A huge investment of 280 million to develop new product categories, which are selling like crazy in East China!

This year, the cross-border industry has seen two extremes: sharp contraction and aggressive expansion. On one hand, there are layoffs and reductions in investment in order to survive the winter, while on the other hand, there are acquisitions and IPOs to expand the market.

When the economy is in a downturn and everyone is cutting back on spending to survive the winter, if a company can still make large external investments, it proves that this company is very resilient in terms of both "financial resources" and "strength", and East China's big-selling Superstar Technology is one of them.

On November 9, Giant Star Technology issued an announcement stating that it plans to spend no more than 280 million yuan to acquire a company that develops and manufactures high-pressure cleaners to expand its product line.

Giant Star Technology spends 280 million to expand its power tool product line

From November 9th to 11th, Giant Star Technology issued two announcements in a row stating that it plans to purchase 70% of the equity of Ailun Ruiqi Cleaning Equipment (Shanghai) Co., Ltd. (hereinafter referred to as "Ailun Cleaning") held by Sand Future Holding Hong Kong Ltd. by paying cash. The transaction price is not more than RMB 280 million ( 70% of 10 times the estimated adjusted net profit of Ailun Cleaning in 2022 ).

Who is Ailun Cleaning?

It is easy to tell from the company name that it is a company that produces or sells cleaning equipment. This is indeed the case. According to reports, Alon Cleaning, which was established on November 8, 2010, mainly manufactures various types of washing equipment, cleaning equipment and power tools, as well as related spare parts and molds, and sells self-produced products. It is currently the world's leading high-pressure cleaning machine R&D and manufacturing company .

And judging from past performance, its performance is not bad. In the past five years, Ailun Cleaning has maintained a steady growth of more than 30% in revenue each year, and achieved revenue of 366 million yuan in 2021. Although revenue declined in 2022 due to epidemic prevention and control at the manufacturing base, it still maintained good profitability, and is expected to generate no less than 40 million yuan in net profit in 2023.

Sellers who follow Giant Star Technology should all know that Giant Star Technology has been deeply involved in the tool and storage cabinet industry. Its main products include four categories: hand tools, power tools, laser measuring instruments, and storage cabinets.

Among them, the power tool product line has been continuously expanded since its launch at the end of 2020, and has successively acquired internationally renowned power tool brands such as SHOPVAC (the leading vacuum cleaner brand in North America) and BeA (European industrial-grade air nail gun brand). For sellers, perhaps more familiar is its own e-commerce brand WORKPRO , which sells a series of power tools .

In the announcement, Giant Star Technology clearly stated that in the future it will use the independent intellectual property rights and patents of Ailun Clean in the pump and valve series to develop and produce a series of products suitable for the North American market and e-commerce market, and expand the company's product line.

If the acquisition is successful, Giant Star Technology will add new categories of washing and cleaning to its power tool product line.

In 2021, the global power tool market has exceeded US$41.5 billion and has been growing steadily. Giant Star Technology has gradually established a foothold in this market, and currently several of its own power tool brands have become regional leaders in their respective product segments.

In fact, innovation has always been the soul of Giant Star Technology's development. It invests nearly 200 million yuan in innovation every year and launches more than 1,500 new products annually . Giant Star Technology not only continuously explores new products in the category, but also actively expands new categories. This year alone , it has entered the photovoltaic, energy storage, household goods and other categories .

The reason for the heavy purchase: money

As can be seen from the above, Ailun Cleaning is not the first company acquired by Giant Star Technology. Wind data shows that since its listing in 2010, Giant Star Technology has launched acquisitions of more than a dozen companies around the world.

Who gave Giant Star Technology the courage to keep buying? It was not Fish Leong, but its outstanding performance and profitability.

Since its listing in 2010, Giant Star Technology's revenue has been increasing year by year. From 2010 to 2019, its revenue rose from 1.882 billion yuan to 6.625 billion yuan, an increase of more than 252% in 10 years.

The outbreak did not stop its upward trend. In 2020, Giant Star Technology's revenue and net profit both increased, with overall operating income of 8.544 billion yuan, a year-on-year increase of 28.96%; net profit attributable to the parent company was 1.350 billion yuan, a year-on-year increase of 50.85%.

In 2021, Giant Star Technology has entered the ranks of the "10 billion buyer club" in one fell swoop, achieving revenue of 10.9 billion, a year-on-year increase of 28% ; net profit attributable to shareholders of the parent company was 1.27 billion yuan.

Not only that, in this year when sellers generally increased revenue but not profits, and hoped to turn things around in the Q4 peak season, Giant Star Technology almost completed last year's full-year net profit in the first three quarters. According to its third-quarter report, from January 1 to September 30, 2022, the company achieved operating income of 9.835 billion yuan, a year-on-year increase of 28.06%, and net profit attributable to the parent company of 1.263 billion yuan, a year-on-year increase of 9.76%. The net profit in the third quarter alone was as high as 622 million yuan.

Giant Star Technology adopts an "online + offline" sales channel model. Although offline channels account for a large proportion, online channels also contribute a considerable amount of revenue.

In terms of online channels, Giant Star Technology was established early and entered Amazon in 2015. Since then, it has continued to make efforts in cross-border e-commerce channels. By 2020, Giant Star Technology has become the number one domestic export seller of hand tools on Amazon.

After gradually launching power tool products, Giant Star Technology's revenue from cross-border e-commerce exceeded US$100 million (approximately RMB 710 million) for the first time .

And this figure is expected to continue to grow. Giant Star Technology said it will continue to increase the product categories and service capabilities of cross-border e-commerce, and continue to maintain a growth of more than 50% in cross-border e-commerce business in 2022.

What drives the continuous growth of Giant Star Technology's performance and profits is its desire for change, its continuous exploration of new sales channels, and its insistence on expanding new product categories.

In conclusion:

In the cross-border circle, like Giant Star Technology, Anker Innovations, a big company that is respected by many industry insiders, continues to invest and acquire companies and develop new product categories.

In 2021, Anker Innovations invested in two companies. In March, it increased its capital by RMB 40 million in Shenzhen Zhiyan Technology Co., Ltd. to start developing home furnishing products. At the end of the year, it invested another USD 5 million in Beijing Lingling Infinity Technology Co., Ltd. to develop drone products. This has added a strong new boost to Anker's diversified product line layout.

The cross-border e-commerce market environment is currently sluggish, and sellers are struggling to figure out how to break through the predicament. The actions of product-based sellers such as Giant Technology and Anker Innovations may provide a direction for sellers.

Under the impact of the cold, new products performed poorly and were very difficult to promote. In order to be stable, many sellers gave up or slowed down the pace of developing new products. Although this would increase the chances of sellers surviving the winter smoothly, they also lost the opportunity to break through.

Therefore, sellers can develop some new products and categories if conditions permit (but blindly expanding product lines is not encouraged here) to find the second growth curve. When the editor conducted a survey on sellers’ peak season sales earlier, a Guangzhou seller said that their peak season sales were not bad, and their performance increased by 30% this year, because they expanded new categories and developed new links.

Product strength is the seller’s most core ability, so it cannot be abandoned at any time.

Giant Star Technology