Shenzhen cross-border e-commerce giant will be wholly acquired!

For cross-border sellers, 2021 can be described as a very difficult year. Repeated epidemics, strict platform policies, high logistics costs, and frequent exchange rate fluctuations have forced some sellers to reduce their cross-border business or even go bankrupt.

In this environment, Shenzhen-based Yibai Network's revenue has achieved growth against the trend , showing considerable resilience . Its parent company, Huakai Yibai, is planning to acquire the remaining 10% of Yibai Network's equity with 338 million yuan. After the transaction is completed, Yibai Network will become a wholly-owned subsidiary of Huakai Yibai.

Huakai Yibai intends to acquire the equity of Yibai Network for RMB 338 million

Recently, Huakai Yibai issued an announcement stating that based on the company's future development strategy plan, after a vote by the Supervisory Board, the company plans to use its own funds totaling RMB 338 million to acquire 10% of the equity of Shenzhen Yibai Network Technology Co., Ltd.

It is reported that the remaining 10% equity of Yibai Network is held by Xiamen Mangliduo Equity Investment Partnership and Xiamen Chaoran Mailun Equity Investment Partnership. The parties to this transaction negotiated and determined that the total consideration for the transfer of the target assets was 338 million yuan, of which Mangliduo held 5.7396% of the shares and the transfer consideration was 194 million yuan; Chaoran Mailun held 4.2604% of the shares and the transfer consideration was 144 million yuan.

Party A (Huakai Yibai) will pay all equity transfer funds to the designated account of Party B (Mangliduo, Chaoran Mailun) within 20 working days from the date when the target company completes the industrial and commercial change registration involved in this equity transfer. If the payment is overdue due to Party A, Party A will pay Party B a penalty of 0.05% of the total consideration of the target equity transfer for each day of overdue payment.

If the transaction is successfully completed, Huakai Yibai's shareholding in Yibai Network will increase from 90% to 100%. This means that Yibai Network will become a wholly-owned subsidiary of Huakai Yibai, and the control rights will be fully owned by Huakai Yibai, a listed company.

However, it is not easy to get the 338 million yuan. According to the agreement, Yibai Network needs to achieve an average net profit of no less than RMB 280 million and a cumulative performance target of no less than RMB 560 million in 2022 and 2023. If the cumulative net profit of Yibai Network in 2022 and 2023 is less than RMB 560 million, Party B shall pay a certain amount of cash compensation to Party A within 30 days after the audit results are determined.

Previously, Huakai Yibai acquired 90% of Yibai Network's equity for RMB 1.513 billion. After the acquisition, Huakai Yibai actively adjusted and contracted its original space environment art design business, and cross-border e-commerce began to become its core business, and its development strategy also focused on cross-border e-commerce .

Focusing on cross-border e-commerce, Yibai Network has a good development trend

In 2021, the operating income of Huakai Yibai's cross-border export e-commerce business was 1.953 billion yuan , accounting for 94.12% of the total revenue ; while the operating income of the space environment art design business was 120 million yuan , accounting for only 5.81% of the total operating income .

The rapid growth of Huakai Yibai's cross-border e-commerce business is due to the outstanding performance of Yibai Network . In 2021 , Yibai Network achieved operating income of 4.756 billion yuan, and net profit attributable to the parent company's owners after deducting non-recurring gains and losses was 215 million yuan. Since 2019 , it has exceeded the promised performance agreed in the previous restructuring agreement for three consecutive years.

Through this transaction, Huakai Yibai will achieve 100% control of Yibai Network , which will effectively increase the net profit scale of Huakai Yibai, and help it further optimize and integrate industrial resources, focus on cross-border e-commerce business, and further enhance its comprehensive profitability and core competitiveness.

According to Yi Enjun, Huakai Yibai uses Yibai Network as a carrier and relies on domestic high-quality supply chain resources to carry out cross-border export e-commerce business. It sells cost- effective Chinese-made products to overseas end consumers through third-party platforms such as Amazon, eB ay , AliExpress, Cdiscount and Wish.

As for the products sold online by Yibai, their coverage is relatively broad , mainly including automobile and motorcycle accessories, industrial and commercial supplies, home gardening, health and beauty , and outdoor sports .

The products sold by Yibai Network have a high overall gross profit margin, a long life cycle, and a slow update and replacement. The market demand in the specific segments is large, and the market competition is less intense than that of 3C electronic products and clothing . This gives it a differentiated competitive advantage in product development strategy compared to other cross-border export e-commerce companies .

In 2021, in the complex and changing market environment, Yibai relied on its supply chain resources and information system endowments accumulated over a long period of time in the pan-category business to establish "EasySeller", a one-stop cross-border e-commerce comprehensive service platform, to provide sellers with comprehensive cross-border business solutions.

The industry is developing positively, and Huakai Yibai is setting sail

Customs statistics show that in 2021, China's cross-border e-commerce imports and exports increased by 15% year-on-year, with exports increasing by 24.5%. Despite the repeated outbreaks at home and abroad, high logistics costs, frequent exchange rate fluctuations, and Amazon's account suspensions, cross-border export e-commerce has maintained rapid growth, fully demonstrating the vitality and growth resilience of the market.

In the long run, the overall upward development trend of the cross-border e-commerce industry will not change . At the same time, the future development of the cross-border e-commerce industry will also derive the following trends:

Multi-platform layout has become an industry consensus ;

Independent websites will become the future trend of cross-border e-commerce going global ;

Products are moving from low value to high value ;

Social media platforms have become an important emerging marketing channel.

Against this background, Huakai Yibai also stated that in the future it will concentrate resources on comprehensively developing cross-border export e-commerce business and strengthening and refining its core business of cross-border e-commerce. Its initial plan is to form a business portfolio of "general products + high-quality products + comprehensive cross-border e-commerce services."

The pan-category business will further enhance the level of digitalization and intelligence, optimize process efficiency and experience, and explore more profit margins, making the company a leading pan-category cross-border export e-commerce company.

The boutique business will enhance the company 's profitability, market position and brand influence by strengthening consumer market research and product innovation, integrating high-quality industrial chain resources, and creating highly sticky and high-premium proprietary product brands .

Comprehensive cross-border e-commerce services are a new business model that uses Yibai Network's cross-border e-commerce operation resources to empower other cross-border e-commerce companies. It is an important measure to achieve staggered competition between the company and traditional e-commerce companies.

In addition, Huakai Yibai said that in the future, the company will increase its technological innovation efforts, leverage the advantages of digital operations, reduce costs and increase efficiency. At the same time, the company will continue to improve the "Yimai" full-chain, full-scenario, one-stop cross-border e-commerce comprehensive service platform, actively develop emerging regional markets, and tap the market potential of emerging platforms.

In general, the strategic transformation of Huakai Yibai to focus on cross-border e-commerce business in 2021 has added a strong stroke to its future development. Now, Huakai Yibai has spent 338 million yuan to acquire the remaining 10% equity of Yibai Network, which is bound to take its cross-border e-commerce business to a higher level.

Huakai Yibai

Yibai Network

Cross-border e-commerce