Recently, A-share holding companies of cross-border e-commerce enterprises such as Newegg, Zebao, youkeshu and patoson have successively pre disclosed the performance of 2021.
According to the incomplete statistics of the 21st Century Business Herald reporter, the A-share cross-border e-commerce concept stocks that have issued performance forecasts have suffered performance losses and profit declines to varying degrees. Many enterprises mentioned the adverse impact of the “Amazon title” incident in 2021 on their cross-border e-commerce business. In addition, rising shipping prices, tighter tax compliance and other operating costs are also important reasons for the decline in profits of cross-border e-commerce enterprises.
It is worth mentioning that Hangzhou Lianluo Interactive Information Technology Co.Ltd(002280) , which controls the North American cross-border e-commerce platform Newegg, although the overall performance has a loss of 355-395 million yuan, it is estimated that the revenue scale and operating profit of Newegg have increased year-on-year.
The export bonus of cross-border e-commerce has also attracted many manufacturing enterprises’ cross-border B2B / B2C online sales business. For example, Hangzhou Great Star Industrial Co.Ltd(002444) , the main business with tool hardware as the core, has continuously increased e-commerce investment in recent years. The performance forecast for 2021 indicates that the DTC (direct to consumer) business dominated by cross-border e-commerce will grow by more than 50% year-on-year.
Amazon Title dragged down sales
Zebao, youkeshu and tongtuo, the big sellers in the B2C cross-border e-commerce export industry, suffered an accident in 2021. Their A-share holding companies Guangdong Saca Precision Manufacturing Co.Ltd(300464) , Tiza Information Industry Corporation Inc(300209) , Yiwu Huading Nylon Co.Ltd(601113) mentioned the adverse impact of the “Amazon seal” event on their cross-border e-commerce business, resulting in performance losses.
According to the performance forecast information of 2021, Tiza Information Industry Corporation Inc(300209) has a loss of 1.8-2.5 billion yuan, and the profit has decreased by 107% – 187% compared with the same period of the previous year. Tiza Information Industry Corporation Inc(300209) explained the sharp decline in the company’s overall performance that the business performance of cross-border e-commerce fell sharply due to changes in Amazon platform policy environment and fierce competition in European and American markets.
Guangdong Saca Precision Manufacturing Co.Ltd(300464) the loss in advance was 1.24-1.42 billion yuan, while the profit in the same period of last year was 212 million yuan. Guangdong Saca Precision Manufacturing Co.Ltd(300464) also mentioned that the performance change of the current period was affected by the “Amazon title” event, resulting in the impact on the performance in the second half of 2021. The company’s consumer electronics sector is expected to achieve an operating revenue of about 2.6 billion yuan in 2021, a year-on-year decrease of 46%.
Yiwu Huading Nylon Co.Ltd(601113) the net loss is expected to be 520-780 million yuan, with an increase of 197 million yuan compared with the same period of last year.
In the middle of last year, the above A-share cross-border e-commerce enterprises successively announced the impact of the “Amazon title” event on performance and disclosed information. For example, according to the information previously disclosed by Tiza Information Industry Corporation Inc(300209) , as of early July 2021, a tree of its cross-border e-commerce subsidiary had been closed or frozen for suspected violation of Amazon platform rules, accounting for about 340 new sites in 2021, accounting for about 30% of the monthly average sites with sales revenue on Amazon platform from January to may 2021.
However, in contrast to the pre loss performance of the seller type cross-border e-commerce enterprises on the Amazon platform, the overall performance of the cross-border e-commerce platform continued to rise.
A-share listed company Hangzhou Lianluo Interactive Information Technology Co.Ltd(002280) is the controlling shareholder of Newegg, a well-known vertical e-commerce platform for electronic products in the United States. Hangzhou Lianluo Interactive Information Technology Co.Ltd(002280) according to the pre disclosure information, the overall operation of the company in 2021 was stable and improved compared with the previous year. The company continued to focus on its main business and steadily promoted the sustainable development of e-commerce business. The annual revenue scale and operating profit of its holding subsidiary Newegg monomer increased compared with the same period of the previous year.
rising costs of shipping and taxation put pressure on operation
The whole cross-border e-commerce export industry had many factors that increased the pressure on operating costs last year. High shipping prices and stricter tax compliance of value-added tax are also important reasons for the decline in profits mentioned in the performance pre disclosure of A-share cross-border e-commerce enterprises.
Xiamen Jihong Technology Co.Ltd(002803) it is expected to make a profit of 234-259 million yuan in 2021, with a year-on-year decrease of 53.64% – 58.12%. The performance forecast shows that due to the long-term persistence of the epidemic and the increasingly fierce market competition, the transportation costs and advertising expenses of the company’s cross-border e-commerce business have increased significantly, while the overall passenger unit price has decreased significantly. Therefore, although the order and revenue scale are still increasing, the profitability has been adversely affected to a large extent, resulting in the decline of net profit.
Hangzhou Great Star Industrial Co.Ltd(002444) it is estimated that the profit in 2021 will be 1.282-1.418 billion yuan, with a year-on-year increase of negative 5% – 5%. Hangzhou Great Star Industrial Co.Ltd(002444) also mentioned that the company’s international logistics costs increased significantly, and the international shipping costs and port detention costs increased by more than 100% year-on-year.
Since the outbreak, the situation of global labor shortage, shortage of containers, warehouse explosion, container dumping, port hopping and crazy rise in freight rates has continued, and the continuous high fluctuation of global shipping prices has raised the cost of cross-border e-commerce transportation. China’s container export index continued to rise to 2600.18 points compared with Japan’s high in 2021.
In the context of high shipping prices, the news that Loctek Ergonomic Technology Corp(300729) who started cross-border e-commerce from the manufacturing industry spent a huge sum of 200 million yuan on shipbuilding triggered a heated debate in the industry. At the end of January, Loctek Ergonomic Technology Corp(300729) announced its intention to invest in the construction of container ships. In response to the purpose of shipbuilding, Loctek Ergonomic Technology Corp(300729) said that since 2020, the global covid-19 epidemic has continued to spread, the efficiency of ports in overseas countries is generally low, and the security, timeliness, reliability and economy of the supply chain have been severely challenged. “In order to further improve the user experience of e-commerce shopping, fast arrival and shorten the delivery cycle… The company plans to strengthen the safety of the supply chain, improve the efficiency of the supply chain and reduce the transportation cost by means of shipbuilding or chartering.”
In addition, the cost of tax compliance has also exacerbated the operational pressure of cross-border e-commerce export enterprises. Yiwu Huading Nylon Co.Ltd(601113) mentioned the main reason for the loss of its e-commerce sector and said that the impact of tax policy changes on cross-border e-commerce platforms. Due to the implementation of the VAT withholding policy by the platform, VAT taxes have increased significantly.
As an important market for China’s cross-border e-commerce exports, the EU’s value-added tax reform policy last year increased the tax cost of the cross-border e-commerce industry to a certain extent. In July 2021, the newly revised EU value-added tax directive came into effect, which made stricter regulations on the value-added tax rules of cross-border e-commerce business. E-commerce platforms need to undertake the obligation of withholding and paying value-added tax for sellers, and the policy of exemption from value-added tax for small parcels worth less than 22 euros was completely abolished.
Manufacturing enterprises involved in cross-border E-commerce
The Loctek Ergonomic Technology Corp(300729) invested in shipbuilding is not a special case of cross-border e-commerce from traditional manufacturing. In fact, with the continuous release of cross-border e-commerce dividends, many A-share enterprises with manufacturing factories and supply chain advantages have increased the layout of cross-border e-commerce business in addition to traditional foreign trade business, and the combination of cross-border e-commerce and manufacturing enterprises is becoming closer and closer.
It is worth mentioning that in the case of rising raw material prices in 2021, traditional manufacturing enterprises are facing the pressure of rising procurement costs, while cross-border e-commerce has created product bargaining and pricing space for enterprise profits and become a new growth point of enterprise business.
A-share driverless leading concept stock Hangzhou Great Star Industrial Co.Ltd(002444) said in the annual performance forecast that the company’s laser measuring instrument business increased by more than 100% year-on-year, the DTC (direct to consumer) business dominated by cross-border e-commerce increased by more than 50% year-on-year, and the revenue of power tools exceeded US $200 million, becoming a new driving point of the company’s business.
Xiamen Jihong Technology Co.Ltd(002803) is an enterprise mainly engaged in FMCG display and packaging. Since the establishment of Xiamen Jihong Technology Co.Ltd(002803) in 2017, Xiamen jikeyin e-commerce Co., Ltd. has been wholly-owned. It has carried out B2C Online export sales through its own independent station and began to set foot in the field of cross-border e-commerce. Up to now, Xiamen Jihong Technology Co.Ltd(002803) cross-border e-commerce revenue accounts for more than half of the total revenue.
On January 20, 2022, Xiamen Jihong Technology Co.Ltd(002803) officially launched the public beta of its Southeast Asian cross-border e-commerce jimeow cloud SaaS service platform. Xiamen Jihong Technology Co.Ltd(002803) in the performance forecast, it is mentioned that the company has continuously increased its R & D investment in the construction of e-commerce SaaS service platform, and the R & D expenses have increased significantly compared with the same period of last year.
