While many celebrate the glamour of Hong Kong Stock Exchange listings, few recognize the hidden challenges behind the success. Recently, cross-border e-commerce company Zibuyu made its debut on the Hong Kong main board, earning the title of "first listed cross-border footwear and apparel stock." Yet beneath its impressive market valuation lies a troubling reality: heavy reliance on a single platform, declining profitability, and other latent risks. This article delves into Zibuyu's current predicament and explores potential paths forward.
From Taobao to Global Marketplace: Zibuyu's Rise
Zibuyu's growth mirrors China's cross-border e-commerce evolution. Since pivoting in 2014 to focus on global fashion design and sales, the company has cultivated nearly 100 brands, forming a stable "brand matrix" where each generates annual sales exceeding 100 million yuan. According to Frost & Sullivan, Zibuyu ranked third globally (and first in North America) by GMV among Chinese cross-border B2C apparel and footwear sellers in 2021.
SHEIN's Dominance: The Unavoidable Benchmark
In cross-border fashion, SHEIN remains the undisputed leader. Though still private, its estimated $100 billion valuation dwarfs competitors. SHEIN's global reach spans Europe, the Middle East, and Southeast Asia, with its app frequently outperforming Amazon and Walmart in downloads. As SHEIN celebrates its tenth year as an independent brand, its influence continues to expand.
A 2.7 Trillion Yuan Opportunity: Riding the Cross-Border Wave
Both SHEIN and Zibuyu benefit from China's booming cross-border e-commerce sector. Frost & Sullivan reports the apparel segment grew at a 47% CAGR over four years. With low entry barriers and China's mature supply chain enabling competitive pricing, the total cross-border B2C market reached 2.7 trillion yuan in 2021.
Business Models: The Key Differentiator
While both companies thrive, their operational approaches differ significantly:
- SHEIN: Built on agile supply chains, small-batch production, hyper-fast turnaround, viral marketing, and ultra-low pricing, with a strong independent platform.
- Zibuyu: Relies on proprietary designs, OEM suppliers, and a multi-brand strategy, but depends heavily on third-party marketplaces.
Zibuyu's Amazon Addiction: A Growing Risk
Zibuyu's prospectus reveals alarming platform dependency: Amazon sales grew from 31.5% of revenue in 2019 to 90.6% in Q1 2022. Meanwhile, its self-operated sites stagnated, contributing just 11% of 2021 revenue (257 million yuan). This overreliance leaves Zibuyu vulnerable to policy changes or competitive pressures on Amazon—likely a key driver behind its rushed IPO.
Financial Red Flags: Profitability Under Pressure
Despite its "industry leader" image, Zibuyu faces mounting challenges:
- Debt ratios remain high at 63.4% in 2021 (down from 86.4% in 2019), partly due to slow platform payouts.
- Marketing costs and platform fees consume 31.7% of expenses, with diminishing returns on customer acquisition.
- H1 2022 saw revenue grow 16% to 1.28 billion yuan, but net profit plunged 46.3% to 61.3 million yuan.
IPO Funds: A Lifeline or Band-Aid?
Zibuyu plans to use its 230 million HKD IPO proceeds to:
- Develop independent e-commerce platforms
- Enhance supply chain and R&D
- Acquire complementary brands
However, building a self-sustaining platform requires substantial time and capital—with no guarantee of success against entrenched competitors like SHEIN.
The Road Ahead: Survival in a Shifting Landscape
Zibuyu's future hinges on addressing three critical challenges:
- Breaking free from Amazon's grip to control its sales channels
- Restoring profitability through operational efficiency
- Differentiating in an increasingly crowded market
As global e-commerce dynamics evolve, Zibuyu's ability to diversify revenue streams and assert financial independence will determine whether its IPO marks a new beginning—or merely postpones an inevitable reckoning.