After more than 10 years of distribution, the building is about to collapse. Can the 1.1 billion investment save its life?

In the era of crazy distribution, the "Sakata Five Tigers" and "Hua Nan City Four Young Masters" emerged in Shenzhen's cross-border circle. Some people say that they are the symbol and epitome of an era, but now, many years later, their era has come to an end.

In the past, distributing goods could quickly make people rich. There was a saying that "one year of distributing goods on Amazon can buy a house in Shenzhen Bay." It sounds exaggerated, but it may not be anecdotal. However, with the changes in the market, there is little news about the "Sakata Five Tigers" now. The "Four Young Masters of South China City" have been listed one after another, but we can still get a glimpse of their business.

Youkeshu and Tongtuo debuted through backdoor listings, while Suntech and Aojie were unwilling to be outdone and chose to go public independently, and ultimately their IPOs were successful.

Who has been eliminated, who is still climbing the mountain, whose building is about to collapse, and who is still entertaining guests in the high-rise building? From distribution to branding, the fate of the "Four Young Masters of South China City" is completely different.

Falling down the mountainside, begging for help

Judging from the current trend, Youkeshu and Tongtuo are the two most negative ones among the "Four Youngsters". The former will undergo restructuring after years of losses, and will go bankrupt and delist if the restructuring fails, marking the end of a generation of heroes; the latter will quickly sell itself when the decline can still be stopped, and be brought under the command of its "juniors", seeking shelter and returning to the top.

Youkeshu: Received 1 billion yuan in restructuring investment, may change direction in the future

On December 16, Youkeshu released an announcement stating that as of December 13, 2024, the manager's account had received all restructuring investment funds paid by financial investors, totaling 725 million yuan .

In February this year , due to its inability to repay the 1.25 million yuan debt to Shenzhen Yuanyang E-Commerce Co., Ltd. (hereinafter referred to as "Shenzhen Yuanyang") , it applied to the Changsha Intermediate People's Court for reorganization of Youkeshu .

In March, the Changsha Intermediate People's Court approved the application, and Youkeshu entered pre-reorganization and reorganization ; half a year later ( September), Youkeshu officially entered reorganization and gradually began to recruit and determine reorganization investors ; in November and December, Youkeshu respectively determined the reorganization industrial investors and financial investors .

On December 5, Youkeshu announced that it had received all restructuring investment funds from industrial investors Shenzhen Tianxingyun Supply Chain Co., Ltd. and Fujian Zongteng Network Co., Ltd. , totaling 362 million yuan .

In other words, Youkeshu has currently received a total of 1.087 billion yuan in restructuring investment .

Through the equity form, Youkeshu uses the existing total share capital of 422 million shares as the base, and implements the capital reserve conversion according to the ratio of 12 shares for every 10 shares, with a total conversion of 507 million shares . After the conversion, the company's total share capital is 929 million shares . In addition to the part of the share capital held by the restructuring investors, more than 70 million shares are used to distribute to creditors to repay debts, and the price of debt-equity swap is 10 yuan per share.

According to the debt adjustment and repayment plan , Youkeshu's property-secured debts and tax debts were basically fully repaid in cash ; ordinary debts below 1 million yuan (including principal) were repaid in cash , and ordinary debts above 1 million yuan (excluding principal) were repaid with stocks .

Among them, as of November 13, Youkeshu had a total of 37 creditors who declared claims, with a total amount of more than 1.266 billion yuan . Among them, tax creditors , creditors with property guarantees , and ordinary creditors ( 36 companies) declared amounts of approximately 1.825 million yuan , 364 million yuan , and 900 million yuan, respectively .

The total amount of claims that have been reviewed and confirmed and reported to the Changsha Intermediate People's Court for confirmation exceeds 576 million yuan ; the amount of claims that have been temporarily deferred confirmation exceeds 311 million yuan ; and there are other claims that have not been reviewed and approved, with an amount of more than 355 million yuan .

Since the announcement of the restructuring plan, Youkeshu's audited total assets are 305 million yuan , and the estimated value of all assets is 315 million yuan .

How could one of the once glorious "Four Young Masters of South China City" fall to such a state?

In the past, Youkeshu emerged out of nowhere and quickly became a cross-border e-commerce giant. At its peak, it had more than 1,800 employees and established multiple branches around the world. Its cross-border export business covered more than 200 markets including North America, Europe, and Southeast Asia .

At the end of 2018, Youkeshu entered the A-share market through the shell of the listed company "Tianze Information". According to the 2019 financial report, in the second to fourth quarters of that year alone , Youkeshu's revenue exceeded 3.1 billion yuan, and its product gross profit margin was as high as 55.21% . Since then, Youkeshu's business has gradually become the focus of the company.

In 2020, Youkeshu's revenue exceeded 5 billion yuan, but due to the outbreak of the epidemic, its profits fell instead of increasing, with a loss of 870 million yuan for the whole year. In addition , during the " Amazon account suspension wave " in 2021 , hundreds of Youkeshu's sites were suspended and frozen for suspected violations, and its losses reached nearly 2.7 billion yuan , and the company's capital chain was on the verge of breaking .

Since then, Youkeshu's downhill road has been unstoppable. Not only has its revenue been declining year after year, but its losses have never been healed. By the end of 2023 , Youkeshu had accumulated losses of nearly 4.4 billion yuan in the past four years . As of the third quarter of this year, Youkeshu's revenue in 2024 has shrunk to 328 million yuan, with a net loss of more than 30 million yuan.

Trapped by debt , economic downturn and intensified industry competition , Youkeshu is having a hard time. Even though it is focusing on Amazon and AliExpress while also making efforts on platforms such as Shopee and Lazada, the results are minimal .

Because the audited net assets in 2023 were negative, Youkeshu was issued a delisting risk warning by the Shenzhen Stock Exchange in April this year , and the stock abbreviation was changed from "ST Youkeshu" to "*ST Youshu".

Now that Youkeshu has entered restructuring, it may temporarily change its business direction, for example:

1. We will start importing B2B and B2B2C businesses , involving international brand products in many industries ;

2. The focus of export business will be extended to supply chain resources , and SEAlink, Alibaba Overseas Cloud, overseas compliance services and other businesses will be injected around 2026 ;

3. Industry implantation drives the agglomeration of industrial belts . Industrial investors will use Youkeshu to get involved in supply chain production, employment, taxation, and the agglomeration of industrial belts to increase efficiency ;

4. Develop business in Southeast Asia, such as operating Polibeli, an online trading platform created by small and medium-sized enterprises .

If the restructuring is successful, most of Youkeshu 's debts will be resolved through equity swaps, and cash flow pressure will be reduced; after getting rid of debt and financial crisis, its core business will be more focused , its hematopoietic ability will be restored, and its industry position will be reshaped . But if it fails, Youkeshu may eventually become a thing of the past in the history of China's cross-border e-commerce.

Tongtuo: Selling itself to its "younger generation" for 700 million yuan to seek protection

As one of the earliest cross-border sellers going overseas, Tongtuo seized the market opportunities and the dividends of the times.

With dozens of categories such as 3C, home and outdoor, and automotive, Tongtuo sold whatever was hot-selling. In the days known as the "grassroots era of cross-border e-commerce", Tongtuo stood at the top of the industry with its distribution strategy. In addition, Tongtuo's smart hardware brand Koogeek also had a certain response in the market at that time, and its smart home brand business was even named by Apple.

Public data shows that in 2015, Tongtuo ’s annual revenue exceeded 1.3 billion yuan , and soared to 2.201 billion yuan in 2016. It was also in 2016 that Tongtuo’s corporate valuation reached 2 billion yuan .

In 2017, the company had 2,000 employees , with annual revenue exceeding 3.6 billion yuan and net profit exceeding 200 million yuan. In the same year, Tongtuo was sold to Huading Holdings for 2.9 billion yuan .

In 2018 , the former CEO of eBay brought senior executives to China to visit Tongtuo . At that time, Tongtuo was the envy of the cross-border e-commerce circle. A seller once said: Everyone wants to be the next Tongtuo .

From then until 2020, Tongtuo's annual revenue soared to nearly 7.5 billion yuan , and its net profit was also in the billions. However, this profit level has been declining almost year by year, so that it failed to complete the bet with Huading Holdings.

In the "Amazon ban wave" of 2021, the big ship of Tongtuo suddenly began to show signs of sinking. After huge amounts of funds were frozen by Amazon and Paypal , although Tongtuo's revenue remained between 3 billion yuan and 5 billion yuan per year, its net profit showed a negative state.

Between 2021 and 2023, its net losses reached 615 million yuan, 310 million yuan and 100 million yuan respectively . In just three years, its total losses exceeded 1 billion yuan .

In July this year , Tongtuo's successor and distribution giant Huakai Yibai issued an announcement saying that it had officially taken over Tongtuo . The financial report showed that Tongtuo's revenue in the third quarter was 677 million yuan. Although it did not disclose specific profit data, it stated that it had turned losses into profits.

From public information , we can know that from 2022 to 2023, Tongtuo will have a total of 9,086 and 10,856 stores on various platforms, with monetary assets exceeding 400 million yuan. The overall operating conditions are still good . It is still unknown whether it can return to the top in the future under the integration of Huakai Yibai .

To stand firm on the top of the mountain

Completely different from Youkeshu and Tongtuo, Aojie and Saiwei, two of the "Four Young Masters of South China City", seem to be much more "competitive". They did not go public through backdoor listings, but have been wandering in the A-share market for many years and have been listed independently one after another. Now both of them are thriving in the cross-border e-commerce market.  

Savi: The brand is on the Forbes list and appears at New York Fashion Week

It is the youngest of the "Four Young Masters of South China City" and was born in 2012. It was also crazy about selling goods earlier and entered the cross-border e-commerce export market with the most competitive clothing track.

This year alone, Savi was listed in the " 2024 Shenzhen Top 500 Enterprises " ( based on last year's revenue performance) , ranking 153rd ; won the "2024 Forbes China·Leading Global Brand" ; its "Fashion Apparel" project won the 2024 Guangdong Province E-Commerce Outstanding Case ; and also included the 2024 China Overseas Brands Top 100 List-Emerging Brands , Guangdong Province Top 500 Enterprises , and "Fortune" " China's Future Globalization Star " .

In essence, Savi also started out as a distributor of goods. In the early days, clothing accessories, department stores and home furnishings, sports and entertainment, and digital automobiles and motorcycles were all categories it sold. However, over the years, the revenue contributed by the clothing category has become increasingly larger, so it began to abandon the method of distributing goods across all categories and focus on the segmented products of the apparel track.

Men's wear, women's wear, home wear, underwear, children's wear ... Savi generates considerable revenue through multiple subcategories.

The financial report shows that from 2020 to 2023, the apparel and accessories categories brought Savi 2.474 billion yuan, 3.193 billion yuan, 3.301 billion yuan and 4.671 billion yuan in revenues respectively, and the proportion increased from 47.11%, 57.40%, 67.40% to 71.17% .

In the first nine months of this year, this category maintained rapid growth, achieving revenue of 4.858 billion yuan, a year-on-year increase of 57.79% , accounting for 71.44% of the company's main business revenue .

Unlike Youkeshu and Tongtuo, Suntech uses branding to achieve distribution in a single large track.

For example, it has over ten clothing brands including the men's clothing brand Coofandy and homewear brand Ekouaer with annual sales of 1 billion yuan, the underwear brand Avidlove with annual sales of over 500 million yuan, the women's clothing brands Zeagoo and Hotouch, the children's clothing brand Arshiner, all with annual sales exceeding 100 million yuan, and dozens of emerging clothing brands with annual revenues of tens of millions.

As of the first half of this year, many products from brands such as Coofandy, Ekouaer, and Avidlove still ranked among the top five in the Amazon BS list .

From January to June 2024, Coofandy 's revenue reached 948 million yuan , a year-on-year increase of 51.11%; Ekouaer 's revenue reached 786 million yuan , a year-on-year increase of 57.93%; Avidlove 's revenue reached 371 million yuan , a year-on-year increase of 34.72%; Zeagoo 's revenue reached 179 million yuan , a year-on-year increase of 81.90%.

It is worth mentioning that in September, Savi ’s men’s clothing brand Coofandy and home wear brand Ekouaer both appeared on the stage of New York Fashion Week.

Of course, Savi has not completely given up on other categories. Its sports and entertainment brand ANCHEER will have revenues of 267 million yuan and 231 million yuan in 2022 and 2023, respectively. Its outdoor brand COBIZI ranked among its top five brands in the first half of this year, with sales reaching 152 million yuan, a year-on-year increase of 96.71%.

Although its performance is good, Suntech's road to listing is quite difficult due to issues such as distribution.

Before 2020, many big sellers in the cross-border circle completed their foray into the capital market by means of backdoor listings, such as Youkeshu, Tongtuo, Cross-border Communication, Global Easy Shopping, and Value Chain. However, Savi wanted to go public independently and retain the original founding team's voice and control over the company, which also doomed its road to listing to be full of twists and turns.

In December 2020, Suntech's listing application was accepted by the Shenzhen Stock Exchange, but during the period, Suntech repeatedly suspended the process due to problems such as failure to update financial reports, etc. Two years later (June 2022), the Shenzhen Stock Exchange Listing Committee meeting approved its application, and it was not until April 2023 that Suntech's IPO process was finally finalized.

As of the third quarter, LDK's revenue has exceeded 6.8 billion yuan this year, with a net profit of nearly 200 million yuan . Whether in terms of revenue or profit, LDK 's operating and profit sustainability performance is relatively good .

As its cross-border business continues to expand, Savi's office building has reached 35,000 square meters. Not long ago, it also spent a lot of money to purchase land in Shenzhen, the cross-border capital. The group has more than 3,200 employees.

While deeply cultivating third-party e-commerce platforms such as Amazon and Walmart, self-operated websites for vertical categories such as Retro Stage, and independent brand websites, Savi also keeps pace with the development of the industry and pays attention to emerging platforms. For example, in the first half of this year, it also increased its investment in platforms such as Temu and TikTok, and obtained revenues of 60.62 million yuan and 23.74 million yuan, respectively.

However, Savi is also in urgent need of improving its profitability, having suffered a loss of 40 million yuan in the third quarter. Since its listing, Savi's share price has fallen from 52.47 yuan per share at its peak to 24.94 yuan per share at press time , with a market value of just over 10 billion yuan.

Aoji: Hong Kong stocks ring the bell, huge losses turn into profits of hundreds of millions in just one year

Founded in the same year as Youkeshu, Aojie is the last of the “Four Young Masters of South China City” to enter the A-share market.

But even earlier, the prototype of Aoji had already taken shape. In the early 21st century, the founder of Aoji came into contact with eBay while studying abroad and quickly sold products on the platform.

According to some data, in 2004, the founder of Aukey had already hired employees in Germany to run his eBay store. In 2005, Aukey's predecessor, Aukey International, was established. In just three years, Aukey International became one of the top 10 sellers on eBay Germany.

In order to expand the scale of this business, the founder of Aojie returned to China and established a larger team, officially entering the cross-border e-commerce industry.

Five years later (2015), Aojie's annual revenue reached 900 million yuan, and it began to test the waters in the listing circle, and was listed on the New Third Board, becoming China's first listed cross-border e-commerce company at that time.

Another four years later (2019), Aojie felt that it was time to enter the A-share market, so it stopped its journey on the New Third Board and switched to the Shanghai Stock Exchange Science and Technology Innovation Board, but for some reason withdrew its application .

The global epidemic broke out in 2020, and cross-border e-commerce ushered in a super boom, and Aoji's revenue also soared. By 2021, Aoji's annual revenue reached a staggering 9.071 billion yuan , and it applied for listing on the Shenzhen Stock Exchange with high spirits, but the sudden "Amazon account ban wave" brought its legend to an abrupt end.

Data shows that the "account blocking wave" caused more than 270 stores of Aoji to be blocked, and the funds frozen by Amazon reached 235 million yuan . Because of this, even though the annual revenue exceeded 9 billion yuan, its net loss reached an incredible 590 million yuan.

After this incident, Aojie’s ambition to enter the A-share market was once again dampened.

In 2022, Aoji did not indulge in setbacks. After getting ready, it temporarily withdrew the attention of the capital market and focused on performance. As a result, in the past two years, Aoji's annual revenue level remained almost unchanged, reaching 7.1 billion yuan and 8.683 billion yuan respectively , but the profit level returned and grew steadily, from a huge loss in the previous year to a profit of 223 million yuan and 520 million yuan in the following years , a turnaround against the wind, which can be called excellent.  

With confidence in going public, Aokkey set its sights on the Hong Kong Stock Exchange and completed the bell ringing at the fastest speed, submitting the prospectus in April this year and officially ringing the bell in November .

Mainly focusing on home furnishings, Aukkey's brand matrix includes ALLEWIE, IRONCK, LIKIMIO, SHA CERLIN, HOSTACK and FOTOSOK . According to Frost & Sullivan 's statistics , based on sales GMV in 2023, Aukkey ranks fifth in the global B2C market for furniture and home furnishing products, and ranks first in the B2C overseas e-commerce market for furniture and home furnishings among Chinese sellers .

Last year, the GMV of 11 brands under Aukei exceeded 100 million yuan. Among them, six categories of brands, including bed frames, jewelry cabinets, dressing tables and dressing stools, bookcases, dining cabinets and sideboards , and refrigerators , ranked first on the Meiya site , and another 10 categories had a market share of more than 10% on the Meiya site .

In addition, Aokky is also involved in consumer electronics , sports and health and other fields .

In the first four months of this year, Aokkey 's revenue has reached 2.833 billion yuan, a year-on-year increase of 16.9%, and its net profit has soared 96.9% year-on-year to 189 million yuan .

In the capital market, although Aojie is the slowest runner among the "Four Young Masters of South China City", the experience of repeated falls has made it well aware of market changes. At the same time, it never lacks the courage and confidence to "again and again".

The era of a generation of distribution giants seems to have ended, or perhaps it has not. There is no answer as to whether Youkeshu and Tongtuo can make a comeback, and whether Saiwei and Aoqi can stand firm at the top of the mountain.

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