Plagued by lawsuits and suffering huge net losses, Cross-Border Link is having a hard time surviving the cold winter!

From a prosperous time to a deep quagmire, people in the industry now talk about Cross-Border Link with more regret. Since 2019, Cross-Border Link's revenue and net profit have been on a downward trend. Even though it turned a profit in 2022, its net profit in 2023 was a loss of nearly 10 million yuan. Saf, which had tried hard to stay, also had frequent lights on and a loss of nearly 100 million yuan.

When the financial report was released, Cross-Border Link brought the company's recent litigation situation to the table, which not only involved new lawsuits, but also the progress of previous major litigation cases. The amount involved was as high as hundreds of millions of yuan, which can be said to be internal and external troubles.

Cross-border Communication is embroiled in litigation involving a total amount of 268 million yuan

As the big sellers released their financial reports, Cross-Border Link took the lead in announcing the company's new major lawsuits and the progress of previous major litigation cases.

Among them, there are two new lawsuits , in which Cross-Border Link is the plaintiff and several people including Paton's founding team (including Paton) are defendants. The basic facts of the case are disputes over infringement liability, and the amount involved in the lawsuit is 164 million yuan.

This case can be traced back to the time when Paton was sold. At that time, Cross-border Communication sold 100% of Paton's equity for 2.02 billion yuan, and Xiaomi and other investors took over. However, according to Cross-border Communication, some of the defendants took advantage of their positions to illegally pay themselves bonuses, which directly led to the assessed value of Paton being significantly lower than its actual value.

In the view of Cross-border Communication, the defendant's illegal bonus distribution directly led to the false reduction of the equity value of Paton by RMB 119 million. Considering that the price-to-book valuation method was used in the calculation, Cross-border Communication claimed 65% of the above-mentioned falsely reduced equity value, or RMB 77.62 million, as the principal of the infringement loss under this case. However, the specific situation still needs to be determined by the court.

Cross-border Communication does not seem to mind being entangled in lawsuits. The announcement data shows that the company and its subsidiaries have 14 other litigation and arbitration cases in execution procedures, involving a total amount of 268 million yuan; 12 of them are under trial, involving a total amount of 219 million yuan.

At the same time, some of Cross-Border Communication's previous litigation cases have also made new progress. In the loan case with China Construction Bank Corporation Zhaoqing Branch, the court decided in the final instance that Cross-Border Communication must repay the loan principal and interest to the bank within 10 days after the court's judgment takes effect, totaling 365 million yuan; Cross-Border Communication notified Yiwei Yihang and Xinhuo (Xiamen) Investment Co., Ltd. of the overdue equity transfer payment case. The court required Yiwei Yihang to pay 41.36 million yuan of equity transfer payment and related liquidated damages to Dama within 7 days after the judgment takes effect.

Although it is not uncommon for big sellers to be embroiled in lawsuits, the cases of Cross-border Communication are indeed complex and somewhat sad, ranging from financial loan disputes to equity transfer disputes to infringement liability disputes, and Cross-border Communication was mostly in a state of net loss during the period when these cases occurred. It can be said that Cross-border Communication, which has been embroiled in lawsuits, has not had a good life in recent years, or has been doing very poorly.

With a loss of nearly 10 million yuan and continued losses, can Cross-Border Link only rely on import e-commerce business?

At the end of March, Cross-Border Link released its 2023 financial report. In this report, we can see that Cross-Border Link's revenue and net profit both declined, with revenue decreasing by 8.8% to 6.616 billion yuan; net profit decreased by 153.98%, with a net loss of 9.69 million yuan.

In fact, before 2023, Cross-border Communication has already started a downward trend↓

In 2019, revenue fell to 17.9 billion yuan and net losses reached 2.7 billion yuan;

In 2020, revenue was 16.4 billion yuan and net loss reached 2 billion yuan;

In 2021, the company turned losses into profits, with a net profit of 674 million yuan, a year-on-year increase of 132.69%;

In 2022, net profit fell again to 17.84 million yuan;

In 2023, the net loss reached 9.69 million yuan.

Obviously, there are traces of the transformation of Cross-border Link. After the collapse of Global Easy Shopping, Cross-border Link began to go downhill and had to sell its cash cow Paton to save itself. However, after Paton was sold, Cross-border Link's cross-border business was no longer optimistic.

Even if Zaful strengthens its brand building and turns losses into profits in 2021, the crisis of Cross-border Communication has not been resolved from the root. The internal company is burdened with huge debts, and the hidden dangers of the previously rampant distribution model cannot be eradicated; the external market competition is becoming increasingly fierce, the platform traffic dividend is decreasing, but the competitors are still increasing. This may also be an important reason why Cross-border Communication, which finally took a breath in 2021, fell into a situation of declining net profit and even losses again.

On the other hand, the import and export ratio of Cross-border Communication seems to have reversed. As early as 2019, Cross-border Communication's export e-commerce business revenue was 11.417 billion yuan, accounting for 63.87% of the total revenue; but back to the past 2023, Cross-border Communication's export business revenue was only 461 million yuan, accounting for only 6.97% of the company's total revenue.

On the other hand, the revenue of import business reached 6.1 billion yuan, accounting for more than 90%. It has become a cross-border e-commerce company with import as the main business and export as the supplement. It also makes people wonder whether the export business of Cross-Border Link is no longer viable?

After three consecutive years of losses, Zaful, the most valued one, lost 87 million in 2023

In the export business, Zaful, which Cross-border Communication has tried so hard to keep, is the first to bear the brunt. Looking back, Zaful, founded in 2014, initially entered the European and American young women market with swimwear. It was once called by the industry as a rival to SHEIN and was listed on the overseas brand value list many times. At its peak, Zaful had tens of millions of users and over 100 million visits.

However, such a highly anticipated leading brand has been deteriorating in recent years, and its performance has been shocking.

As of the end of 2023, Zaful's revenue was 205 million yuan and its net profit loss was as high as 87.2602 million yuan, which has already lagged behind Cross-Border Link.

By comparing the data, it can be found that Zaful was able to maintain stable profits initially. Even when Cross-Border Link suffered consecutive huge losses in 2019 and 2020, Zaful remained profitable. At that time, industry media estimated that its revenue in 2020 would exceed 5.5 billion yuan.

Zaful's real collapse came after Global Easy Shopping collapsed in 2021. Zaful was divested and transferred to Sateng, operating independently as its own brand. However, Zaful also took on a huge debt burden and was besieged by debt collection suppliers. Since then, it has started three consecutive years of losses. From 2021 to 2022, Sateng's revenue dropped from 608 million yuan to 470 million yuan, and its net profit dropped from a net loss of 429 million yuan to a net loss of more than 80 million yuan.

In terms of traffic, Zaful also saw a cliff-like decline. In 2019, Zaful had an average of 23 million monthly active users, which shrank to 7.6867 million in 2021. By the end of 2023, Zaful's self-operated website had 57.4787 million registered users, but the average monthly active users were only 1.4717 million, a reduction of dozens of times.

At present, Zaful's development is going downhill and it is difficult to turn things around. As the core of Cross-border's export business, Zaful seems unable to save its decadent trend.

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