Is the sword of banning still making Zebao bleed?

Some people say that cross-border e-commerce seems to have a stable market share among the top players, but in reality, things are changing rapidly due to undercurrents.

A few years ago, Amazon, Wish and other companies were firmly established as the leading platforms. Now that Wish has been sold, TikTok Shop, Temu and other companies have emerged.

The "Five Tigers of Bantian" and the "Four Young Masters of South China City" have created cross-border e-commerce legends. Many of the big sellers in the past were wildly successful, but now they have almost disappeared and reported consecutive losses.

The ban has still caused pain to many big sellers, such as Youkeshu and Zebao.

Xinghui shares were also questioned because of Amazon's account blocking

Not long ago, Zebao's parent company, Xinghui Co., Ltd., announced its 2023 annual financial report as scheduled, and was questioned by the Shenzhen Stock Exchange.

Specifically, although Xinghui Co., Ltd.'s revenue in 2023 was 1.626 billion yuan, it was a decrease of 30.85% compared with the same period in 2022; in addition, although the loss was significantly reduced compared with 2022, it still lost 76.0925 million yuan.

Among them, Yien.com noticed that the Shenzhen Stock Exchange asked it to explain the subsequent impact of the Amazon account blocking incident .

Amazon’s account suspension is still a scar that is difficult to heal for big sellers. Not long ago, Yien.com reported the ongoing lawsuit between Youkeshu and Amazon over the account suspension.

And it is clear that Zebao has not yet completely escaped from this prison. Like other big sellers such as Youkeshu, Zebao also started out by selling products crazily on Amazon in the early days.

In 2021, six major brands under Zebo , including RAVPower, VAVA, Taotronics, Anjou, Sable, and Hootoo, were banned from selling on Amazon, and the related Amazon stores were also closed.

The annual report shows that in 2021, a total of 367 Zebao stores were closed on Amazon . As of the end of 2021, the balance of funds in the frozen stores was equivalent to approximately RMB 32.2301 million . Therefore, Xinghui Co., Ltd. made an impairment provision of 680 million yuan for the goodwill of the asset group in which Zebao is located, and an inventory impairment provision of 416 million yuan for the ending inventory of Zebao Technology.

In the same year, Zebao was hit hard by this incident, with its revenue falling 46.09% year-on-year , from 4.773 billion yuan in 2020 to 2.573 billion yuan in 2021, with a loss of approximately 886 million yuan.

In 2022, still affected by the account blocking incident, Zebao's revenue fell by 52.44% year-on-year to only 1.224 billion yuan.

In terms of specific sales volume, 3C product sales dropped sharply from 16.77 million units to 7.4 million units, a drop of 55.84%.

In addition, the amount of frozen Amazon store payments that cannot be recovered has reached 16.82 million yuan, and the amount of overdue payments that are expected to be unrecoverable is 13.17 million yuan .

In 2023, the situation has not improved. Zebao's revenue continued to decline by 33.99% to only 808 million yuan, and the sales volume of 3C products dropped by another 39.54%, from 7.4 million units to 4.48 million units . Moreover, the above payment has not been recovered, and Zebao's goodwill impairment provision is still 680 million yuan.

After the account blocking incident that year, Zebao urgently accelerated the "multi-platform, multi-channel" business strategy in the second half of the year, expanding third-party platforms, independent sites and offline channels such as Walmart, Ebay, Rakuten, Newegg, etc. As a result, non-Amazon channels brought Zebao 605 million yuan in revenue in 2021, an increase of 92.03% from 315 million yuan in 2020; the proportion of total cross-border e-commerce revenue was 23.47%, an increase of 16.87 percentage points year-on-year from 2020.

Does this mean that ZEBO has successfully reduced its reliance on Amazon alone? Probably not.

In 2021, Zebao's revenue on Amazon was 1.972 billion yuan. Although it was a decrease of 55.76% from 2022 (4.459 billion yuan), its share was still as high as 76.54% .

In 2022, its revenue from Amazon was 601 million yuan, a year-on-year drop of 69.53%, but it still accounted for 48.92% of its revenue. It can be seen that its revenue from independent sites and offline channels is also declining. Although other third-party platforms have grown by 107.73%, their revenue was only 181 million yuan, accounting for only 14.72%.

In 2023, Amazon channel revenue dropped another 28.60%, but still accounted for more than half (53.06%) with 429 million yuan. It can be seen that in the past year, Zebao's revenue in all sales channels has plummeted, with the third-party platform suffering the largest drop of 53.44%. The Amazon channel suffered the smallest loss .

Judging from these data, even if Zebao has a shadow on Amazon and intends to reduce its dependence, the current situation is that it is not adapting well to other platforms and channels.

I used to have a lot of good cards, but now I am in a mess

The Shenzhen Stock Exchange is paying attention to more than just the Amazon account blocking incident. The Shenzhen Stock Exchange has also questioned the subsequent impact on the company's cross-border e-commerce business regarding matters such as the payment of back taxes, the litigation between the parent company Xinghui Holdings and the original shareholders of Zebao, and the bankruptcy liquidation of the subsidiary Linyoutong.

In 2018, Xinghui Co., Ltd. purchased 100% of the equity of Zebao . 2018, 2019 and 2020 were the performance betting periods between Zebao and Xinghui Co., Ltd. Since then , all past businesses of the subsidiaries established by Zebao have been transferred to Xinghui Co., Ltd., which also laid some landmines.

In January this year , SKL, a subsidiary of Xinghui Holdings , received a tax payment notice from the Italian tax department. The tax years involved in the payment notice were 2017-2021 . The specific tax-related matters involved the period before the merger and acquisition closing and the performance betting period .

Specifically, SKL is a company established by Zebao for e-commerce procurement business and online business through registered stores on Amazon . The Italian tax department believes that the company has failed to pay VAT in full from 2017 to 2021. Therefore, it issued a tax payment notice to SKL , and the total tax and fines exceeded 6.4244 million euros .

Long before receiving this tax penalty notice, Xinghui Co., Ltd. also received a payment notice from the US tax department .

Specifically, STK is a subsidiary of Zebao Technology established in California, USA, and mainly conducts online business through registered stores on Amazon. The relevant US tax department determined that STK did not pay sales tax in full from 2016 to 2021, so it issued a tax payment notice to STK, with a total of US$2.3784 million in taxes and fines .

After being pursued for tax repayment by two major tax departments , Xinghui Co., Ltd. also stated that it would recover taxes and fines before the delivery date of the major asset restructuring target (December 31, 2018) and losses during the performance betting period from relevant parties (namely Zebao founder Sun Caijin, etc. ) in accordance with the provisions of the "Asset Purchase Agreement" and "Profit Forecast Compensation Agreement".

And because of these two taxes, Xinghui Co., Ltd. included them in the 2023 annual profit and loss, with the amount reaching 18.3275 million yuan, which is also one of the reasons for the net loss.

In April, Xinghui Holdings announced that it would file a lawsuit with the Shenzhen Intermediate People's Court , demanding that four former Zebao executives, including Sun Caijin, pay joint and several compensation for losses of approximately 243 million yuan .

Today, Zebao has been making losses for consecutive years, and Xinghui Shares has issued the " Announcement on Unrecovered Losses Reaching One-Third of the Total Paid-in Share Capital " for three consecutive years . As the bulk of business revenue, Zebao's inability to continue to make profits has brought great pressure to Xinghui Shares , and the original acquisition has now become a business burden.

A good hand of cards has now been played to pieces. Some people say that Zebao has been kicked off the table long ago. This former cross-border star has now fallen. How can it clean up its mess and return to the game as a winner?

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Zebao