Zebao’s parent company was sued for more than 50 million by its suppliers!

  When many cross-border sellers experienced bankruptcy incidents earlier, the biggest psychological trauma was suffered by the suppliers they cooperated with. The bound sellers and suppliers are more likely to share weal and woe. If they win, both parties gain, but if they lose, disputes will arise.

Xinghui shares were sued by suppliers for more than 50 million

Recently, Zebao's parent company, Guangdong Xinghui Precision Manufacturing Co., Ltd. (hereinafter referred to as "Xinghui Co., Ltd."), has added a major litigation and arbitration matter. The amount involved in this case is as high as 50.45 million yuan.

According to the content of the announcement, since Xinghui Holdings' subsidiaries Shenzhen Linyoutong Technology Development Co., Ltd. (hereinafter referred to as "Linyoutong") and Shenzhen Danya Technology Co., Ltd. (hereinafter referred to as "Danya Technology") signed a "Procurement Framework Contract" with Foshan Shunde Yafu Electronics Co., Ltd. (hereinafter referred to as "Yafu Electronics"), a contract dispute subsequently occurred, so Yafu Electronics applied for arbitration to the Shenzhen International Arbitration Court .

At present, the case has been accepted with the case number ( 2022) Shenzhen Guozhong No. 2821, but the trial has not yet begun.

It is understood that Linyoutong was initially positioned as a domestic purchasing entity for Zebao , that is, after purchasing qualified products from suppliers in China, Linyoutong sold the products to subsidiaries in the United States, Germany and Japan, and sold them on the local Amazon platform through Zebao's overseas subsidiaries. Danya Technology is also a service platform for enterprise software selection and procurement under Xinghui Co., Ltd.

In this case, Yafu Electronics first requested the court to order Linyoutong and Danya Technology to pay the overdue payment for goods to Yafu Electronics, which were RMB 8.65 million and RMB 10.0283 million respectively; secondly, it requested the court to order Yafu Electronics to pay liquidated damages for late payment of RMB 5.97 million and RMB 1.03 million respectively (this data is temporarily calculated as of April 18, 2022. The liquidated damages are based on the unpaid payment, calculated at 0.5 per thousand per day until Linyoutong and Danya Technology pay off all the payment for goods).

Of course, it is worth noting that Yafu Electronics requested the court to order Linyoutong and Danya Technology to compensate for the loss of finished products, semi-finished products and materials in the inventory of RMB 24,369,100. At the same time, Yafu Electronics also requested the court to order Linyoutong and Danya Technology to pay up to RMB 390,000 in legal fees.

Industry insiders said that due to the huge amount of money involved, the arbitration result of this case will definitely affect the fate of listed companies and suppliers. At the same time, if the arbitration proposed by Yafu Electronics for compensation for losses of inventory, semi-finished products and materials is established, it will have a great impact on the cooperation mode and agreement terms of sellers and suppliers in the cross-border e-commerce industry. Such inventory and semi-finished goods terms may be added to the cooperation regulations between sellers and suppliers.

In addition, in the announcement, Xinghui Co., Ltd. also disclosed that the cumulative amount involved in the company's litigation and arbitration matters in the past ten months was approximately RMB 55.6885 million, accounting for 12.01% of the company's latest audited net assets.

Among them, the total amount of litigation and arbitration cases involving the company's subsidiaries as plaintiffs was approximately RMB 2.5381 million, accounting for 4.56% of the total amount of the above-mentioned litigation and arbitration; the total amount of litigation and arbitration cases involving the company and its subsidiaries as defendants was approximately RMB 53.1505 million, accounting for 95.44% of the total amount of the above-mentioned litigation and arbitration.

Counting the above-mentioned lawsuits of Xinghui Shares, we can see that the amount involved is not small, and the disputes between its subsidiaries and suppliers are also the first to be affected.

The amount involved in the dispute between Cooper, Zebao and Linyoutong is as high as 10 million

Some time ago, a notice from 3C supplier Dongguan Cooper Electronics announcing the suspension of production and closure was widely circulated in the cross-border circle, causing heated discussions among many sellers and suppliers. One of the important reasons for its closure was that it was owed money by multiple cross-border e-commerce sellers, and Zebao was one of them.

According to the public information released by ZEBO, Cooper is its main supplier and has been its second largest supplier for many years. The products that ZEBO mainly purchases from Cooper are Bluetooth headsets. In 2017, ZEBO purchased from Cooper for a total amount of 82.443 million yuan, accounting for 8.96% of its total purchases. Currently, the sales contract dispute case between Cooper, ZEBO and even Shenzhen Linyoutong is under trial, with the amount involved reaching 12.94 million yuan.

Suppliers and sellers are in a deeply bound relationship. If problems arise with the cooperating cross-border sellers, such as products or accounts, so that the seller's cash flow is cut off, the first to suffer will be the suppliers. Under multiple pressures such as investment costs, inventory backlogs and slow payment collection, the crisis will quietly come.

The Cooper incident also brought the risks of suppliers to the table. As the saying goes, if the lips are gone, the teeth will be cold. Under pressure from sellers, some factories that supply cross-border industries have been affected. Some of them have no orders for a long time, and some finally choose to close down.

Earlier, the collapse of Global Easy Shopping was the best example. When sellers encounter a crisis, the purchase volume of major products drops sharply, and suppliers will definitely have a hard time. Leading seller suppliers like Cooper were not spared, not to mention some relatively small factories, not to mention that sellers are not having a good time nowadays.

In the semi-annual report disclosed by Xinghui Shares, we can see that its performance has declined sharply and its profitability is not as good as before. Its revenue in the first half of 2022 was 1.256 billion yuan, a decrease of 48.3% compared with the same period last year, of which the net profit attributable to listed shareholders was -17.6015 million yuan, a decrease of 116.85% compared with 100 million yuan in the same period last year.

Among them, Zebao's revenue in the first half of the year was 645 million yuan, a decrease of 66.45% compared with the same period last year, and the total profit was -20.4873 million yuan. The editor learned that Zebao's revenue share on Amazon in the first half of 2022 was 48.88%, and its revenue was 315 million yuan, a year-on-year decrease of 81.17%.

However, as far as other third-party platforms and self-operated platforms are concerned, Zebao's revenue has shown an upward trend. In the first half of 2022, the revenue of the third-party platform was 91.61 million yuan, a year-on-year increase of 324.74%, and the revenue of the self-operated platform was 48.30 million yuan, a year-on-year increase of 30.18%.

At present, the company's best-selling products are smart home appliances, with revenue of 240 million yuan in the first half of the year, followed by power supplies and 3C peripherals, with sales revenue of 222 million yuan in the first half of the year. The revenue from Bluetooth audio products is relatively small, at 75 million yuan.

Although Xinghui shares repeatedly attributed its performance decline to the impact of Amazon's account suspension in the report, there are many other factors involved. As mentioned in our article, the lawsuits and amounts involved by the company are unfavorable factors for cross-border sellers. Of course, how to adjust, standardize, and operate reasonably is an urgent problem that the company needs to solve.

Zebao

Xinghui Shares

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