Cogobuy.com, a Chinese business-to-business e-commerce firm for integrated circuit products, plans to become the first e-commerce firm to list in Hong Kong, most likely in the second or third quarter of this year, a top company official said.
But of course, that is if Alibaba Group Holdings Ltd. does not realize its initial public offering plan in the city before that.
One major difference between Cogobuy.com and Alibaba is that the former conducts direct sales and keeps an inventory of its products, while the latter operates as a “yellow page” platform.
“Keeping stocks is not dangerous for us as 90 percent of our stocks are covered by concrete orders,” Cogobuy.com chairman Jeffrey Kang told a press briefing.
“We would factor the accounts receivable of our blue-chip clients to Hong Kong banks including HSBC Holdings Plc (00005.HK), Standard Chartered Plc (02888.HK) and Bank of China (Hong Kong) Ltd. (02388.HK) in exchange for a total of US$220 million financing credit with an annual rate of 2.5 percent, then we take the money to place the orders,” Kang said.
Blue-chip clients such as Huawei Technologies Co. Ltd. and ZTE Corp. (00763.HK, 000063.CN) account for 56 percent of the company’s revenue.
Kang said the stocks that it is not able to sell can be exchanged with new products. About 90 percent of the company’s suppliers are from the United States, including Intel Corp.
Besides the direct sales business model, suppliers and buyers can link up with each other through the website or a special function in WeChat. If a deal is closed, Cogobuy.com takes a 0.5 to 4.5 percent commission from the transacion amount. Alibaba, on the other hand, has a one-off membership fee model.
Cogobuy.com hopes the commissions will account for more than 40 percent of total sales in three to five years’ time, compared with 10 percent at present.
Sales reached 4 billion yuan (US$658 million) to 5 billion yuan last year, from just 1 billion yuan in 2010. The company plans to boost revenue to 100 billion yuan in three to five years’ time.
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