Riding on the coattails of Alibaba's successful IPO in New York last September, Alibaba-invested e-commerce company Baozun from Shanghai raised $110 million in its own IPO and began trading today on NASDAQ but without the fanfare and lift of its lead investor.
Baozun is the second Chinese technology company to list in the U.S. this year, after Beijing-based GroupOn like Wowo Ltd., raised $40 million in an IPO in April. Many Chinese companies have been opting to go public in China over the past year, capitalizing on the booming A share market. Baozun shares traded up slightly in the initial trading day, while Wowo, the former 55tuan.com, has faced mixed performance.
In an interview, Baozun's CEO Vincent Qiu, speaking in perfect English, said the $110 million capital raise will go toward increased sales and marketing staff and expanding the e-commerce branding service into international markets with Taiwan and Southeast Asian markets earmarked for later this year. Japan could follow soon after, he said.
Not that there is any lack of opportunity for an e-commerce leader such as Baozun in the mainland China market. Started in 2007, Baozun specializes in helping multinational companies such as Nike, Microsoft and Phillips leverage its technology to manage inventory, fulfillment, customer service and marketing campaigns and sell their brands online in China marketplaces including TMall and JD.com, on mobile, and offline.
Baozun has a 20 percent market share of this e-commerce specialty market in China for so-called online to offline sales.
Positioned as a niche player in China's e-commerce market with $289 million in revenues and a net loss of $26 million over the past 12 months, Baozun is riding on this sector's tremendous growth as Chinese consumers and brands meet online. Though facing setbacks from concerns over counterfeit goods, China's e-commerce market is set to increase from roughly $130 billion in 2014 to $379 billion by 2017, according to China market research firm iResearch.
Following the IPO, Alibaba holds a 18.2 percent share, down from 23 percent. While most of Baozun backers are strategic investors like Alibaba, Baozun also has venture capital from Israeli-Chinese firm Infinity I-China Investments, which has a 6.6 percent stake.
