Chuan Cheng Global Co., Ltd. (Stock Code:NASDAQ:LGCB) on2023year12month19The company successfully logged into NASDAQ on the same day. As a market-leading cross-border e-commerce comprehensive service provider, through its operating entities in Japan, Hong Kong, and the Chinese mainland, the company has formed a comprehensive service system consisting of two business lines: including(i)Cross-border sales and(ii)Comprehensive e-commerce services. Frost & SullivanFrost & Sullivan,Frost & Sullivan, referred to below as the 'Frost & Sullivan Team', provides exclusive industry advisory services for the listing of Transcheng Global Co., Ltd. We hereby extend our warmest congratulations on its successful listing.
Eastern Time, United States2023year12month19The company was successfully listed on the stock market today. Zhencheng Global this timeIPO listingIssued at par per common share4The public offering price of the US dollar is issued in total1,500,000Total raised amount for common shares6,000,000US dollar (excluding underwriter discounts and other issuance expenses).
During the process of listing in the US, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important chapters), and assisting the issuer in completingSECCommunication with investors, helping them quickly understand the market ecosystem and competitive landscape, assisting issuers in completingSECFeedback on various industry-related issues, etc.
Investment highlights
The company is a leading comprehensive cross-border e-commerce service provider;
The company realizes targeted digital marketing services through business data analysis;
The company has a diversified portfolio of internal 'recommended' or 'selective' products;
The company has established a comprehensive service system including cross-border sales and integrated e-commerce services;
The company has a management team that shares a common mission and is highly visionary.
Overview of Cross-border Trade Markets
Traditional cross-border trade refers to foreign trade transactions, mainly involving the import and export of goods. Domestic and international manufacturers directly connect with distributors, reaching business cooperation through telephone, email, exhibition marketing, etc. Payment for goods is made in the form of international bank vouchers or wire transfers, and finally, shipments are completed and transported through sea containers.
World Trade OrganizationWTOUnder the multilateral trading system, most member states actively participate in and cooperate to formulate free trade agreements, promoting trade flows. The WTO provides the organizational and legal basis for the trade system among its members, handles trade disputes, and administers various international trade agreements, including the North American Free Trade Agreement (NAFTA).NAFTAOrganization of the Petroleum Exporting CountriesOPEC) andRCEP(APEC Regional Comprehensive Economic Partnership).
RCEPIt is the world's largest free trade area, and2020year11month15ASEANASEAN) was signed during the summit. It includes10An ASEAN member state (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam), as well as China, Japan, South Korea, Australia, and New Zealand. Through the integration of existing agreements,RCEPIt is expected to narrow the distance between Asian countries, achieve mutually beneficial business exchanges, and promote economic integration in Northeast Asia and Southeast Asia.
According to the United Nations Commodity Trade Database and Frost & Sullivan reports, the market scale of Japan's cross-border trade in goods is based on total merchandise value (GMV) calculation, so as to2.6%The compound annual growth rate has increased, from2018year14,866Billion dollars increased to2022year16,466billions, expected to2027The year will further grow to22,535billion US dollars, with a compound annual growth rate of6.5%.
importGMVThe market scale of cross-border trade between Japan is expected to7.2%The compound annual growth rate increased to2027year12,751billions of dollars. ExportsGMVThe market scale of Japan's cross-border trade is expected to grow at5.5%The compound annual growth rate further increased, to2027Annual achievement9,784billion dollars.
Source: United Nations Commodity Trade Database, Frost & Sullivan report
According to the report by China Customs General Administration and Frost & Sullivan, the market scale of cross-border trade in China is based on the total value of goods (GMV) calculation, so as to7.9%The compound annual growth rate has increased, from2018year4.6Trillions of dollars to2022year6.3trillion dollars, expected by2027The year will further grow to9.9One trillion dollars, with a compound annual growth rate of9.6%.
importGMVThe scale of China's cross-border trade market5.9%The compound annual growth rate is from2018year2.1Trillions of dollars grow to2022year2.7trillion dollars, expected by2027Year will be10.4%The compound annual growth rate further increased to4.4trillion dollars. The market scale of China's cross-border trade is in exportsGMVcompute, from2018year2.5Trillions of dollars to2022year3.6One trillion dollars, with a compound annual growth rate of9.4%, is expected to arrive2027The year will further grow to5.4One trillion dollars, with a compound annual growth rate of8.9%.
Source: General Administration of Customs of China, Frost & Sullivan report
Overview of Cross-border E-commerce Market
In recent years, with the development of internet infrastructure, foreign trade digitization has promoted the rise of cross-border e-commerce models. This refers to a series of business activities carried out by trading entities within different countries' territories relying on e-commerce platforms. These activities include online ordering, payment, settlement, and delivery through cross-border logistics, customs clearance, etc., ultimately completing transactions. This transformation has weakened the limitations of traditional cross-border trade, which was highly dependent on suppliers and buyers, with long procurement chains and low profit margins. Nowadays, more and more participants are entering the cross-border e-commerce market, and the Regional Comprehensive Economic Partnership AgreementRCEP) may further drive this trend.
RCEPIt is the first foreign trade agreement between Japan and China in Northeast Asia (FTAAs one of the world's largest economies, China and Japan are vigorously expanding e-commerce cooperation.2022In terms of annual export and import value, apart from ASEAN, China and Japan rank first and second in East Asia respectively. On the core basis of assisting ASEAN development,RCEPat2019fully effective in the year-The e-commerce chapter in the ASEAN Free Trade Area (FTA) Protocol has been further upgraded, and member states are encouraged to establish a unified regional economic and trade framework.2022At the end of the year, China also signed memorandums of understanding on e-commerce cooperation with countries such as Singapore, Thailand, Laos, and the PhilippinesMemorandum of UnderstandingASEAN is currently China's largest commercial partner.2022The annual bilateral trade volume reached6.52trillion yuan, growth15.0%, occupyRCEPTotal national trade volume50.3%.
As the world's third-largest economy and fourth-largest e-commerce market, Japan's growing market size, high degree of digitization, and advanced infrastructure provide a favorable environment for the development of the e-commerce industry. In addition,2022Japan's foreign trade accounted forGDPrecent40%China is Japan's major supplier and the second-largest importer. The close trade relationship between the two countries also provides opportunities for China's cross-border e-commerce entry. With the further popularization of e-commerce and the increasing dependence of new-generation young consumers on online shopping, Japan's strong purchasing power and demand for high-quality products will further drive the vigorous development of e-commerce.
According to a report by Frost & Sullivan, from2018year840billion dollars to2022year1,470billion dollars, withGMVCalculated JapanB2CThe scale of cross-border e-commerce market is growing at a rate of15.0%The compound annual growth rate has increased, and is expected to be in2027The year will further grow to2,596billion US dollars, with a compound annual growth rate of12.0%Among the products sold through online platforms, according to Frost & Sullivan's statistics,2022About63%The goods originated in China.
Source: Frost & Sullivan report
Due to the development of cross-border services, overseas logistics, payment solutions, and the facilitation of regulatory environments, China's cross-border e-commerce market has achieved significant growth in terms of market size.GMVIn recent years, China's overall cross-border e-commerce market has been mainly driven by export markets. The main reasons are the improvement of China's supply chain, as well as relatively low labor and manufacturing costs. In addition, driven by technological disruption, it is expected that the categories of China's export products will expand from low-end products to high-end products, further promoting Chinese brands into international markets. At the same time, the COVID-19 pandemic has promoted online consumption in recent years, further stimulating the growth of the cross-border e-commerce market.
According to the Frost & Sullivan report, withGMVAccording to calculations, the market scale of cross-border e-commerce in China is17.9%The compound annual growth rate is from2018year12,099USD billion growth to2022year23,360billions, expected to2027The year will further grow to44,310billion US dollars, with a compound annual growth rate of13.7%.
According to the Frost & Sullivan report, imports of cross-border e-commerce in ChinaGMVMarket scale is in18.4%The compound annual growth rate is from2018year2,571USD billion growth to2022year5,059billions, expected to2027The year will further grow to10,210billion US dollars, with a compound annual growth rate of15.1%The scale of China's cross-border e-commerce market, in terms of exportsGMVCompound annual growth rate17.7%, from2018year9,528USD billion growth to2022year18,301billions, expected to2027The year will further grow to34,100billion US dollars, with a compound annual growth rate of13.3%.
Source: Frost & Sullivan report
RCEPMarket Overview of Cross-border E-commerce Comprehensive Service Providers
Cross-border e-commerce comprehensive service providers mainly exist in the form of agency cooperation. Typically, service providers provide enterprises with all or part of the online store e-commerce outsourcing operations, including store establishment and operation, product management, consumer management, marketing and promotion, customer service, warehousing and logistics.ITConsulting services. In addition to operating businesses, some service providers will also become distributors for enterprises, directly selling products to consumers through exclusive agency, or distributing them toB2CPlatform. Overall, service providers optimize merchants' sales performance and improve operational efficiency through comprehensive support.
According to a Frost & Sullivan report, the Regional Comprehensive Economic Partnership Agreement (RCEP) has not only been established91%The tariff reduction rate has also integrated new technologies to accelerate customs clearance of cross-border logistics, promoted the growth of regional industrial chains and supply chains, and formulated in-depth regulations on intellectual property and e-commerce. Against this backdrop, the zero-tariff policy is particularly clear for trade countries with high transaction volumes such as China and Japan. According to data from the General Administration of Customs of China, bilateral trade between China and Japan is2021Year-on-year growth17.1%China has become the largest trading partner of ASEAN. A favorable policy environment has stimulated e-commerce exchanges among member states and given rise to comprehensive e-commerce service providers in the continuously expanding e-commerce market.
According to a Frost & Sullivan report, by revenue:RCEPThe market scale of cross-border e-commerce comprehensive service providers is28.0%The compound annual growth rate is from2018year102USD billion growth to2022year274billions, expected to2027The year will further grow to718billion US dollars, with a compound annual growth rate of21.2%What is more noteworthy is thatGMVThe scale of the Southeast Asian e-commerce market,2018year230USD billion growth to2022year1,300billion US dollars, with a compound annual growth rate of54.2%, is expected to arrive2027Year will be21.2%The compound annual growth rate increased to3,403billion dollars.
Source: Frost & Sullivan report
RCEPCross-border E-commerce Market Comprehensive Service Provider Market
Key market drivers
· RCEPDriving demand for the Southeast Asian market
RCEPThe regulations specify the rules of origin to provide favorable tariffs and clear e-commerce terms, including 'customs procedures and trade facilitation' to expedite cargo clearance, as well as provisions on consumer rights and data protection. According to a report by Frost & Sullivan,RCEPThe actual support provided has significantly promoted the expansion of demand and e-commerce in Southeast Asian countries. However, the development level of e-commerce in the region is relatively lagging behind, making it difficult to fully utilize these advantages.
· Development of technology
With the rapid development of digital technologies such as cloud computing, big data, and artificial intelligence, cross-border e-commerce has been promoted and supported, giving rise to comprehensive innovations such as direct sales e-commerce platforms and diversified social media platforms. All these innovations may make cross-border e-commerce support services more refined and intelligent, and be deeply applied throughout the entire supply chain, for example throughSaaSFrost & Sullivan helps stores manage and digitize the entire inventory process, thereby improving the efficiency of cross-border e-commerce logistics, marketing conversion rates, and the quality of operational decisions. In addition, according to a report by Frost & Sullivan, after more than a decade of development in the domestic market, Chinese service providers have accumulated mature knowledge and platform operation technology that can be replicated in foreign markets to meet the needs of a large number of cross-border sellers.
· Capital injection into the field of comprehensive e-commerce service providers
RCEPThe implementation of Frost & Sullivan has provided a secure business environment for e-commerce companies looking to expand within member states, attracting a large number of investors. According to a report by Frost & Sullivan, since2021Since [start year], the business of cross-border e-commerce service providers in China has undergone20Multiple financing activities, with the total financing amount exceeding20RMB 20 billion. This includes independent websites, software services, warehousing, and logistics service providers that have established or potential business models and technologies that can be expanded and improved.
RCEPCompetitive landscape of cross-border e-commerce comprehensive service provider market
According to a report by Frost & Sullivan, the Chinese cross-border e-commerce market, as a major seller, as of2022In 2021, it was fragmented, with over160,000homeB2BSeller and more530,000homeB2CSeller. Other major onesRCEPThe country also faces a similar market situation, with numerous and scattered sellers, and the e-commerce industry is continuously expanding. In addition,2022yearRCEPThe industry of cross-border e-commerce service providers within China is also fragmented. For instance, the website construction market is dominated by foreign companies.ShopifyOccupying about60%market share. The product selection category mainly serves Amazon sellers, with leading suppliers occupying the60%However, due to the large variety of supplier types, customer acquisition and market operations are highly dispersed.
2022yearERPThe industry is also fragmented, with more than30Home suppliers, most of which are operational service providers expanding into marketing and supply chain services. Those comprehensive service providers that aggregate and cooperate with different cross-border e-commerce service providers can fully leverage their deep understanding of the entire cross-border e-commerce value chain, target markets, and customers to better serve sellers and are expected to succeed in this fragmented but growing market.
View the prospectus
Frost & Sullivan has extensive research experience in the e-commerce industry and has assisted well-known enterprises in successfully listing on the capital market. Successful listings include:Webuy（NASDAQ: WBUY), the child does not speak2420.HK),Blibli（BELI.IDX),Starbox（NASDAQ:STBX), Dajianyun WarehouseNASDAQ:GCT), Youhe Holdings2347.HK),YesAsia（2209.HK), Huaixin Holdings8442.HK), Shangjin International2528.HK), TopBao International6110.HK), Baby Tree1761.HK), Siku ChinaNASDAQ:SECO), Barbie Beige8297.HK) JumeiyoupinNYSE.JME), VIP.comNYSE.VIPS) etc.
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