Continuously turning losses into profits! Shenzhen's big sellers are coming back

Is the Shenzhen big selling chain coming back? Is there still a place for it in the cross-border circle?

After 6 years of losses, Jiazhilian started to make a profit

In the 2023 financial report, when talking about the business plan for 2024, Xunxing Co., Ltd. stated that the company planned to achieve a 9% increase in operating income in the zipper business and turn losses into profits in the cross-border e-commerce business. It did it.

Not long ago, an investor asked Xunxing Shares on an interactive platform: How is the performance of the company's subsidiary Shenzhen Jiazhilian Cross-border E-commerce Co., Ltd.? Is there a plan to go public independently?

The secretary of the board of directors replied that Shenzhen Jiazhilian Cross-border E-commerce Co., Ltd. has achieved a turnaround in its semi-annual report and the third quarter. If there are capital operation plans such as independent listing, the company will perform the disclosure procedures in accordance with the listing rules and disclose them publicly.

According to the financial report, in the first half of 2024, Jiazhilian achieved operating income of 187 million yuan, a year-on-year increase of 45.02%; total profit of 5.1053 million yuan, a year-on-year increase of 355.41%; net profit attributable to parent company shareholders of 1.878 million yuan, a year-on-year increase of 181.10%. Although the specific performance data for the third quarter has not been disclosed, it should be good.

Prior to this, it had been losing money for six consecutive years:

In 2023, Jiazhilian achieved operating income of 336 million yuan and a net profit loss of 12.8092 million yuan;

In 2022, the company will achieve operating income of 412 million yuan and a net profit loss of about 60 million yuan;

In 2021, the company achieved operating income of 550 million yuan and a net loss of 9.8891 million yuan;

In 2020, the operating income data was not released, but it is known that the net profit loss was 24.3994 million yuan;

In 2019, the company achieved operating income of 151 million yuan and a net loss of 58.582 million yuan;

In 2018, the company achieved operating income of 775 million yuan and a net loss of 74.9308 million yuan.

From 2018 to 2023, the total losses of Jiazhilian reached 240 million yuan.

In fact, before this, Jiazhilian had achieved impressive performance and was developing rapidly. According to the financial report, its operating income in 2016 reached 457 million yuan, a year-on-year increase of 232.7%, and its net profit reached 58.17 million yuan, a year-on-year increase of 564%. But who could have expected that after signing the gambling agreement with Xunxing Co., Ltd., the company's development trend would take a sharp turn for the worse.

In 2017, Xunxing Co., Ltd. purchased 65% of Jiazhilian’s equity for RMB 1.014 billion. In the same year, Jiazhilian achieved operating income of RMB 868 million, a year-on-year increase of 90.17%; net profit of RMB 103 million, a year-on-year increase of 84.93%.

In other words, from the second year after signing the gambling agreement with Xunxing Co., Ltd., Jiazhilian fell into the quagmire of continuous losses.

Returning to the race, the competitive landscape has changed dramatically

Jiazhilian was founded in 2008 and can be said to be one of the earliest cross-border e-commerce giants in the cross-border circle. It should have been moving forward steadily in the industry, but due to a bet with a listed company, it was seriously damaged, not only hindering its business development, but also missing out on the best development opportunities.

The six years when Jiazhilian fell into decline were the golden period of the booming cross-border e-commerce industry. According to the statistics of the General Administration of Customs, in 2018, the total retail import and export of goods through the customs cross-border e-commerce management platform reached 134.7 billion yuan, of which the export volume was 56.12 billion yuan, a significant increase of 67% year-on-year. By 2023, the scale of my country's cross-border e-commerce imports and exports will climb to 2.38 trillion yuan, and the export volume will be as high as 1.83 trillion yuan, and the scale of the industry will achieve explosive expansion.

Against the backdrop of the booming industry, peers in the value chain have also taken advantage of the situation and developed rapidly. Take Aoji Technology (established in 2010) as an example. In 2018, Aoji Technology achieved revenue of 5.076 billion yuan and net profit of 249 million yuan; by 2023, these two figures climbed to 8.683 billion yuan and 520 million yuan respectively. From 2018 to 2023, Aoji Technology's revenue increased by 71.06%, and its net profit increased by as much as 108.84%.

Six years ago, Jiazhilian was still influential in the cross-border e-commerce field. Today, the industry landscape has changed dramatically. Top sellers such as Aoji Technology and Anker Innovations have emerged and occupied a large market share. In this new situation, people can't help but ask: Can Jiazhilian still seize the opportunity, get back on track, and get a share of the fierce competition? Yien believes that there is an opportunity, but the challenges are very great.

Xunxing shares obviously also noticed the changes in the industry situation. In its financial report, it mentioned that although the overall concentration of the current cross-border e-commerce industry is still relatively low and the average scale of enterprises is relatively small, under the monopoly of Amazon, the previous leading enterprises have suffered a shock. At the same time, a group of strong brand e-commerce companies such as Anker Innovations have developed rapidly. In comparison, Jiazhilian's originally relatively complete cross-border export e-commerce comprehensive service system is gradually weakening its advantages.

At present, the competitive advantages of ValueChain include:

1. It has several self-owned brands, including Bravolink, OXA, DBPOWER, TEC.BEAN, etc. Some of them have formed a certain influence in major developed countries in Europe and the United States. In the first half of 2024, its sales revenue of self-owned brand products was 178 million yuan.

2. Strong data-based operation capabilities. Using self-developed marketing software and data analysis tools such as AMZ Tracker and CASHCOWPRO, we can conduct accurate market research, product selection analysis, store data tracking, etc.

3. Multi-category coverage. Products cover 3C electronic products, household products, kitchen products, health and beauty products, automotive peripheral products and other fields, which can meet the needs of different consumers, spread risks, and at the same time utilize the synergy between categories to enhance overall competitiveness.

4. Through years of accumulation, we have established a stable cooperative relationship with suppliers to ensure product quality and timely supply. At the same time, we have certain experience in supply chain integration and optimization, which can reduce procurement and logistics costs and improve product cost performance.

The bad debts of gambling are still there, and the founder has been hiding from debt overseas for many years

The result of the bet between Jiazhilian and Xunxing Shares is well known: the bet ended in failure. According to the agreement, Gan Qingcao and his wife and Common Dream Technology need to pay Xunxing Shares up to 1.014 billion yuan in compensation. However, nearly four years have passed since the court made the ruling. As of June 20, 2024, Xunxing Shares has only recovered 158 million yuan in execution funds.

Now, among the top sellers that once participated in the IPO bet, except for Yibai Network, which had a better ending, Youkeshu, Zebao Technology, and Tongtuo Technology are all stuck in their own quagmire, experiencing ups and downs in the tide of the industry:

Youkeshu suffered losses for years and ended up going bankrupt and undergoing restructuring.

Zebao Technology founder Sun Caijin is embroiled in a lawsuit with parent company Xinghui Shares;

Tongtuo Technology was sold to Huakai Yibai last year.

As for Jiazhilian, its founders Gan Qingcao and his wife have already fled overseas for many years, and were once dubbed by the media as "the cross-border version of Jia Yueting who will return to China next week."

Jiazhilian was once the focus of the industry. As the first company that was determined to build an industry ecological service platform, it was also called the "first stock in the cross-border e-commerce ecosystem." No one expected that it would fall into the quagmire of losses for six consecutive years. Fortunately, Jiazhilian has now successfully turned losses into profits.

This makes people curious. After experiencing such twists and turns, what will its future development prospects be? Do you think it will perform well in the future?

Chain of Value

Xunxing Shares