Youzan (有赞), a Hong Kong-listed e-commerce platform, announced that it has completed HKD 910 million strategic investment on April 4, 2019. It was led by Tencent (HKD 550 million), with participation from Greater Bay Area Development Fund (大湾区共同家园基金), Gaocheng Capital, Franchise Capital, and Elephas Investment. The investment will be used on offline stores expansions including system upgrades, product developments, marketing and promoting and daily operations.

After this strategic investment, its prices opens high and closes at 6.25% higher than the previous closing price.

Company description 

Milestones

In November 2012, Youzan started as SaaS provider for small e-commerce companies. It is also known as the Chinese version of Shopify.

In 2017, Youzan started to work on Youzan Cloud. At that time, third-party developers were invited to help businesses to customize their shops.

In April 2018, Youzan went public via the backdoor listing. The initial offering price was HDK 0.38 and rose to HKD 0.57 with a market cap exceeding HKD 6 billion. It is the first and only (till now) listed company that heavily relied on WeChat ecosystem.

On March 26, 2019, Youzan launched a solution for cross-border retailers to help them organize and legitimize operations.

Company size

The market cap ending April 3, 2019 is HKD 9.3 billion, according to Choice, a financial service provider.

Ending 2018, Youzan has 4.42 million business users, 100 thousand+ paid users, , 100 thousand active users and 200 users who have had one or more transactions, according to All Weather TMT, a Chinese tech media.

Financial outlooks

Revenue: reaches HKD 684 million with year-on-year growth of 229.3%.

Gross profit:  reaches HKD 231 million with year-on-year growth of 784.9%.

Net loss: reaches HKD 839 million with year-on-year growth of 521.4%.

Interestingly, in May 2016, Youzan launched the so-called "Manhattan Project" which BAI Ya (白鸦), the founder and CEO of Youzan, believes it is critical and high importance. The project is about to achieve sustainable profits in 2010 to 2011. Moreover, "Project Normandy" is another plan came up by Youzan which aims to increase the share of offline stores businesses to more than 50%. 

GMV (Gross Merchandise Volume): reaches CNY 33 billion with year-on-year growth of 80%.

Investor's thoughts

The leading investor is Poyang Lake Investment, a fully owned subsidiary of Tencent. 

Synergies

From the second half of 2018, Tencent started to emphasize more on toB business. And Youzan is the largest WeChat's mini-program services provider. In addition, Youzan has extensive experience in serving retailers and good understandings of retailer's needs/pain points and different applicable retail scenarios. By investing Youzan, Tencent marched further in toB market and smart retail plan.

Tencent's next plan - toB and industrial internet

In September 2018, Tencent announced a group restructure and CSIG (Cloud, Smart Industry Group) was formed. 

The benefits result from the internet mobile era started to diminish. Tencent's key toC business - gaming, was heavily hit by tighter regulations, resulting in its share price dropped significantly. So, Tencent needs to find a new direction which can both generate sustainable growing profits and meet long-term strategic development goals. Focusing on business customers and industry and advanced technology are the strategies that Tencent came up.

Tencent is not alone, other Chinese tech giants such as Alibaba, Baidu, and Xiaomi are also follwoing a similar strategy and invested heavily on business customers and technology.