Shenzhen Dasai has fallen! It has declared bankruptcy

A few days ago, Cross-border E-commerce issued an announcement that its subsidiary Global Easy Shopping had been declared bankrupt. Thus ended a generation of leading cross-border e-commerce companies.

Global Easy Shopping was declared bankrupt

Recently, Cross-border Communication issued an announcement on the progress of the bankruptcy liquidation of a wholly-owned subsidiary. The core content is that on August 31, 2023, the company received the "Civil Ruling" from the Taiyuan Intermediate People's Court, and the ruling results are as follows:

"This court believes that the application by the administrator of Shenzhen Global Easy Shopping E-Commerce Co., Ltd. to declare Shenzhen Global Easy Shopping E-Commerce Co., Ltd. bankrupt complies with the law and should be supported. In accordance with the provisions of Article 107, paragraph 1 of the Bankruptcy Law of the People's Republic of China, the ruling is as follows: Shenzhen Global Easy Shopping E-Commerce Co., Ltd. is declared bankrupt. This ruling shall take effect from today."

Before this, this tug-of-war had been going on for a long time:

On November 24, 2021, Shenzhen Zhongan Xinshi Technology Co., Ltd. applied to the Intermediate People's Court of Taiyuan City, Shanxi Province for bankruptcy liquidation of Shenzhen Global on the grounds that Shenzhen Global could not repay its due debts and obviously did not have the ability to repay.

On November 30, 2021, the Taiyuan Intermediate People's Court issued a "Civil Ruling", ruling to accept the bankruptcy liquidation application filed by the applicant Zhongan Xunshi against the respondent Shenzhen Global, and at the same time issued a "Civil Ruling", ruling to seal up all the properties of Shenzhen Global.

On December 3, 2021, the Taiyuan Intermediate People's Court issued a "Decision" designating Shanxi Guojin Law Firm as the Shenzhen Global Administrator.

On December 10, 2021, Shenzhen Global's administrator, Shanxi Guojin Law Firm, has completed the handover of Shenzhen Global's official seal, certificates, account books and other materials, and has taken over the management rights of Shenzhen Global's various assets and businesses. The company has lost control of Shenzhen Global, and Shenzhen Global will no longer be included in the company's consolidated financial statements.

Since December 2021, Shenzhen Global will no longer be included in the consolidated financial statements of Cross-border Link, and its bankruptcy liquidation will no longer have an impact on its subsequent operations. Cross-border Link has finally gotten rid of this burden. Now that the hammer has fallen, the former "cross-border leader" Global Easy Shopping has completely withdrawn from the industry stage.

Annual revenue once exceeded 10 billion, why did Global Easybuy fall

Global e-commerce is a symbol of the cross-border e-commerce era. Industry insiders believe that Global e-commerce is the Huangpu Military Academy of Shenzhen's cross-border e-commerce. Almost all the overseas market departments of Shenzhen companies have former employees of Global e-commerce. The former glory of this big seller can be seen from the description of an industry insider.

In 2016, the Hangzhou Economic and Trade Bureau organized a group of traditional foreign trade enterprises to visit Shenzhen cross-border enterprises, hoping that they would learn from the advanced experience of Shenzhen cross-border enterprises. A foreign trade person who participated in the event, "Factory Director in the Wind", said: "One of the companies we visited was called Global Easy Shopping. To be honest, it was very shocking. At that time, it had thousands of employees and a scale of nearly 10 billion. The key is that it is growing exponentially. Traditional foreign trade simply cannot do this. At that time, several senior executives of the company shared their model without reservation, and I felt that the top-level design of this company was very impressive."

At this time, Global Easy Shopping had become one of the leading companies in the industry, but had not yet reached its peak.

Global was founded in 2007. Its founder, Xu Jiadong , graduated from Peking University and obtained a doctorate from the University of California, Davis . He was one of the few highly educated talents in the cross-border circle at that time. In 2014, Global Easy Shopping had built multiple self-operated vertical websites for clothing , 3C electronics and other categories , and also did well on Amazon, with annual revenue reaching 1.416 billion yuan.

In the same year, the listed company Baiyuan Pants Industry came here and acquired Global Easy Shopping for over 1 billion yuan. The following year, the company was renamed "Kuomentong" and became the first cross-border e-commerce company listed on the A-share market.

Behind the scenes, Global Easybuy and its senior executives, including Xu Jiadong, were under a gambling agreement. According to the promise, Global Easybuy 's net profit from 2014 to 2017 should be no less than 65 million, 91 million, 126 million and 170 million respectively, but from 2012 to the first quarter of 2014, its net profit was only 13.91 million, 30.1461 million and 11.6354 million. If the performance cannot be achieved, Xu Jiadong and other former major shareholders will have to pay compensation in the form of cash or shares.

The agreement required Global Easy Shopping to double its profits, but how easy was that? In order to achieve its goal, Global Easy Shopping started to expand at full speed. In 2016, Global Easy Shopping's SKUs exceeded 350,000. At the end of 2018, the number of SKUs of its independent website Gearbest was close to one million. From 2017 to 2018, Global Easy Shopping's revenue exceeded 10 billion yuan, contributing 81% and 58% of Cross-border E-Commerce's performance, becoming an industry benchmark.

At its peak, Global E-Commerce was the No. 1 cross-border export B2C in China, with a turnover of over 12.4 billion, more than 10,000 cooperative suppliers, more than 2 million online SKUs, more than 140 million registered users, and a daily shipment volume of over 200 tons. Even today, it is rare for a cross-border e-commerce company to reach such a large scale.

However, the situation took a sharp turn for the worse in 2019, with Global Easybuy's revenue falling to 8.506 billion yuan, and then to 5.629 billion yuan in 2020. In 2019, Cross-border Link lost about 2.7 billion yuan, and in 2020, the loss was as high as 3.374 billion yuan, of which Global Easybuy's loss was as high as 2.95 billion yuan. After that, Global Easybuy's performance continued to decline and never recovered.

An insider analyzed the main reasons for the decline of Global Easy Shopping: In 2017, Global Easy Shopping's business was booming, but blind expansion led to insufficient operating funds and a large amount of arrears in payments to suppliers; starting in 2019, banks began to withdraw loans in large quantities, causing difficulties in its capital operation; at the same time, poor internal management, a surge in bad inventory backlogs, and incomplete inventory records of goods formed a vicious cycle. Excessive inventory became a big hole for Global Easy Shopping, and its capital chain was tight. Continued serious losses made it difficult to move forward, and Global Easy Shopping was finally filed for bankruptcy in 2021.

At this time, the "big brother of the industry" has been embroiled in lawsuits. According to Qichacha information, it currently has more than 999 lawsuits, including sales contract disputes, transportation contract disputes, labor contract disputes, etc. The number of judicial cases in which it is the defendant has reached 395, with a case amount of 170 million yuan, including 224 sales contract disputes . However, judging from the number of suppliers who are owed money for goods, this is just the tip of the iceberg.

(Photo source : Qichacha )

Even until the news of its bankruptcy broke, most suppliers said they were unable to get back millions of dollars in payments for goods.

In addition to disorderly expansion and chaotic internal management, another reason for the collapse of Global Easy Shopping’s high-rise building is believed to be its backward model.

In the early days, Global Easy Shopping took advantage of the bonus period of cross-border e-commerce and Amazon, and quickly grew up with the distribution model, completing the early capital accumulation. However, after the rapid expansion, it began to suffer from the pain of high inventory. Some people bluntly said that Global Easy Shopping could not keep up with the times. The industry also often believed that Global Easy Shopping verified the unsustainability of the distribution model, and its bankruptcy represented the end of a model.

Some sellers analyzed that judging from the development of Amazon, it is an inevitable trend to move from extensive to refined management. However, with the surge in sellers, simple distribution has become sluggish, and high-quality products have become the ultimate channel for competition. This is a process of market optimization and an inevitable law of economic development. The three forms of distribution, refined distribution and high-quality products will always coexist, but the market share will gradually shift.