Big news! Cross-border Link lost 3.3 billion! The staff was reduced by nearly 3/4, and the director resigned...

In 2020, Cross-Border Link achieved a total operating revenue of 17 billion yuan, a year-on-year decrease of 4.77% , and a net profit attributable to shareholders of listed companies of -3.3 billion yuan , a year-on-year decrease of 24.61%.

In 2020, Paton achieved operating income of 4.9 billion yuan, a year-on-year increase of 43.88%; net profit of 300 million yuan, a year-on-year increase of 78.19%. Youyi E-commerce achieved operating income of 6.3 billion yuan, a year-on-year increase of 8.74%, and net profit of 100 million yuan, a year-on-year decrease of 40.47%. Global Easy Shopping achieved operating income of 5.6 billion yuan, a year-on-year decrease of 33.82%; net profit of -2.9 billion yuan, a year-on-year decrease of 11.36% .

The company's self-operated websites (including mobile terminals) achieved operating income of 4 billion yuan, compared with 5.1 billion yuan in the same period last year, a year-on-year decrease of 21.36%; the third-party platform achieved operating income of 6 billion yuan, a year-on-year decrease of 3.76%. As of December 31, 2020, the operating data of the company's main self-operated websites are as follows:

In addition, Cross-Border Link also disclosed its first quarter financial report, with revenue of 3.1 billion yuan in the first quarter, a year-on-year decrease of 30.81%, and net profit attributable to shareholders of listed companies of 40 million yuan, a year-on-year decrease of 63.63% .

The main reason is that Global Easy Shopping has been facing tight capital chain in recent years and its credit line has shrunk sharply. In 2020, global logistics and warehousing costs continued to rise. The company has huge debts owed to various parties such as commodity procurement, logistics and warehousing, which are necessary for its business operations. The company’s main sales of independent stations and third-party platform businesses lack marketing and other expenses, which led to a sharp decline in Global Easy Shopping’s business in 2020.

On this basis, one of the company's countermeasures was to stop losses in the long term by significantly reducing its staff size .

In 2020, affected by the global epidemic and capital shortage, the company's wholly-owned subsidiary Shenzhen Global Easybuy E-Commerce Co., Ltd. had a total number of employees of 3,353 at the beginning of 2020, and by the end of 2020, the total number of employees was only 885, a reduction of about 3/4 .

Staff reductions and the closure of some businesses led to inefficient management of Global Easy Shopping, a sharp decline in business, and poor coordination between the business team and the financial team at the operational level. As a result, at the end of 2020, Global Easy Shopping's financial system failed to obtain business documents in a timely manner, resulting in forecasting deviations.

In addition, the high short-term severance costs and other management business losses caused by staff reductions, the clearance of obsolete product inventory, and the provision for bad debts on accounts receivable resulted in a loss of approximately RMB 2.5 billion for Global Easy Shopping , and the deferred income tax assets of RMB 460 million were reversed from impairment provisions.

Before Cross-Border Communication released the revised earnings forecast, two directors resigned. Cross-Border Communication also disclosed the reasons for the resignation of the two directors in the announcement:

However, Cross-Border Link stated that the company originally had 9 board members and currently has 7 board members. The resignation of Mr. Xi Zhimin and Mr. Zhang Bo will not cause the number of board members to fall below the statutory minimum and will not affect the normal work of the company's board of directors. The company will speed up the by-election of directors .

It is worth noting that although funding issues still loom over Cross-Border Link, its internal structure has begun to change for the better: the company is further analyzing its operating conditions, sorting out actual data, and ultimately presenting a true and comprehensive picture of operating data, and will strictly manage subsequent internal controls, finances, and data management.

In the past year, we can see that in response to historical problems on the business side, Cross-Border Link sold businesses to "cut off its arms to survive", while at the same time operating high-potential and high-quality businesses that were trapped by financial pressure independently to seek better development conditions for them.

Cross-border has sold the import business of Global Easybuy and Paton, and the proceeds were used to repay bank loans and transfuse business. After the company's business was streamlined, Cross-border gave its high-quality businesses greater autonomy, and the independent operation of "ZAFUL" is a good example.

With its own DTC brand, it has a large market, high gross profit, deep brand accumulation and influence, and huge room for development. Previously, SHEIN, an e-commerce upstart with a valuation of tens of billions of dollars, had reportedly planned to go public in the United States. ZAFUL has become the second largest fast fashion brand after SHEIN. After independent operation, ZAFUL will also have the opportunity to be revalued and enter the "table" with a brand new attitude .

Another high-quality asset under Cross-Border Link, "Youyi E-Commerce", has strong business strength, stable performance, and good cash flow. It can still maintain steady development and help boost the group's performance.

Global Easy Shopping, the main loss-making company, will arrange for capital inflow after the sale of Paton by Cross-border Link in the future, and its business is expected to resume healthy operation. After the independent operation of "ZAFUL" and the sale of its import business, Global Easy Shopping has achieved business slimming and concentration.

The strength of its self-operated comprehensive platform Gearbest should not be underestimated. Gearbest focuses on promoting high-quality products and creating hot-selling products, and also provides sellers with "one-to-one" shop assistant guidance services. This model is relatively unique among the current mainstream cross-border export e-commerce platforms . The platform has unlimited potential and may help more brands go overseas in the future.

In terms of third-party platform stores, Cross-Border Link will adopt a prudent strategy in the future, select category brands, adopt a boutique model, form complementary advantages with self-operated platforms, operate in a solid manner, not pursue scale, and focus more on profit performance.

For Global Easy Shopping, the main loss-making company, in addition to the strategic deployment errors, the funding problem was the last straw that broke the camel's back, and the domino effect it produced cannot be ignored. After sorting out the problems, the next step is to make drastic reforms. After the subsequent management and rectification, the above problems may gain new solutions and practices.

In the post-epidemic era, cross-border e-commerce is in full swing. Data shows that as of July 31, 2020, there were 24 investment events in the cross-border e-commerce field, with an investment amount of more than 5 billion yuan, and the number of investments has exceeded 45 in 2019. In terms of investment targets, capital prefers leading companies.

The General Administration of Customs also stated that it will continue to focus on the development of new business formats and corporate concerns, continue to strengthen supervision, optimize services, further improve the supervision and statistical systems, and continuously promote the high-quality development of new business formats in cross-border e-commerce.

The industry as a whole is thriving, with good news coming one after another. After sorting out its own problems, Cross-border E-commerce's high-quality businesses are still competitive, and its huge user base and brand reputation are something that newcomers in the industry cannot surpass in a short period of time. The various problems encountered during the development of Cross-border E-commerce also provide warnings and references for cross-border e-commerce peers. I hope that Cross-border E-commerce will win the turnaround battle in the future!