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｜Qin Yi Yang SongEditor
｜Jiang YubinGlobal cross-border e-commerce has launched the trend of fashionable Hanfu, and tens of thousands of sellers in China are taking advantage of it And up.
What’s interesting is that when exploring the rise of these active players, people can always go back to around 2010.
At that time, it was the golden age of cross-border sales in China. Among the young people who started to start businesses overseas, there were Wen Xin who founded Lanting Jishi, Chen Wenping of Saiwei e-commerce, and Xu of SHEIN. Looking up to the sky... Hua Bingru, a post-85s male boss who started out as a Taobao copycat and went overseas to sell Hanfu, is also one of them.
Recently, ZiBuYu, a cross-border e-commerce brand founded by Hua Bingru, submitted a listing application to the Hong Kong Stock Exchange. It is not well-known, with a market share of only 0.4%, but it has made its mark in North America early by operating a women's fast fashion business. In 2021, its revenue exceeded 2.3 billion yuan and its profit reached 200 million yuan.
Taobao started as a copycat
In 2008, when the annual GMV of Taobao platform exceeded 100 billion for the first time, Hua Bing, a sophomore majoring in electronic science and technology at Chaohu University in Anhui, For example, start your own e-commerce journey and open an online store on Taobao.
At first, we were engaged in “copycat goods”, distributing clothes and shoes produced in Guangdong and Fujian. Within two years, we entered the Taobao category and are currently in the third category.
It is difficult for imitation products to remain popular for a long time. In 2011, Hua Bingru founded it in Hangzhou with his friend Wang ShijianSilent, he sells self-designed Hanfu on Taobao.
In the early days, Zibuyu mainly targeted the domestic market and opened a Youchu flagship store on Tmall. By 2013, Hua Bingru, who had accumulated experience in e-commerce operations, decided to transform, abandon the highly competitive domestic market, open a store on Amazon, and focus on cross-border e-commerce business.
Hua Bingru is good at interacting with users for feedback, customizing on demand, and making quick moves. He quickly replicates these experiences in overseas business.
However, we have also gone through a detour. Overseas consumers are not the same as domestic consumers. For example, some long-sleeved clothing becomes three-quarter sleeves when worn by tall overseas users.
Hua Bingru made a prompt decision and introduced foreign models, making adjustments with reference to their figures, and gradually understood the design styles suitable for different markets, "For example, summer Hanfu, Brazilian customers like bright and lace ones, European and American ones." The style is more sexy," Hua Bingru said.
While Zibuyu’s overseas business was in full swing, the first batch of domestic Taobao brands went into decline, and “Qigege” and others were acquired by traditional clothing brands.
At present, Taobao brand has lost its popularity. On the other hand, Hua Bingru led his team to retreat from the Red Sea market in time, instead of seeking greater opportunities overseas.
Hua Bingru once revealed that Zibuyu achieved sales of 200 million in 2014, and its performance has maintained rapid growth in the following years. A man with a background in science and engineering has led Zibuyu into one of the largest cross-border e-commerce companies in China.
Making 2.3 billion in revenue a year
How much money can Chinese people make selling Hanfu overseas?
From 2019 to 2021, Zibuyu’s revenue was 1.429 billion, 1.898 billion, and 2.347 billion yuan respectively, with a compound annual growth rate of 28.1%.
The clothing category is its main source of revenue. In the past three years, its revenue was 1.121 billion, 1.147 billion, and 1.338 billion yuan respectively, accounting for more than 70% of the total revenue. In a sense, Hua Bingru, who started out selling Hanfu, has reached the top position in the cross-border Hanfu track.
Industry capacity determines the development space of Zibuyu.
The market size of cross-border e-commerce clothing and footwear remains at around 500 billion, with a market share of 25.2% in 2020 and is expected to grow to 30% in the next five years.
Network analyst Zhang Zhouping believes that as a mainstream category of cross-border e-commerce, the clothing category is currently highly competitive and it is difficult for new entrants to break through. This means that the Matthew Effect in the industry will come sooner or later, and it is the right time for Huabing to seek listing at this time.
From the perspective of market layout, Huabingru’s business is mainly in developed countries such as the United States, with sales of 2.26 billion in Europe and the United States in 2021.
Mainly rely on third-party platforms such as Amazon, Wish, and eBay to sell products. In the past three years, Zibuyu's revenue mainly comes from Amazon. In 2021, it generated revenue of more than 1.6 billion yuan, a year-on-year increase of nearly 172%, accounting for more than 30% of total revenue.
In 2018, Huabingru built an independent brand website, but unfortunately the income was average. After contributing nearly 20% of revenue in 2020, it dropped to only 11% in 2021.
Precisely because of its single product structure and over-reliance on third-party platforms, Huabingru faces the risks that may arise from "putting all its eggs in one basket".
After all, since May last year, the Amazon platform has been "banned" on a large scale, and China's top sellers have been blocked by the platform one after another.
Zibuyu’s business model is a typical traditional big-box store. In the past, it relied on the distribution model to grow its business. As of the end of 2021, Huabingru has cultivated more than 200 brands, 64 of which have annual sales exceeding 10 million.
"(Overseas) consumers do not necessarily have strong brand loyalty in terms of brand recognition, because styles are changeable and they just buy what they want. Therefore, our core logic is design, coupled with cost-effective Product." In the early years, Hua Bingru, who firmly believed in the distribution model, had predicted this.
In the long run, cross-border e-commerce is moving towards refined operations, which requires companies to have the ability to expand categories and create hot products.
What Hua Bingru is facing is the pain of the entire cross-border industry. Likewise, it is also a new proposition for Zibuyu.
The winding road to capital
The Hua Bingru familyIt has absolute controlling rights and family members are also involved in daily operations.
Before the IPO, Hua Bingru held 50.14% of the shares. His wife Yu Feng holds 5.33%, ranking as the fourth largest shareholder. She once controlled Jiahe International, Zibuyu’s second largest customer in 2021.
Sister Hua Hui holds 2.23% of the shares and is also among the major shareholders. She joined Zibuyu in the early stages of the business and served as sales director. She is also a non-executive director of the company and the only female among the directors.
What is surprising is that Zibuyu did not have any public financing news before. As disclosed in the prospectus, the company received 39 million yuan in financing from Ningbo Zhongyao in March 2018; before submitting its first listing application in May 2021, it received a total investment of 26 million US dollars from Kangxu Investment and Aloe Tower.
It is difficult to find successful investment cases for the above-mentioned institutions, and they have no overseas market resources. This is not conducive to Zibuyu, which focuses on overseas markets and promotes its own brands.
On the other hand, SHEIN, which is in the same track, has billions of dollars in financing from Sequoia China, IDG, etc., and is obviously more confident in the face of the rapidly changing international situation.
Hua Bingru’s worries don’t stop there.
Zi Buyu has tried to rush to the market many times but failed. In January 2017, the company hired an intermediary to provide guidance and set up a corresponding shareholding platform, but ultimately nothing happened. In mid-2021, Zi Buyu submitted a form to the Hong Kong Stock Exchange, but it later became invalid due to the expiration of the application.
Whether it can successfully hit the IPO this time, Hua Bingru must be worried about it.
From the perspective of financial status, Zibuyu’s assets and liabilities have attracted much attention. The amount of current liabilities has shown high growth. In 2019, the asset-liability ratio was as high as 86%. With the overall decline in the following two years, Huabingru still faces high financial pressure.
The high debt ratio is attributed to Zibuyu’s slow payment collection speed and relatively heavy asset operations on third-party platforms. Industry veterans believe that "this essentially confirms the logic of involution in the apparel industry."
“The clothing track requires real money investment. Once the money is burned out, (the company) will be gone.” A cross-border industry person said.
Zi Buyu obviously spends money constantly, 2From 2018 to 2020, marketing and advertising expenses were 57.7 million yuan, 116 million yuan, and 263 million yuan respectively, and their proportion of total sales expenses increased year by year.
Cross-border clothing sales all follow a similar path: burning money in exchange for growth. "In addition to winning by scale, it is also difficult for the clothing industry itself to invest in high-tech research and development." said the aforementioned cross-border industry insiders.
The cake is only so big, and the one that stands out from the inside is always outstanding.
Anker, which also relies heavily on the Amazon platform, is a typical case. As the first independent listed company in the cross-border e-commerce industry, Anker grew up in the low-end manufacturing and over-involved 3C market. Its advantage lies in its R&D expenses of nearly 400 million in recent years and its possession of 520 domestic and foreign patents.
Huabingru still has a long way to go to get out of the dilemma of burning money for marketing in exchange for growth, build its own brand to become a high-quality product, and differentiate itself in different positioned categories and platforms.
