5Y News | CloudWalk Group Closes $600 Million Series C2 Round to Expand Global Digital Supply Chain Services

五源资本·April 19, 2021

A world-class supply chain that belongs to Chinese retail.

Xingyun Group, a leading Chinese digital supply chain platform for consumer goods, recently announced the completion of its Series C2 funding round totaling approximately $600 million. The round was led by Yunfeng Capital, with co-lead investors CITIC Capital and Harvest Investment. Skywalker Capital, B Capital Group, Keywise Capital, Mirae Asset, and UOB Venture Management participated, while existing shareholders Matrix Partners China, Taikang Life Insurance, 5Y Capital, and HLC continued to increase their investments.

Wang Wei (Billy)

Founder of Xingyun

Why did you found Xingyun?

Wang Wei: After more than a decade of development, the e-commerce industry has gone through many iterations on the consumer-facing side, but the supply chain system remains stuck in the general trade era. Cross-border e-commerce supply chains in particular involve so many parties that they've created extremely long chains where supply and demand can't be transmitted efficiently, resulting in massive cost waste. Xingyun's founding mission was "making cross-border business simpler." Over the past six years, we've built out a complete supply chain for cross-border import scenarios. Today, we have 200,000 small and medium retailers generating nearly 30 billion RMB in GMV annually. This year, we're setting our sights on "buying global, selling global." We want to take what we've learned from import e-commerce supply chains and replicate it for export e-commerce, using payment and settlement as one of the key scaling elements to help Chinese products reach global consumers through e-commerce.

What's the difference between e-commerce supply chains and general trade supply chains?

Wang Wei: General trade operates on a trader-to-trader logic — it's a point-to-point relationship. E-commerce, by contrast, involves massive numbers of sellers reaching buyers directly through platforms — a many-to-many relationship. This fundamentally different transaction model creates major differences in goods flow, logistics, and capital flow.

On the goods flow side, consumer demand gets transmitted to sellers in a more efficient, digital way, lowering supply chain circulation costs and flattening distribution channels. On the logistics side, the roughly one-week customs clearance cycle typical of traditional general trade gets replaced by bonded logistics or direct mail with "T+0" delivery to consumers. And because return costs are so high, localized resale capabilities become more critical. On the capital flow side, traditional general trade's reliance on banks for large-sum clearing can't adapt to e-commerce's pattern of small, frequent, high-concurrency transactions — the market is calling for new solutions.

What is Xingyun's mission?

Wang Wei: Cross-border e-commerce represents a new model, led by China, that's challenging the US-led general trade system. The global spread of cross-border e-commerce carries the historic mission of RMB internationalization and a new China-led global trade order. Domestically, Xingyun aims to become the intelligent supply chain backbone for e-commerce. Globally, we want to be the evangelist for Chinese cross-border e-commerce. That's the historic mission this era has entrusted to Xingyun.

Zhou Xiao

Vice President, 5Y Capital

Why did you invest in Xingyun?

Zhou Xiao: Chinese consumer goods are currently undergoing a historic separation of production, supply, and sales. As per capita disposable income rises, more and more new brands are emerging, while traffic sources are becoming increasingly fragmented. Only the supply side is undifferentiated — and undifferentiated means standardizable, standardizable means scalable, and scalable means the opportunity for a $100 billion company.

What's the biggest variable in retail supply chains today?

Zhou Xiao: Offline supply chains are典型的 "push supply chains," where products get pushed through layers of distributors, creating excess inventory in the channel and wasting capital and logistics costs. E-commerce supply chains are典型的 "pull supply chains" — demand comes first, then supply gets organized. So e-commerce compresses circulation costs while also breaking the "Price" and "Place" elements of the traditional 4P marketing theory, creating an integrated online-offline inventory system. For e-commerce to become truly intelligent, it needs to go beyond online consumer tagging to also coordinate offline supply chain systems — supply chain tagging. Today, Xingyun not only understands consumer shopping behavior across the entire internet, but also has offline integrated inventory data. We believe there's a massive opportunity here for a digital e-commerce supply chain backbone.

How much room for growth do you think Xingyun still has?

Zhou Xiao: Xingyun is already far ahead in the cross-border import space. In domestic general trade, it's gradually building an intelligent supply chain backbone for e-commerce retail based on the supply chain advantages developed through cross-border imports. On the export side, Xingyun provides traders with comprehensive supply chain management services covering goods flow, logistics, and capital flow, enabling Chinese products to reach and circulate more efficiently through Xingyun. In both domestic and export directions, intelligent supply chain backbones and brand export empowerment will be key scaling elements — both represent opportunities above $100 billion.

Does Xingyun have a clear benchmark company?

Zhou Xiao: China's growth in per capita disposable income and consumer spending power developed in parallel with the rise of e-commerce — very different from the US and Japan, where offline retail was already highly developed before e-commerce emerged. So in a sense, because our e-commerce environment is more advanced, our digital supply chain foundation is actually more advanced than in the US and Japan. Today we have the world's largest market, the most extensive supply chain base, and the most advanced algorithm technology. This is fertile ground for business models that can lead the world.

What are your expectations for Xingyun?

Zhou Xiao: To become a world-class supply chain for Chinese retail.

Founded in 2015, Xingyun Group has consistently focused on providing digital supply chain and dropshipping fulfillment services for online and offline small and medium retailers. After nearly six years of development, it now provides approximately 50,000 SKUs from roughly 3,000 overseas consumer brands to nearly 200,000 domestic online and offline small and medium retailers. Through digital connections with nearly 150 logistics centers, goods can reach hundreds of millions of consumers across more than 200 e-commerce platforms.

Xingyun Group will continue strengthening its advantages in overseas consumer goods digital supply chains while rapidly building domestic consumer goods digital supply chain capabilities. It aims to provide innovative services for emerging domestic retail formats such as community group buying and livestream e-commerce, as well as for overseas online small and medium retailers, while continuing to drive the digital transformation of overseas offline small and medium retailers.

Xingyun Group founder Wang Wei noted that after more than a decade of development, the e-commerce industry has created a fragmented ecosystem of tens of millions of online small and medium retailers, with millions of SKUs available for online sale. Through digital transformation on the supply side, Xingyun connects with digital retail endpoints and fulfillment providers via a powerful algorithm backbone. Online small and medium retailers can focus on content creation and building social relationships to generate consumer orders, without worrying about complex supply chains or asset burdens. Brands and distributors can reach fragmented traffic across the entire network through a single platform.

"We're excited to be doing something right and valuable in the global consumer goods market, which exceeds hundreds of trillions of RMB. We hope our digital supply chain platform services can empower more small and medium retailers and brands, ultimately benefiting consumers worldwide. Starting from connecting imported consumer goods with domestic small and medium retailers, Xingyun has already become a domestic leader in this space and will continue to grow rapidly. Building on our existing base of small and medium retailers, Xingyun will provide digital supply chain services for domestic consumer goods, and leverage the expansion of domestic consumer goods supply capabilities to open up export channels and overseas small and medium retailer endpoints. With the capital support from the Series C2 funding, Xingyun plans to establish online and offline goods, logistics, and capital flow pathways in over 70 countries within the year, comprehensively serving Chinese brands going global, and ultimately achieving our vision of 'buying global, selling global,'" said Wang Wei.

5Y Capital (formerly Morningside Venture Capital) currently manages approximately $5 billion in USD and RMB dual-currency funds. We believe the world would be a better place if the crazy you that others saw started to be believed.

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