is worth mentioning that more than 50% of online shoppers in Mexico are aged between 15 and 34, and are highly receptive to cross-border products. According to statistics, 48% of Mexican online shoppers believe that products on cross-border websites are better than those on local e-commerce websites .

According to relevant survey data, Mexico’s top three importing countries are the United States, China and Japan .

Because local Mexican consumers attach great importance to the price-performance ratio of products when shopping online, high-quality and low-priced Chinese products are quite popular in the Mexican market.

According to AMVO 's research report, the most popular products on Mexican e-commerce platforms are fashion, electronics, household products, home decoration products, mobile phones, and beauty and personal care products.

Daye Co., Ltd.'s expansion of its supply chain to Mexico will also be very beneficial for future business expansion in Mexico.

For other sellers who want to explore new markets, they can also seize the opportunity of the rapid development of the Mexican market and make arrangements in advance.

Daye shares

Supply Chain