① The chairman of Commodity City was sued by the subsidiary Yiwu Purchase. The cause of the case was a dispute that harmed the company's interests ② The disputed competitive relationship between Yiwu Buy and Chinagoods was the “trigger” of the incident ③ Yiwu Buy once sued Commodity City for “unfair competition”, but the lawsuit was not upheld by the court
Financial Services Association, April 2 (Reporters Liu Ke and Chen Kang) **Financial Association, April 2 (Reporters Liu Ke and Chen Kang) **Listed company Commodity City (600415.SH) and its chairman were recently involved in a “bizarre” case of “family beating family”.
Zhejiang Yiwu Shopping E-Commerce Co., Ltd. (hereinafter referred to as “Yiwu Shopping”), a subsidiary that indirectly holds 51% of Commodity City, filed a lawsuit with the Yiwu Municipal People's Court, alleging that Zhao Wenge, the chairman of Commodity City and also the chairman of Yiwu Shopping, violated his duty of loyalty and diligence as a director of the company and requested an order to pay compensation for financial losses, return of part of the annual remuneration, and ban on related positions. The case is currently awaiting trial.
Wang Jianjun, general manager of Yiwu Shopping, explained the reason for the lawsuit to the Financial Federation reporter: “After becoming the director of Yiwu Shopping, Zhao Wenge, the chairman of Commodity City, betrayed his loyal and diligent duties as a director of Yiwu Shopping, harmed the interests of Yiwu Shopping Company. The core business of Yiwu Shopping and Chinagoods platforms is highly repetitive, and they all serve the online display and transaction of merchants.”
The Financial Services Association reporter contacted Zhao Wenge several times to seek evidence regarding the lawsuit. As of press release, no positive response had been received.
The “old feud” has not come to an end for many years
The “old feud” that Yiwu bought and competed with Chinagoods was the reason for Zhao Wenge's sudden attack.
Yiwu Shopping, which was established in 2014, and the Chinagoods platform launched in 2020 are the official websites of Yiwu Market of Commodity City Holdings.
Commodity City holds 51% of Yiwu's shares, general manager Wang Jianjun personally holds 25% of Yiwu's shares, and Yixia Chengdu International Trade City Co., Ltd. holds 24% of the shares.
Meanwhile, Commodity City owns 100% of the Chinagoods platform.
According to the “2023 Yiwu Purchase Net Asset Special Audit Report” provided by Wang Jianjun, after the establishment of Yiwu Purchase in October 2014, the shareholder Yiwu China Commodity City Information Technology Co., Ltd. (a wholly-owned subsidiary of Commodity City) used software such as the Yiwu Shopping Platform, warehouse management software, domain name and other software as an investment of 6.413,000 yuan.
Wang Jianjun believes that Commodity City has injected the above online assets into Yiwu purchases, but due to repetition of core business, Chinagoods has taken away some of the functions of Yiwu purchases, including parking space swings, air conditioning, market management fee payment, business pledge applications, decoration approval, and sublease transfers. This is equivalent to extracting some of the online assets.
(Screenshot of some services on the Chinagoods platform)
(Screenshot of the Yiwu shopping website after some functions were removed)
(Screenshot of the 2014 Yiwu shopping website)
“Chinagoods was launched in April 2020. We discovered (similar) and then negotiated, but they continued to push ahead and keep suppressing Yiwu purchases, so we had to file a lawsuit.” Wang Jianjun said, “We can't advertise in the (Yiwu) market right now, and many measures cannot be implemented.”
The reporter learned that at present, Wang Jianjun is responsible for the daily operation of Yiwu Shopping, and only the person responsible for finance and a deputy general manager are stationed at the Commodity City.
Wang Jianjun said, “We hope the Group will pay attention to and resolve the issue of competition in the industry.”
To this end, in the past four years, Wang Jianjun tried more than once to achieve his claim of “resolving competition in the same industry” through legal channels, but was not upheld by the court.
In 2020, Yiwu Shopping sued the Hangzhou Intermediate Court for “unfair competition”, “arguing that the positioning, content, and business model of Chinagoods is highly similar to Yiwu Shopping, and that there is a crackdown on Yiwu Shopping, which violates the provisions of the Anti-Unfair Competition Law.”
On July 28, 2021, the Hangzhou Intermediate Court determined that unfair competition was not established; it did not support Yiwu's claim of 10 million for unfair competition; it only determined that “there is a direct competitive relationship.”
The Hangzhou Intermediate Court believes that the evidence provided by the Yiwu Purchase Office is insufficient to prove that the Small Commodity City Group and the Big Data Company constitute unfair competition.
According to the judgment reviewed by the Finance Association reporter, the Hangzhou court dismissed evidence such as WeChat records and leaflets provided by Yiwu Purchase on the grounds that the original documents could not be verified or that it had not been impartial; furthermore, the court did not support the Yiwu Purchase lawsuit in determining some facts.
On December 3, 2021, the Zhejiang Higher People's Court upheld the original judgment in the second instance of this case and rejected the appeal.
After a lapse of more than two years, now Yiwu shopping is once again in trouble, pointing the finger at Chairman Zhao Wenge. Wang Jianjun said that the purpose is still “to hope that small commodity groups will solve competition problems in the industry. The ideal state is for the two platforms to develop in a misaligned position.”
However, a relevant person close to Commodity City told the Financial Federation reporter: “Yiwu Shopping and Chinagoods do not form direct competition. Yiwu Shopping is an online product transaction. In addition to online display and trading, Chinagoods also has comprehensive services such as customs compliance, payment and settlement, warehousing and logistics. It is a full-link industrial platform. This is a very important difference.”
Whether Wang Jianjun's current accusation is valid is yet to be examined by the court.
“Fading away” Yiwu shopping, growing Chinagoods
The reporter noticed that Yiwu Buy and Chinagoods, which have competition disputes in the same industry, are in a very different situation today.
According to Commodity City's announcement on September 30, 2014, Yiwu China Commodity City Information Technology Co., Ltd., a wholly-owned subsidiary, invested 56 million yuan in cash and in kind to co-sponsor the establishment of Zhejiang Yiwu Shopping E-commerce Co., Ltd., with Wang Jianjun and Yixia Chengdu International Trade City Co., Ltd., which accounts for 51% of the shares.
At the time, the announcement stated, “The decision to invest in the establishment of an e-commerce company in Yiwu was “to strengthen and expand the 'Yiwu Buy' platform, increase incentives for the 'Yiwu Buy' team, accelerate the transformation and upgrading of the Yiwu market, and maintain the continued prosperity of the Yiwu market.”
In the 2018 Commodity City Annual Report, it is written under the “Steady Improvement of E-commerce Platforms” column, “Promote the internationalization of Yiwu Shopping, complete the revision and logo update of the Yiwu Shopping International Website, and use the new domain name yiwugo.”
In 2019, Yiwu Shopping celebrated its 7th birthday. At that time, the number of registered users of Yiwu Buyers exceeded 3.3 million, more than 2,000 new registered buyers were added every day, and the average number of active buyers on the platform was nearly 100,000 per day. Among them, active overseas buyers mainly come from countries and regions such as Indonesia, the United States, Malaysia, Thailand, Russia, India, and Africa.
Also in 2019, Chinagoods first appeared in the annual report of Commodity City. Among the targets set in the 2020 business plan, the Chinagoods platform's GMV target exceeds 10 billion yuan.
According to the 2020 annual report, chinagoods is the company's “officially launched official website platform for the Yiwu Market” and is an important step in the company's digital transformation. In the official website name, chinagoods is the “only official website” of Yiwu Market.
Since Chinagoods was launched in April 2020, it has settled in more than 50,000 merchants and more than 500,000 registered buyers. At the time, Zhao Wenge explained, “The Chinagoods platform is equivalent to fully online and digitizing the trade ecosystem of the Yiwu market. This platform integrates functions such as online display transactions, smart warehousing and logistics, convenient customs clearance, global supply chain services, credit data collection applications, and financial empowerment.”
Subsequently, only relevant operating data appeared in Yiwu Purchase's annual report. Chinagoods performed rapidly in 2021-2022, and GMV rose from 16.8 billion yuan to 35.676 billion yuan. Commodity City's 2023 annual performance advance announcement shows that during the reporting period, the Chinagoods platform's GMV exceeded RMB 65 billion, an increase of more than 80% over the previous year; Yiwu China Commodity City Big Data Co., Ltd. (Chinagoods operator)'s annual net profit exceeded 80 million yuan.
When visiting the Yiwu Commodity Market in 2023, the Financial Services Association reporter learned that all 75,000 merchants in the market have already entered Chinagoods, and the platform is mainly monetized through basic membership fees and value-added membership fees.