Why Are The Two E-Commerce Platforms Of The Small Commodity City In The Face Of "Horizontal Competition"?

As the largest wholesale trading center of small commodities in China, Yiwu listed company small commodity city (600415. SH) has driven the global business of a number of small and medium-sized vendors. However, it is intriguing that the company's two major e-commerce platforms are in hot water because of the suspicion of horizontal competition.

On the one hand, it is the "Yiwu Small Commodity City" platform (www.chinagoods. Com), which is 100% controlled by the small commodity city, and the other is the "Yiwu shopping" platform (www.yiwugo. Com), which is 51% controlled by the small commodity city. However, in August this year, Wang Jianjun, one of the shareholders and general manager of Yiwu purchase platform, appealed to the small commodity city and its wholly-owned subsidiary Yiwu China Small Commodity City big data Co., Ltd. (hereinafter referred to as "big data company") in court, demanding that the small commodity city and other parties stop unfair competition and claim 10 million yuan.

At present, the Hangzhou intermediate people's court has issued the first instance result. Although the court rejected the claim that "Yiwu Commodity City" platform constitutes unfair competition, the court also held that there is indeed a competitive relationship between the two e-commerce platforms.

According to the reporter of the 21st century economic report, Yiwu purchase company is actively communicating and negotiating with the small commodity city, but it does not rule out the possibility of continuing to appeal.

What is the source of the disputes?

Who is the biological son of the two e-commerce platforms?

The 21st century economic reporter inquired about the annual reports of the commodity city, and almost every year there are a lot of comments on the "Yiwu purchase" platform.

As early as 2012, in order to cultivate e-commerce, "Yiwu purchase" was successfully launched and selected as the pilot platform of e-commerce promotion and development in Zhejiang Province, realizing online purchase, 3D live video and other functions.

According to the 2014 annual report, "yiwugou" is a B2B e-commerce platform. Since its launch in 2012, it has achieved phased results, achieving annual online transaction volume of 1.5 billion yuan and matching transaction volume of 15 billion yuan.

A judgment of Hangzhou intermediate people's court obtained by 21st century economic report also mentioned that "in order to promote the construction of Yiwu e-commerce platform and realize the goal of moving the physical market of small commodity city to the Internet, on August 13, 2014, the state owned assets supervision and Administration Commission of Yiwu City approved the establishment of Zhejiang yiwugou e-commerce Co., Ltd. (hereinafter referred to as" Yiwu purchase company ").

On October 20, 2014, Yiwu purchase company was officially registered and established with a registered capital of 100 million yuan. Among them, small commodity city subscribed 56 million yuan through its wholly-owned subsidiary Yiwu Small Commodity City Information Technology Co., Ltd., accounting for 56%, of which 5% of the equity was registered in Wang Jianjun's name as equity incentive.

In addition, the shareholders of Yiwu purchase company also include Wang Jianjun, who has subscribed 20 million yuan, accounting for 20% of the registered capital, of which 5% is the equity of the core team of the company, which is temporarily held by Wang Jianjun. In addition, Yixia Chengdu International Trade City Co., Ltd., the other shareholder, subscribed 24 million yuan, accounting for 24% of the registered capital.

On September 18, Wang Jianjun, general manager of Yiwu purchase, introduced to the reporter of 21st century economic report that "at that time, the small commodity city invested more than 39.56 million yuan in cash, plus more than 16 million yuan in intangible assets, including B2R project investment, servers and electronic equipment, office furniture, etc.

"Yiwugo" platform (www.yiwugo. Com) is the e-commerce platform set up by Yiwu purchase company.

According to the official website of Yiwu shopping, the positioning of Yiwu shopping is to "move Yiwu small commodity market online", which corresponds online and offline; Covering the national small commodity market, professional Street, high-quality suppliers of industrial belt; It serves 2 million SMEs in the upstream of the industrial chain. According to Yiwu shopping, 50000 merchants have settled in, 800000 visitors a day, 15 million visitors per day, and 8 million registered purchasers, 10% of which are overseas users. The platform has become the world's largest online small commodity wholesale platform.

From the annual reports over the years, we can learn about the operation status of Yiwu shopping platform: in 2014, the net profit of "Yiwu purchase" was 3.862 million yuan of loss. From 2016 to 2020, the net profit of "Yiwu purchase" was 1.1996 million yuan, 3.625 million yuan, 1.7424 million yuan, 3.8202 million yuan and 6.6901 million yuan respectively. The latest news is that in the first half of 2021, the net profit of "Yiwu purchase" is 5.5352 million yuan.

Compared with the "Yiwu shopping" platform which has been established for seven years, another e-commerce platform, "Yiwu Small Commodity City", was established soon.

On March 14, 2020, the small commodity city announced that it has invested and established a wholly-owned subsidiary Yiwu China Small Commodity City big data Co., Ltd., with a registered capital of 100 million yuan.

Half a year later, on October 22, 2020, the small commodity city further announced that the company invested and set up a wholly-owned subsidiary big data company in March 2020 to build a full scene digital Yiwu China small commodity city comprehensive trading service portal platform - "Yiwu Small Commodity City" (www.chinagoods. Com). After the online test on April 15, 2020, the platform was put into operation, It will be officially launched on October 21, 2020.

"Chinagoods" platform is regarded as an important measure for the digital transformation of small commodity city and a symbol of the company's integration of online and offline markets: by the end of 2020, 50000 merchants have settled in the platform, more than 800000 registered purchasers have been registered, 2.6 million product SKUs have been downloaded, and 2 million app downloads have been made. From October 21, 2020 to the end of the report period, the cumulative transaction volume has reached 2.894 billion yuan, The average daily visits exceeded 3.25 million, with a peak of more than 5 million.

One side is the "Yiwu Small Commodity City" platform, which is 100% controlled by the small commodity city, and the other is the "Yiwu purchase" platform, which is 51% controlled by the small commodity city. Who is the real son? What are the differences between the two? Why does Yiwu buy choose to sue commodity city?

Doubts about "horizontal competition"

On September 18, Wang Jianjun, general manager of Yiwu shopping, told the 21st century economic report that "prosecution is forced because chinagoods is similar to Yiwu shopping's business. In his opinion, chinagoods imitates Yiwu's website and copies Yiwu's business model in terms of website positioning, content, relying on Yiwu market entities, market-oriented operators and shop commodities.", "It is necessary to set up chinagoods in the small commodity city, but chinagoods should develop in dislocation with yiwugou to form a joint force, rather than repeat construction, leading to horizontal competition."

In the indictment, Yiwu purchase held that, "In order to seize customers and suppress Yiwu purchasing company, Yiwu purchase company deliberately fabricates and spreads rumors in Yiwu market to slander Yiwu purchase company. In addition, it also uses various means to poach employees of Yiwu purchase company. In addition, it also suppresses and deprives Yiwu purchase company of its normal operation rights in terms of advertising, sports event naming, service venue leasing, etc It holds that "the behavior of small commodity city and big data company violates the provisions of anti unfair competition law and business ethics, resulting in huge economic losses of Yiwu purchase company". Accordingly, Yiwu purchase requested the court to order the small commodity city and big data company to stop their unfair competition behaviors and ask them to make an apology to Yiwu purchase company and compensate 10 million yuan.

The evidence provided by Yiwu purchase company includes a leaflet entitled "China goods should know and know", which states that "chinagoods is a platform wholly owned by the mall group, yiwugou and yicaibao are the platforms independently operated by private enterprises with the group's equity participation", and the small commodity city provides the obtained human resources information to big data companies.

Wang Jianjun also pointed out to the 21st century economic reporter that "after the establishment of Yiwu purchase company, the small commodity city has appointed several directors to Yiwu purchase, and the chairman of Yiwu purchase is also the chairman of small commodity city. The wholly-owned big data company under the small commodity city and the operation of chinagoods, which has a direct competitive relationship with Yiwu purchase, is obviously contrary to the company's Zhang Cheng.".

According to the public information, at present, Zhao Wenge, chairman of the small commodity city, serves as the chairman of Yiwu buy, Wang Dong, the general manager of Small Commodity City, and serves as the director of Yiwu purchase. In addition, Zhang Qizhen, deputy general manager of Small Commodity City, is also a director of Yiwu purchase.

In the judgment, the small commodity city stated that "the relationship between Yiwu shopping and the commodity city is not the subject of competition regulated by the Anti Unfair Competition Law", "The two platforms are independent legal entities that operate independently, are responsible for their own profits and losses, independently formulate business strategies, and bear operational risks. The small commodity city does not participate in or interfere in the daily business activities of their respective platforms. Neither platform nor the small commodity city has the right to force merchants to trade on which platform... Disputes arising from the business activities of the two platforms have nothing to do with the small commodity city."

However, judging from the existing evidence, Hangzhou intermediate people's court held that it was difficult to support the Yiwu purchase company's accusation, and rejected Yiwu purchase's appeal for unfair competition in the first instance. However, the court held that "there is a direct competitive relationship between small commodity city, big data company and Yiwu purchase company".

On September 23, the 21st century economic news reporter called the Securities Affairs Department of commodity city to learn about the progress of the case. A person from the Department said, "if there is further progress in the case, we will make an announcement, and we also need to learn from the relevant (business) departments", the person also said, "Both platforms are affiliated to the listed companies. No matter which platform is bigger, it is beneficial to the listed companies.".

Before that, in October 2020, the small commodity city had publicly responded to the media about whether yiwugou and chinagoods were both subordinate to the small commodity city and whether differentiated competition was considered in the initial design, "After eight years of cultivation and development, Yiwu shopping platform has played an active role in commodity display, matchmaking and other aspects. Yiwu purchase company is a small commodity city holding subsidiary. Different from the general e-commerce platform, in addition to the display and trading functions, chinafoods platform focuses more on performance + service. The platform connects the supply and demand sides in the aspects of production design, exhibition trading, market management, and so on Logistics warehousing, financial credit and other aspects of the demand to achieve effective and accurate allocation of market resources... "

On September 23, lawyer Qin Weili, partner of Zhejiang Sandao law firm, pointed out to the reporter of the 21st century economic report that, "Judging from the first instance judgment of Hangzhou intermediate people's court, Yiwu purchase company sued for unfair competition dispute, and required relevant parties to bear tort liability, but the existing evidence is not enough to support its accusation of unfair competition on another e-commerce platform, so it bears the adverse consequences of losing the lawsuit. However, from another perspective, starting from the cause of action of liability for damaging the interests of the company, if If Yiwu purchase company can clearly claim that the shareholders and directors of the company violate the provisions of the articles of association that they are not allowed to engage in competitive business, then they can also ask the relevant parties to compensate for the losses. "

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