Chinese e-commerce player Yiguo declares bankruptcy
China’s annual online commerce biggest holiday, “Singles Day,” on 11 November once again brought heavy promotion and discounting by Alibaba platforms like Tmall.
But with Yiguo E-Commerce entering bankruptcy this month, there is evidence that the intensely competitive online marketplace in China may be pushing weaker rivals out of reach of the major players.
Based in Shanghai, Yiguo drew CNY 6 billion (USD 906 million, EUR 768 million) in investments since it was founded in 2005, with Alibaba and U.S.-based venture capital house KKR among its backers. But the high costs involved in cold chain logistics as well as intense competition appear to have undone Yiguo, which announced a bankruptcy-initiated restructuring this month.
The site remains online and trading seafood.
Dozens of smaller Chinese online retailers have gone bust in recent years, but new up-and-comers such as Bytedance (owner of Tiktok) have indicated they’re likely to join the fray.
At the Norway-China Seafood Summit in Beijing in May 2017, Yiguo E-Commerce Board Co-Chairman Jin Guanglei outlined how his platform had become a key seller of seafood to China’s online shoppers with logistics centers in 10 of China’s largest cities, including Beijing, Guangzhou, Hangzhou, and Shanghai.
Yiguo also presented at the Pangasius Industry Development Roundtable meeting in Wuhan in 2018 to outline its ambitions for growing seafood sales. Yet it appears that one of Yiguo’s strengths – backing from Alibaba – also proved a key weakness, after Tmall Fresh switched its fulfillment partnership from Yiguo to Hema Xiansheng, the online-offline supermarket chain also backed by Alibaba.
In 2017, Yiguo signed a memorandum of understanding with the Global Aquaculture Alliance (GAA), which committed the company to including GAA’s Best Aquaculture Practices (BAP) certification in its seafood sourcing policy and preferentially sourcing seafood products that originate from BAP-certified facilities.
“That also means BAP-certified products and their providers can expedite the process to do business with Yiguo, and Yiguo’s customers will be able to purchase BAP-certified seafood from home and abroad,” a GAA statement noted at the time.