Club Factory heavily impacted by India’s “only essentials” ecommerce policy

Many independent Chinese cross border ecommerce companies are facing the crunch as the coronavirus pandemic hits every part of the world.

JollyChic already shut down its warehouse in Dubai and communicated with its suppliers over overdue payments.

Club Factory, also Hangzhou based (as JollyChic and Alibaba are) but focused on India, is facing the crunch as well. Its suppliers are putting up banners in public areas demanding payment.

For those who are not familiar with how debt holders exercise their grievances in public – this activity is called “拉横幅” or “pull up the horizontal banner”. P2P investors use this a lot:

Club Factory, which raised US$100 million in 2018, and in the same year overtook Alibaba backed Paytm Mall as the 3rd largest ecommerce player in India, has been facing growing pains.

Last year, the tightening of customs inspection in India hit both Club Factory and SheIn, as well as other Chinese cross border players. Club Factory has demonstrated its resilience by transforming into a marketplace also with local Indian sellers. That year, it raised more money but probably at flat valuation.

Amid coronavirus-induced lockdown, there was a bit of back and forth on what should be allowed. Current stance is that ‘non-essential’ ecommerce is not allowed, after a government policy U-turn last Sunday.

While the move is seen as protecting local traders, ecommerce companies whose assortments are largely ‘non essential’ are heavily impacted.

Back in Hangzhou, rumours of mass layoffs are flying around. Bulletin boards crowded with developers are usually good source of such information.

This one says that “those laid off would receive half a month of compensation”:

While this ones ays “layoffs could impact 30-50% of the workforce”:

These are indeed extraordinary times.