Huakai Yibai to spend 1.5 billion to build South China headquarters

Many big sellers in the cross-border circle have "died" on the road to gambling, but Yibai Network has exceeded the gambling agreement for five consecutive years. Last year, it made a net profit of nearly 500 million yuan and was going to pay a performance bonus of 90 million yuan, which made everyone in the cross-border circle envious.

Is cross-border e-commerce losing ground? Judging from Huakai Yibai's performance, this is not the case. Its move to spend 1.5 billion to build a South China headquarters to expand its business has "refuted" this doubt.

Spending 1.5 billion! Huakai Yibai's South China headquarters will be located in Zhongshan

The last time we saw a large-scale headquarters construction in the cross-border circle was at the end of 2022, when Anker Innovations spent 1.542 billion yuan to buy a building in Shenzhen to build its southern headquarters. This year, Huakai Yibai also spent more than 1 billion yuan to buy land and build its headquarters.

Not long ago, the super-seller Huakai Yibai issued an "Announcement on Overseas Investment to Establish a Wholly-Owned Subsidiary and Purchase Land Use Rights".

In the announcement, Huakai Yibai stated that it had signed the "Zhongshan Cuiheng New District Project Investment Agreement" with Zhongshan Torch Development Zone Linhai Industrial Park Development Co., Ltd., and planned to invest in the establishment of the Zhongshan Project Company in the Cuiheng New District of Zhongshan City, and purchase land use rights to build Huakai Yibai's South China headquarters. The total investment in the project is planned to be 1.5 billion yuan (which may increase later).

Huakai Yibai stated that it will establish a new wholly-owned subsidiary in a timely manner according to the progress of the investment project , and the newly established subsidiary will be the implementing entity for the investment and construction of Huakai Yibai's South China headquarters.

The land use right transferor for this land purchase is the Zhongshan Natural Resources Bureau , involving an area of ​​approximately 56,100 square meters ( equivalent to approximately 84.14 acres) , and the total construction scale of the project is approximately 220,000 square meters (gross floor area) .

The South China headquarters to be built in the future will include design and R&D offices , IT technology centers , core product production and assembly lines , smart warehousing , product experiments, testing, and inspection rooms , and other supporting facilities .

Huakai Yibai aims to build a large-scale, clustered, innovative, and branded cross-border export e-commerce industry demonstration base with independent intellectual property rights, advanced technology, and a certain scale.

Why spend 1.5 billion to set up the South China headquarters in Zhongshan?

As cross-border e-commerce competition becomes increasingly fierce, the role of supply chain and logistics in supporting the market position of big sellers is self-evident. Huakai Yibai also believes that this move can enhance its competitiveness.

On the other hand, " general products + high-quality products + comprehensive cross-border e-commerce services " have always been its three pillars for conquering the market. However, with the increasing demand for high-quality products, Huakai Yibai is also eager to expand into emerging business areas . Improving its production and R&D departments will enable it to extend from general products to high-quality products and comprehensive cross-border e-commerce services , and better build a high-quality brand .

As a city of home appliances, Zhongshan is also conducive to expanding the market for home appliances and other categories .

At present, the project has officially started preparations, and Huakai Yibai has officially been recruiting various types of engineers.

In recent years, many cross-border super-sellers have been on the decline, but Huakai Yibai is still riding the cross-border boom.

Huakai Yibai intends to acquire 100% equity of Damaitongtuo

At the end of last year ( December 5), Shenzhen Damaitongtuo's parent company Huading Holdings announced that it would sell 100% of the equity of its wholly-owned subsidiary Shenzhen Tongtuo Technology and all operating assets related to its main business to Huakai Yibai , including but not limited to trademarks, patents, cross-border e-commerce platform stores, inventory assets , etc. The two parties have signed a "Cooperation Framework Agreement".

The most important thing is that this time Huakai Yibai has to acquire Huakai Yibai in full cash, and within 5 working days after the agreement is signed and takes effect , Huakai Yibai paid a one-time earnest money of RMB 100 million .

According to Huakai Yibai's announcement, the acquisition has not yet been officially finalized. The intermediary agency hired by Huakai Yibai is actively carrying out due diligence, auditing, and evaluation of Tongtuo .

Please note that if during the due diligence period, Tongtuo encounters a series of "substantial obstacles" problems , such as the closure of its third-party platform stores and its own platform PayPal accounts , and the freezing of its funds , and these problems cannot be resolved before the asset delivery, Huakai Yibai will have the right to terminate the agreement and Tongtuo will have to return the earnest money.

In 2022, Tongtuo's parent company Huading Holdings had a revenue of 6.548 billion yuan, a year-on-year decrease of 24.33%, mainly due to the decrease in sales revenue of the cross-border e-commerce segment.

Huading Holdings stated that its cross-border e-commerce business continued to be affected by the shrinking demand caused by the global economic downturn, the Amazon incident, and the platform's VAT withholding policy, resulting in a decline in revenue. At the same time, it was compounded by asset impairment provisions such as the Paypal incident, so it has been unable to turn losses into profits.

It was not until the first half of 2023 that Huading's cross-border e-commerce business segment (Tongtuo) finally achieved profitability. It is reported that Tongtuo achieved operating income of 1.676 billion yuan. Although the revenue decreased by 0.18% year-on-year, the total profit reached 4.5458 million yuan, a year-on-year increase of 102.35%, and the net profit reached 3.5078 million yuan, a year-on-year increase of 101.8%.

Huading shares sold out just when the business was on the rise, perhaps because they were too busy to do anything else.

Not long ago, Huading Co., Ltd. issued an announcement on the expected decrease in performance in 2023, estimating the net profit in 2023 to be 135 million yuan to 200 million yuan , a decrease of at least 229 million yuan compared with 2022 , and a net profit decline of 53.34% to 68.91% .

Perhaps for this reason, Huading Co., Ltd. sold Tongtuo in order to focus more on its core business.

For Huakai Yibai, the acquisition of Tongtuo can make up for its business "shortcomings", such as in operating model, category and product strength.

Tongtuo has the brand-building capability that Huakai Yibai does not have. Having been active in the cross-border e-commerce industry for more than ten years, it has created general category brands such as TOOARTS and TOMTOP , as well as boutique brands such as GOOLSKY, DODOCOOL, ANSELF and KOOGEEK . Now Huakai Yibai is vigorously developing its boutique brand business, which is also one of the purposes of building its South China headquarters.

In addition, Huakai Yibai can also supplement its advantageous categories such as instruments and meters, office supplies, musical instruments and tools in the market through Tongtuo .

Building a headquarters and acquiring big sellers, all of this is based on the fact that Huakai Yibai has money and sufficient confidence in the market.

In conclusion:

Before officially announcing the establishment of its South China headquarters, Huakai Yibai already announced its annual performance for 2023.

In the past year, Huakai Yibai continued its brilliant performance, with annual net profit reaching approximately 320 million yuan to 355 million yuan, an increase of 47.99% to 64.18% compared with 2022 .

Among them, Huakai Yibai's cross-border e-commerce business segment Yibai Network is expected to achieve revenue of approximately 6.4 billion yuan to 6.6 billion yuan, and net profit may reach 490 million yuan to 510 million yuan .

At the same time, this is the fifth consecutive year that Yibai Network has exceeded its performance bet with Huakai Yibai. Last year, Yibai Network calculated and extracted excess performance rewards of more than approximately 90 million yuan throughout the year , and received excess performance rewards of 42.5 million to 52.5 million yuan in the first three quarters .

In 2021, it was successfully sold to Huakai Yibai. Many voices in the industry said that Yibai Network was actually a backdoor listing. On the other hand, many backdoor listings in the cross-border circle have sold well, but most of them are now on a downward trend or almost "disappeared" in the cross-border circle, but Yibai Network's momentum is getting stronger.

Now, Huakai Yibai, which has acquired Yibai Network, is not only going to acquire another cross-border leader Tongtuo in full, but is also going to build its South China headquarters with a huge investment. In the cross-border e-commerce race, Huakai Yibai is indeed running fast.

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