The encyclopedia · Strategy & Leadership · Strategic decision · 2015–2023
BAIFUN's ¥8B cross-border EC to China collapsed as COVID and lockdowns killed it
A cross-border ecommerce company selling Japanese cosmetics to China peaked at ¥8B then collapsed to ¥2.7B with ¥1.2B debt as COVID broke the pipeline.
BAIFUN Co., Ltd. · 2023-01-19
What happened
BAIFUN Co., Ltd. was an Osaka-based cross-border ecommerce company founded in June 2015 with ¥5 million in capital. The company sold Japanese cosmetics, general goods, and pharmaceuticals to Chinese consumers through Chinese ecommerce platforms, capitalizing on the surge in demand for Japanese products in China.
The company grew rapidly, reaching peak revenue of approximately ¥8 billion by the fiscal year ending April 2018. Chinese consumers' enthusiasm for Japanese cosmetics and toiletries drove explosive growth. However, the COVID-19 pandemic disrupted logistics between Japan and China, while the company's founder was unable to enter Japan from China for an extended period, causing management disarray. China's zero-COVID lockdowns further crushed consumer demand.
Revenue fell to approximately ¥2.7 billion by the fiscal year ending April 2022. With thin margins and accumulated losses, the company could not sustain operations. BAIFUN was ordered into bankruptcy on January 19, 2023 with approximately ¥1.2 billion in liabilities.
Why it happened
- Revenue fell from ¥8B to ¥2.7B (66% decline) as COVID disrupted the cross-border logistics pipeline between Japan and China.
- The founder could not enter Japan from China for an extended period due to pandemic travel restrictions, creating management chaos.
- China's zero-COVID lockdowns and economic slowdown crushed consumer demand for Japanese imports.
- The cross-border EC business had thin margins and no cash reserves to absorb a multi-year disruption.
- The company grew fast on Japanese product demand but had no cushion when the pipeline broke.
The lesson
A cross-border business that depends on the founder moving freely between two countries has a single point of failure that no amount of demand can fix when borders close.
Aftermath
BAIFUN Co., Ltd. was ordered into bankruptcy on January 19, 2023 with ¥1.2 billion in liabilities. Founded June 2015 with ¥5M capital in Neyagawa, Osaka, the company sold Japanese cosmetics, toiletries, and pharmaceuticals to Chinese consumers via Chinese ecommerce platforms. Peak ¥8B revenue (FY Apr 2018) fell to ¥2.7B (FY Apr 2022) as COVID-19 disrupted logistics, trapped the founder in China, and Chinese lockdowns crushed demand.
Sources
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