Only 158 million yuan was recovered in 3 years! The founder avoided debt overseas

On June 20, Xunxing Co., Ltd. issued an announcement regarding the progress of its arbitration and application for compulsory execution .

If you look carefully at the content of the announcement, it is related to Gan Qingcao and his wife, the former helmsmen of Jiazhilian. It is another mess left over from a backdoor listing.

In the early years, "backdoor listing" was particularly popular. Even if a company was running fast in a certain field, once it needed to enter the IPO stage, various audit issues on financial performance would emerge one after another, and it was really "difficult as climbing to the sky" to go through a formal IPO. On the other hand, although some listed companies were already in the capital market, their operations were bleak, and some even faced the possibility of bankruptcy and delisting. I need your revenue performance, and you need my shell. Based on this, the two hit it off and merged, reorganized and listed.

In the cross-border circle, there are quite a few companies that have sold well through backdoor listings. The ones we are familiar with include Jiazhilian, Global Easybuy, Tongtuo, Youkeshu, Zebao , etc.

After the backdoor listing, the core business of the original shell company gradually changed after a few years. These big sellers got rid of the original shell company and truly became a cross-border listed company in the A-share market.

The "escape" drama is staged frequently, but unfortunately, these big sellers did not have a good ending. Now they have their own internal conflicts, and have become a topic of conversation in the cross-border circle.

Only 160 million of the 1 billion yuan compensation was recovered

On June 5 and June 20, Xunxing Co., Ltd. issued two consecutive announcements regarding the progress of its arbitration and application for compulsory execution, both of which were related to the founders of Yuanjiazhilian, Gan Qingcao and his wife.

The announcement shows that in July 2021, the dispute between Xunxing Co., Ltd. and Gan Qingcao, Zhu Ling, and Shenzhen Common Dream Technology Enterprise (Limited Partnership) ( hereinafter referred to as "Common Dream" ) was arbitrated by the China International Economic and Trade Arbitration Commission and an "Award" was issued , and Xunxing Co., Ltd. won the case.

*Note: The actual controller of Shenzhen Common Dream Technology Enterprise (Limited Partnership) is Zhu Ling.

Three years later, Xunxing Co., Ltd. received 15% of the 1.014 billion yuan execution amount required in the judgment .

In 2018, Xunxing Co., Ltd. filed a lawsuit naming Gan Qingcao, Zhu Ling and Common Dream as respondents, and applied to the China International Economic and Trade Arbitration Commission for acceptance of a case involving a dispute over an equity transfer agreement . It received a notice of acceptance in the same year.

In the past few years, Jiazhilian and its parent company Xunxing Co., Ltd. have been fighting from time to time. For example, Jiazhilian lost a bet and was sued for 1 billion yuan. For example, Gan Qingcao, the founder of Jiazhilian, was investigated for suspected contract fraud . Later, Wang Lijun, the actual controller of Xunxing Co., Ltd., was investigated by the China Securities Regulatory Commission for suspected manipulation of Xunxing Co., Ltd ....

Who can talk about the price chain without sighing?

In 2006, Gan Qingcao started his first cross-border trade journey in Xiamen. He made his first fortune through the stone trade. Two years later (2008), he set up shop in Shenzhen and founded Jiazhilian , thus officially starting his more than ten-year journey of cross-border e-commerce.

As good as he was at studying, Gan Qingcao, a top student who graduated from Peking University, also thrived in the cross-border e-commerce industry. The Jiazhilian he founded was based on self-operated cross-border e-commerce, and has since developed into an integrated company integrating payment, logistics, etc. , with "e-commerce trade + e-commerce services" as its main business, and Jiazhilian has grown rapidly .

Before 2020, when cross-border e-commerce was growing wildly , it can be said that most cross-border sellers had no awareness of building brands, and the same was true for Jiazhilian. However, its brand awareness was awakened relatively early, and it started to build a brand in 2014. In other words, between 2008 and 2014, Jiazhilian completed the transformation from a distribution king to a brand.

In an interview with the China Internet Network Information Center, Gan Qingcao said that in order to transform from a simple trader to a brand marketer , Jiazhilian spent 4 months reducing the SKUs from 3,000+ to 300+ .

Perhaps it was this transformation, coupled with the fact that some people say 2015 is the first year of the full-scale outbreak of cross-border e-commerce, that led to significant changes in Jiazhilian's revenue and profits this year, and it was listed on Amazon's TOP10 Chinese sellers list, and thus obtained its A round of financing of 75 million yuan .

After that ( 2016 ) , Jiazhilian completed a round B equity financing of 40 million yuan; in the first half of the same year, Jiazhilian's revenue reached 159 million yuan, a year-on-year increase of 412.82% , and its net profit reached 21.03 million yuan, a year-on-year increase of more than 11 times ; in August 2016, it was officially listed on the New Third Board. This year, Jiazhilian's sales scale increased by nearly 3 times compared with 2015 .

In 2017 , Jiazhilian received 165 million yuan in the C round of financing . In the same year, Jiazhilian was not satisfied with the New Third Board, so it signed an acquisition agreement with Xunxing Co., Ltd., the "first zipper stock", to sell 65% of its shares and use its shell to fulfill its A-share dream.

But all the discord began from then on.

In July 2017, Xunxing Co., Ltd. and Jiazhilian signed the "Equity Transfer Agreement" and "Profit Compensation Agreement" .

The "Equity Transfer Agreement" stipulates that Xunxing Co., Ltd. will purchase 32.4986% of the equity of Price Chain from Gan Qingcao, Zhu Ling and Common Dream , with a total equity consideration of 526 million yuan , of which 160 million yuan will be used as a guarantee before Gan Qingcao, Zhu Ling and Common Dream fulfill their performance compensation commitments, and will be jointly managed in accordance with the company's notification .

The Profit Compensation Agreement ( i.e. the "Performance Betting Agreement" ) stipulates that Gan Qingcao, Zhu Ling and Common Dream must commit to achieving net profits of no less than 100 million yuan, 160 million yuan and 250 million yuan during the performance betting period ( 2017-2019 ) , and the total profit for three years must not be less than 510 million yuan , otherwise cash compensation must be paid .

In 2017 , Jiazhilian's net profit after deducting non- recurring items was 96.8696 million yuan, which failed to meet its performance commitments; in the first half of 2018, its net loss reached 19.0758 million yuan. As its operating conditions could not be improved, Xunxing Co., Ltd. demanded compensation for its gambling commitments, but Gan Qingcao and Zhu Ling proposed to modify the agreement, limiting the net profit of the gambling to 260 million yuan . After being rejected , they lost interest in operating the company and deliberately repaid the bank loan in advance , creating a tight financial situation for Jiazhilian , which affected its normal operations.

In September 2018, Gan Qingcao went to the bank counter without authorization to report the loss of the account where he kept the 160 million yuan gambling guarantee , and then transferred 53.274 million yuan of co-managed special funds into his personal account . Xunxing Co., Ltd. had to apply for judicial freezing of his account.

Based on the above-mentioned breach of contract operations , Xunxing Co., Ltd. filed an arbitration application with the China International Economic and Trade Arbitration Commission , requiring the gambling party to pay performance compensation of 1.014 billion yuan and liquidated damages of 526,500 yuan , and to pledge and register the 2.126 million shares of Xunxing Co., Ltd. under its name to the party designated by Xunxing Co. , Ltd.

However, Gan Qingcao, Zhu Ling and Common Dream refused to comply with the ruling. In 2021 , the Quanzhou Intermediate People's Court accepted Xunxing Co., Ltd.'s application for compulsory execution against the three parties , froze the executed persons according to law, and transferred to Xunxing Co., Ltd. the funds deposited by Gan Qingcao in the Jinjiang Longhu Branch of Quanzhou Bank, about 122 million yuan , in the same year .

Later in January this year, about 31.34% of the equity of Jiazhilian held by the above three persons subject to execution were auctioned according to law, but no one bid for the first and second auctions and the auction failed . Later, according to relevant regulations , it was ruled that these equity shares should be paid at 26.391 million yuan to repay the debt . In June, the above equity shares were transferred to Xunxing Co. , Ltd.

In March , the Quanzhou Intermediate People's Court publicly auctioned 2.126 million shares held by Gan Qingcao in accordance with the law , and Xunxing Co., Ltd. received 10.2782 million yuan in stock auction funds .

So far, as of June 20 , Xunxing Co., Ltd. has recovered a total of 158 million yuan in execution funds , less than 20 % of the 1 billion yuan. Most of the funds are now in a difficult situation to recover as Gan Qingcao is living in exile overseas.

Seven years after the merger , the price chain is still dragging down Xunxing shares

Does Xunxing Co., Ltd. regret entering the cross-border e-commerce market? We don’t know the answer.

In 1992 , Xunxing Co., Ltd. was founded in Fujian . Relying on zippers , it stood at the top of the industry. 14 years later (2006), it rushed for IPO and became China's "No. 1 zipper stock."

Thanks to these zippers, the market value of Xunxing Co., Ltd. exceeded 10 billion yuan in 2016. However, in the same year, the original founder Shi Nengkeng sold 25 % of the shares to Wang Lijun, the actual controller of Tianjin Huizefeng, for 2.5 billion yuan , and the actual controller changed .

After Wang Lijun became the actual controller, he quickly paid attention to cross-border e-commerce. In 2016, it was still an era when you could make money in cross-border e-commerce. But unfortunately, it was only here that Wang Lijun suffered his first setback in Xunxing Shares.

After the acquisition of Jiazhilian in 2017, Xunxing Co., Ltd. under Wang Lijun's control was transformed into a cross-border enterprise. However, Jiazhilian failed to complete the performance bet in the first year, and then began a long road to turn losses into profits.

The financial report shows that before the chain of the acquisition price, from 2013 to 2015, Xunxing Co., Ltd.'s annual revenue reached 1.006 billion yuan, 1.05 billion yuan, and 1.041 billion yuan, respectively, all exceeding 1 billion (in fact, this revenue level has been maintained since 2010); the net profit in the same period was 60.61 million yuan, 78.20 million yuan, and 71.97 million yuan, respectively .

In 2016, although Xunxing Co., Ltd.'s annual revenue "only slightly" increased to 1.175 billion yuan, its net profit had a huge breakthrough, reaching 119 million yuan.

After the acquisition of Price Chain in 2017, Xunxing's annual revenue soared to 1.86 billion yuan, but its net profit was only 119 million yuan. From the specific figures, it was 118,495,872.16 yuan in 2016 and 118,993,445.82 yuan in 2017. In other words, after the acquisition of Price Chain, Xunxing's overall profit increased by only 497,600 yuan, less than 500,000 yuan .

According to the 2017 financial report, Xunxing Co., Ltd.'s main business - zipper business achieved sales revenue of 1.424 billion yuan, a year-on-year increase of 21.19%, and a net profit of 102 million yuan; in the same year, Jiazhilian's revenue was 868 million yuan. Based on a 65% stake, Xunxing Co., Ltd. increased its revenue by 435 million yuan, but due to the increase in financial, intermediary and other expenses caused by mergers and acquisitions, the total profit failed to increase.

In 2018, Xunxing Co., Ltd. had a total revenue of 2.273 billion yuan, a net loss of 650 million yuan, and a non-net profit loss of 753 million yuan; among them, the zipper business had a revenue of 1.497 billion yuan, and the cross-border e-commerce business (Jiazhilian) had a revenue of 775 million yuan, a net loss of 74.93 million yuan, and a non-net profit loss of 75.89 million yuan .

Due to the chain of acquisition prices, the goodwill value of Xunxing Co., Ltd. also took a "roller coaster", increasing by 748 million yuan in 2017 and decreasing by 748 million yuan in 2018, a decrease of 100%.

As a result, this year, the total net profit attributable to ordinary shareholders of Xunxing Co., Ltd. decreased by 769 million yuan compared with the same period in 2017 , a decrease of 646.02%. Although the profit of the zipper business increased compared with the same period of the previous year , the goodwill impairment provision was 748 million yuan , and the consolidated profit of Jiazhilian also decreased year-on-year .

While net profit plummeted, Xunxing Co., Ltd. also received a notice of investigation.

In October 2018, the China Securities Regulatory Commission sent an "Investigation Notice" stating that it was suspected of violating laws and regulations in information disclosure. If Xunxing Shares is subject to administrative penalties by the China Securities Regulatory Commission and is deemed to have committed a major violation, or is transferred to the public security organs for violations, Xunxing Shares will be subject to a delisting risk warning. After thirty trading days of the warning, the stock will be suspended, and the Shenzhen Stock Exchange will need to decide the destination of its A shares within fifteen trading days.

In December last year , Xunxing Co., Ltd. issued a series of announcements regarding the investigation , stating that the company's actual controller Wang Lijun was suspected of " manipulating " Xunxing Co., Ltd., and the controlling shareholder Tianjin Huizefeng Enterprise Management Co., Ltd. and shareholder holding more than 5% of the shares Fujian Xunxing Group Co., Ltd. were suspected of illegal and irregular information disclosure, and were all filed by the China Securities Regulatory Commission on December 4 .

In 2019, Wang Lijun was also arrested by the Chongqing Municipal Public Security Bureau on suspicion of insider trading . After that , the First Branch of the Chongqing Municipal People's Procuratorate reviewed the case and found that his crime was minor and that he had surrendered himself. According to relevant regulations, the Procuratorate issued a "Decision Not to Prosecute" against him.

Now, after nearly six years, the investigation results of the case have not yet been released. Xunxing Co., Ltd. stated that the investigation by the CSRC is still ongoing and it has not yet received any conclusive opinions or decisions from the CSRC , but this is always a "sword of Damocles."

Today, Xunxing Co., Ltd. is still trying to clean up the mess caused by the actual controller and Jiazhilian.

From 2019 to 2022, Xunxing Co., Ltd.'s annual revenue reached 1.919 billion yuan, 1.59 billion yuan, 2.262 billion yuan, and 2.112 billion yuan, respectively, and its net profit reached 55 million yuan, 200 million yuan, 126 million yuan, and 82 million yuan, respectively. The non-net profit was 59 million yuan, 35 million yuan, 121 million yuan, and 87 million yuan, respectively.

During the same period, Jiazhilian's revenue was 474 million yuan , 375 million yuan, 550 million yuan and 412 million yuan respectively ; its net losses were 58.58 million yuan , 24.40 million yuan , 9.89 million yuan and 68.47 million yuan respectively .

Judging from the overall revenue and net profit, the zipper business of Xunxing Co., Ltd. contributed the most. If this carriage had not been able to run, Xunxing Co., Ltd. would have been dragged down by the chain of price and would have been half-crippled if not dead.

In terms of last year's revenue, Xunxing Co., Ltd. sold 2.054 billion yuan, with a net profit of 121 million yuan and a non-net profit of 124 million yuan. However, the cross-border e-commerce sector that Jiazhilian is responsible for still showed no signs of improvement, with revenue falling to 336 million yuan and a net loss of 12.3 million yuan .

Will Xunxing Co., Ltd. abandon the seemingly unsustainable Price Chain? Perhaps not for the time being.

In an investor relations interaction in May this year , Xunxing Co., Ltd. stated that in the first quarter of this year, the losses of cross-border e-commerce business have been shrinking continuously. In order to turn this part of the business from loss to profit this year, the company is currently strengthening product planning, increasing investment in original products, developing new product lines, creating popular products, optimizing inventory management, increasing platform expansion, and overall improving the comprehensive operational capabilities of the management team.

Will Xunxing succeed? Can it reverse the current situation? We can only wait for the answer given by time.

What is the fate of backdoor listing?

In addition to Jiazhilian, several other big sellers in the cross-border industry that went public through backdoor listings also went from glory to decline. And this trend of backdoor listings in the cross-border industry to rush into the A-share market started with Global Easy Buy.

Xu Jiadong, the founder of Global Easy Shopping, is a fellow student of Gan Qingcao at Peking University. He and Gan Qingcao also entered the cross-border e-commerce circle at the same time.

During the early explosive cross-border dividends, Global Easy Shopping built multiple self-operated vertical websites , such as Gearbest, which focuses on 3C electronic products , and ZAFUL, a fast fashion platform that competes with ZARA . It also established a firm foothold on Amazon early on and created its own myth.

It is reported that in 2014, Global Easybuy's annual revenue reached 1.416 billion yuan. In order to seek a quick listing, Xu Jiadong wanted to use a shell company, and at this time the founder of Baiyuan Pants also set his sights on the cross-border e-commerce field, and the two coincided.

In 2014, Baiyuan Pants Industry acquired Global Easybuy for over 1 billion yuan. The following year, the company was renamed " Kuomentong " and became the "first cross-border e-commerce stock" in the A-share market .

There are usually performance bets behind backdoor listings, and Global Easy Shopping must promise that its net profit will not be less than 65 million, 91 million, 126 million and 170 million in the four years from 2014 to 2017. If this is not achieved, Xu Jiadong and Global Easy Shopping's original major shareholders will compensate in cash or shares .

Fortunately, GlobalE-Commerce's two independent websites and Amazon channels have strong performance. Take Gearbest and ZAFUL as examples:

Gearbest was once ranked in the top 30 in global e-commerce traffic, and ranked in the top five in e-commerce websites in many developed countries. It has tens of millions of registered users worldwide, and its average monthly visits once reached 189 million times. Other data show that the smart home and small appliances categories on its website account for 60% of the market share in Europe and the United States. From 2018 to 2021 , for four consecutive years, Gearbest has been on Google's list of the top 50 Chinese brands going overseas.

ZAFUL 's sales growth rate reached 310% in 2017. From 2018 to 2021 , for four consecutive years, ZAFUL was listed in the "Annual BrandZ™ Top 50 Chinese Global Brands" list . In 2021, in the segmented fast fashion e-commerce list, ZAFUL ranked second only to SHEIN . At its peak , ZAFUL 's average monthly visits reached 130 million , and the total number of registered users reached 53.0963 million.

In order to achieve the bet target, Global Easy Shopping also frantically expanded its SKUs.

Data shows that in 2016, its SKUs exceeded 350,000, and by the end of 2018, the number of SKUs of Gearbest alone was close to one million .

The massive SKUs require a large number of cooperative suppliers. During the boom years, Global Easy Shopping had more than 10,000 cooperative suppliers , more than 2 million online SKUs, more than 140 million registered users, and the daily shipment volume exceeded 200 tons .

In 2017 and 2018, Global Easy Shopping achieved revenue of tens of billions , accounting for 81% and 58% of Cross-Border Link’s revenue respectively .

However, after the performance betting period, Global Easy Shopping fell into an inexplicable decline, causing its parent company Cross-Border Link to start making losses. The net profit dropped from 623 million yuan in 2018 to a net loss of 2.7 billion yuan in 2019 overnight , and a loss of 2 billion yuan in 2020.

With losses exceeding 2 billion yuan for two consecutive years, Cross-border Communication was labeled as "ST". In 2021, Cross-border Communication sold its shares in Paton for 2 billion yuan , thereby turning losses into profits, with a net profit of more than 673 million yuan that year .

In 2022, Cross-Border Link's profit fell again , leaving only 17.95 million yuan ; in 2023, it suffered a net loss of 9.69 million yuan. After five consecutive years of declining revenue and negative net profit, Cross-Border Link was questioned by the Shenzhen Stock Exchange. In the first quarter of this year, Cross-Border Link's revenue was 1.276 billion yuan, and its net loss had reached 17.41 million yuan. The loss in one quarter was nearly twice that of the whole year of 2023 .

Two years ago, Xu Jiadong, the founder of Global Easy Shopping, was investigated for suspected occupational embezzlement ; last year, Global Easy Shopping officially declared bankruptcy; now, Cross-border Link is mired in debt, and its helmsman Yang Jianxin is selling off shares ...

Jiazhilian, Youkeshu and Zebao, which followed the example of Global Easy Shopping and went public through backdoor listing, are now behind bars. Tongtuo was sold to Huakai Yibai by Huading for 700 million yuan.

Once they fall, it is difficult to stand up again. After years of ups and downs, how can they reverse their future destiny in defeat?

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Avoid debt