A tree is sued again, and the compensation may exceed 10 million!

Although it is not uncommon for big sellers to be involved in arbitration cases, Youkeshu is involved in arbitration cases quite frequently. In the 12 months before July 2023, Youkeshu was involved in 18 major lawsuits.

Following the bankruptcy liquidation application of its subsidiary Shanghai Hyundai Shangyou Software in August, Youkeshu’s other subsidiary Huangyuanrun also ran into trouble, which is truly a misfortune.

After years of losses, Youkeshu’s largest source of revenue is no longer Amazon.

Youkeshu subsidiary sued again, arbitration amount exceeds 10 million

Recently, Youkeshu disclosed an announcement regarding a major arbitration matter involving its subsidiary.

The announcement mentioned that Youkeshu's holding subsidiary Huangyuanrun Technology Co., Ltd. (hereinafter referred to as "Huangyuanrun") and Youkeshu recently received the November 10th hearing notice and other documents delivered by the Beijing Arbitration Commission, and the applicant is Jiuqi Digital Communication (Hong Kong) Co., Ltd., hereinafter referred to as "Jiuqi Digital".

The reason why Jiuqi Digital filed for arbitration was that it had a service contract dispute with Huangyuan Run and Youkeshu Network, with the amount involved being approximately US$1.4207 million.

It is understood that as early as July 2020, Huangyuanrun and Jiuqi Digital signed a "Promotion Service Agreement" on the Facebook platform, agreeing that Jiuqi Digital would provide promotion services for it. Among them, Youkeshu Network, as a guarantor, issued a "Maximum Guarantee Letter" to Jiuqi Digital, providing a maximum guarantee for the bonds enjoyed by Huangyuanrun (within US$5.31 million).

It is common sense that after signing the "Promotion Service Agreement", the cooperation between the two parties should have proceeded smoothly according to the contract, but the reality has changed. Jiuqi Digital claims that the company provided promotion services to Huangyuanrun normally, but Huangyuanrun did not pay the service fee within the period stipulated in the contract.

Therefore, Jiuqi Digital filed a lawsuit with the Beijing Arbitration Commission, demanding that Huangyuanrun pay US$1.4207 million, including US$1.0224 million in service fees, liquidated damages of RMB 398,300, attorney fees paid by Jiuqi Digital for the arbitration of this case, and Youkeshu's joint and several liability for Huangyuanrun's obligations.

In fact, this is not the first time that a company under Youkeshu has encountered problems. The series of problems faced by its subsidiaries have also widely implicated Youkeshu.

In August, Shanghai Modern Shangyou Software Co., Ltd. (hereinafter referred to as "Shanghai Shangyou"), a wholly-owned subsidiary of Youkeshu, received a "Notice" from the court that it was filed for bankruptcy and liquidation. This was due to a complaint filed by an employee. Due to a labor dispute with Shanghai Shangyou, employee Zhu took Shanghai Shangyou to court. The court ruled that Shanghai Shangyou should pay Zhu 101,500 yuan, but because Shanghai Shangyou had no executable property, the court ruled to terminate the execution procedure.

Under this series of cases, including the joint and several liability of subsidiaries and the bankruptcy of subsidiaries, Youkeshu will inevitably have an impact on the current or future profits. In July, Youkeshu was sentenced to pay the principal of 184.92 million yuan and interest, penalty interest, compound interest, etc. to Pudong Development Bank in a dispute over overdue M&A loans, which will also increase Youkeshu's debt. Before July 2023, Youkeshu was involved in many major lawsuits.

12 months before July 2023: 18 major lawsuits against Youkeshu

According to the Shenzhen Stock Exchange, major litigation and arbitration matters involving a company should be calculated cumulatively over twelve consecutive months. If the cumulative amount involved reaches more than 10% of the absolute value of the company's latest audited net assets and the absolute amount exceeds RMB 10 million, it must be disclosed in accordance with the regulations.

In July, Youkeshu disclosed 18 major lawsuits in the first 12 months of July 2023. On average, there were lawsuits every month, mostly service contract disputes, labor disputes and sales contract disputes. Only Youkeshu was the plaintiff in two lawsuits, and the highest amount involved reached 6.8077 million yuan.

Among them, there are 7 cases in which the defendant is directly Youkeshu . The labor dispute in November 2022 has been adjudicated, involving an amount of 517,600 yuan; the labor dispute in March 2023 involved 413,700 yuan and has not yet been adjudicated; the sales contract dispute with Shenzhen Shengtai Intelligent Innovation Technology Co., Ltd. in May is currently in the first instance, involving an amount of 281,400 yuan; the road freight transport contract dispute with 4PX in June is in the first instance, involving an amount of 6,807,700 yuan. In addition to the above cases, one case has been withdrawn, one has been settled, and one has been judged at first instance, rejecting the plaintiff's request.

Not only is Youkeshu itself facing constant lawsuits, the current situation of its subsidiaries is not much better either.

In addition to Huangrunyuan, which we mentioned recently, before July this year, Youkeshu's subsidiary Shanghai Xiandai/Beijing Shangyou Software Co., Ltd. had already been involved in several cases, with the plaintiff applying for changes in company registration disputes. If Shanghai Shangyou is declared bankrupt, the relevant disputes are likely to be transferred to Youkeshu, which is likely to increase the burden on Youkeshu.

Net loss of nearly 60 million in half a year, the largest source of Youkeshu's income is not Amazon

In the first half of this year, Youkeshu's revenue was 235 million yuan, down 44.40% from the same period last year; its net profit loss was 59.2862 million yuan, up 29.28% from the same period last year. So far, Youkeshu has been losing money for three consecutive years.

The continuous decline in revenue and the continuous loss in net profit have made things worse for Youkeshu. After all, before the account was blocked, Youkeshu's performance had almost never declined. In addition, Youkeshu previously announced that the overdue balance of the acquisition loan was as high as 200 million yuan, and the company's cash flow was still at risk of shortage.

Cross-border business has always been the focus of Youkeshu, but Amazon, which used to account for the majority of its revenue, is no longer its main source of revenue. In the first half of the year, Youkeshu's sales on Amazon were only 49.89 million yuan, down 54.81% from the same period last year.

On the contrary, the revenue on the Shopee platform has exceeded that of Amazon. In the first half of this year, Shopee contributed 51.4793 million yuan in sales to Youkeshu, becoming the third-party platform with the highest revenue for Youkeshu. However, compared with the same period last year, the sales of the Shopee platform are also in a downward trend.

This may be the result of the adjustments made by Youkeshu to cope with the negative impact of the account blocking wave. At that time, in order to reduce its dependence on Amazon's single platform, Youkeshu began to delve into platforms such as Shopee and Walmart and explore the Southeast Asian market. The fact is that Shopee and Walmart have squeezed into Youkeshu's top five revenue platforms, but its dependence on Amazon is still at a high level.

In addition, many industry insiders mentioned Youkeshu’s current situation: poor yield, low profitability, poor performance, low growth, high debt, weak debt repayment ability, and high inventory. The overall poor financial condition caused Youkeshu to rank at the bottom of the industry, and industry insiders were also worried about the future direction of Youkeshu.

Under the double pressure of internal performance and external market, what kind of situation will Youkeshu face in the future?

There is a tree

defendant

Amazon