How Does Cross-Border E-commerce Survive Under the Epidemic?

Recently, the news of "Globalegrow E-commerce has been filed for bankruptcy and reorganization" appeared on the Internet hot search. One reason why this matter has attracted widespread attention is that Globalegrow is a wholly-owned subsidiary of the A-share listed "cross-border e-commerce first share"-KJT. The total market value of the parent company was once close to 40 billion, and the revenue reached 20 billion. Moreover, in the past two years, the epidemic has boosted online transactions and also brought opportunities for cross-border e-commerce to clean out old inventory. Why did Globalegrow, with the halo of "the first stock of cross-border e-commerce" on its head, collapsed?


Globalegrow is in debt crisis!

The first report of "Globalegrow's deep debt crisis" was in September 2020. Not only exposed by the media for keeping in arrears with suppliers, but it was also involved in a number of contract disputes, all of which were related to defaulting on supplier payments.

By 2020, the debt problem has become urgent.KJT said, in order to solve the problem of capital needs, company was trying to raise funds through various methods such as issuing corporate bonds, bank loans, shareholder loans, and selling assets.

The most shocking thing for the industry is that on March 24, 2021, KJT announced the sale of 100% of its subsidiary, Patozon, with a total price of 2.02 billion yuan for the transfer of the underlying equity.

Ongoing business problems caused KJT to wear the ST (specialtreatment) hat on May 7 this year. At the same time, the KJT also experienced a personnel earthquake.

According to a media interview, an employee of Globalegrow revealed that “Globalegrow owes more than 3,000 suppliers, about 450 million yuan owed to suppliers, and about 300 million yuan owed to logistics, totaling more than 700 million yuan."



How did KJT come to this? Where did the money go?

1. Explanation of Globalegrow

With regard to the issue of funds, an insider of Globalegrow revealed that there are three main aspects. One is that since 2019, banks began to draw a large amount of loans, which directly led to the financial problems of Globalegrow; the second is that the company’s business developed too fast, which caused the company’s insufficient operating funds; third, the outbreak of the epidemic has brought tremendous influence and pressure on the industry and supply chain. 

2. Statements of former employees of Globalegrow

A former employee of Globalegrow believes that there is still a chance for KJT to make a comeback, provided that the chaos in internal management must be resolved. "Sailvan has encountered all these problems, the capital chain was broken, the supplier refused to supply them, and the whole reputation was stinking. Now the reputation is restored. Globalegrow must work together."

3. Analysis of business insider

A cross-border e-commerce practitioner believes that the problem is that Globalegrow has too many standard products and huge inventory. Globalegrow originally made mobile phones, which were basically standard products. Xiaomi and Huawei have their own overseas markets and direct sales channels. At the very least, the cash flow does not need to go out so quickly. Globalegrow must pay cash first before purchasing inventory. Selling slowly, this is all costs, and mobile phones are clearly priced, and selling abroad may not necessarily have an advantage.

The impact of overseas markets under the epidemic may be more severe than we expected! Whether it is the capital chain, internal management or the choice of sku. Every link can determine the life or death of an enterprise. Opportunities and challenges coexist in Cross-border e-commerce, and every step needs to be taken carefully!


Post time: Jun-23-2021