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Recently, the cold chain warehouse distribution company Weijie Chengpei published an article on its official account, admitting that its business was in crisis. Due to the company's major shareholders' early repurchase arbitration and the adoption of property preservation measures, multiple accounts of the company were frozen, and it was unable to carry out normal financial activities, including income collection, payment of payable expenses, employee wages and other daily expenses, resulting in serious interruption of business activities.

The business was suddenly interrupted and most customers began to terminate their contracts.

Public information shows that Weiji Chengpei is a same-city delivery B2B platform. The company was founded in Xiamen in 2014 and later established its management and operation headquarters in Shanghai. The company takes warehouse and distribution integration as its main service product, focusing on the two main lines of catering and supermarkets, serving three customer groups of brand owners, channel merchants and chain terminals, and creating a multi-city, multi-temperature layer, multi-level warehouse and distribution operation network. It has long been focused on the fulfillment and delivery of B2B multi-temperature warehouse and distribution. This segment. As of the beginning of 2023, official data showed that Weiji Chengpei has a monthly active capacity of more than 3,500 units, including 2,100 cold chain vehicles, making it one of the top 50 domestic cold chain self-owned transportation companies. The average daily effective distribution points exceed 50,000.

In the field of same-city delivery, Weiji Chengpei was once a star company. According to industrial and commercial information, from 2015 to 2020, the company received four rounds of financing, with investment institutions coming from Meihua Venture Capital, Deqian Capital, SAIF Investment Fund, Sinovation Ventures, Xiamen Venture Capital, SPD Silicon Valley Bank, Falcon Investment, China Resources Runxiang Lianhe Fund, etc. The company has served clients including Suning, JD.com, Alibaba, Budweiser, Xiabu Xiabu, Xibei Youmiancun, Qiandama, Hema Fresh, Baiguoyuan, Dingdong Maicai, etc.

In 2020, Weiji City Distribution received a B+ round of financing of RMB 100 million led by China Resources Runxiang Lianhe Fund under the China Resources Group. Wang Qi, founder and CEO of Weiji City Distribution, pointed out: "With the continuous compression of the levels of the new consumer supply chain, the continuous improvement of distribution, and the continuous increase in digital requirements, the national warehouse distribution network platform serving the entire chain and all channels has ushered in a major strategic window period. Weiji City Distribution will further increase the construction of warehouse distribution logistics network and intelligent system network."

Weiji City Distribution admitted in a recent announcement that since 2020, the company has encountered great difficulties in business operations due to various macroeconomic conditions and objective factors. The Weiji team has taken a variety of effective measures to maintain operations and strive for development. With the trust and support of customers and the team's tenacious struggle, local companies in Guangzhou, Xiamen, Fuzhou, Hangzhou, Shanghai, Nanjing, Jinan, Guiyang and other places have successively achieved profitability, and business conditions have gradually improved. Due to the agreement on the investment agreement of external shareholders, the company triggered the equity repurchase clause on December 31, 2023. After several rounds of communication, the understanding and exemption support of the vast majority of shareholders were obtained.

"Unfortunately, a major shareholder recently filed a repurchase arbitration against our company and took property preservation measures. On July 9, 2024, multiple accounts of our company were frozen, and we were unable to carry out normal financial activities, including revenue collection, payment of payable expenses, employee wages and other daily expenses, resulting in a serious interruption of business activities." Weijie Chengpei said that in the face of this emergency, the company is negotiating a solution with all parties. However, due to the sudden interruption of business, market confidence in the company plummeted, and most customers began to terminate their cooperation agreements with it.

According to reports, in order to reduce losses and maintain the company's operations, the management team of Weijie Chengpei has been actively looking for external investors to restructure the company, but has failed to obtain unanimous consent from all shareholders. Currently, Weijie Chengpei is working hard to maintain the company's operations and resolve the repurchase arbitration issue with a major shareholder through legal means in order to lift the account preservation status as soon as possible. At the same time, it is looking for suitable investors and partners to achieve the company's restructuring and business recovery.

The urban distribution market is highly fragmented, and heavy asset investment and operation pressure are high

Urban distribution refers to a series of logistics operations such as collection, sorting, processing, packaging, storage, and transportation in and around cities according to customer needs. It mainly serves multiple industries such as commercial circulation, e-commerce, catering, fresh food, and fast-moving consumer goods. It connects various commodity manufacturers, distributors, and retailers upstream, and physical retail and restaurant stores such as supermarkets downstream. According to statistics from third-party institutions, the market size of China's urban distribution industry will be about 1.393 trillion yuan in 2023.

Industry insiders pointed out that unlike express delivery companies or intra-city instant delivery platforms facing consumers, city distribution business needs to match different industries and urban economic development levels, has strong regional characteristics, high professional barriers, and is difficult to standardize in various links. The entire market is highly fragmented. In addition, city distribution companies have large warehouse and vehicle investments, which are asset-heavy operations. Large amounts of prepaid expenses prolong the profit cycle, which often puts companies under greater operating pressure.

Nandu previously reported that in 2021, Yunniao Technology, also a city distribution company, was caught in a "bankruptcy and runaway" storm. The company was exposed to have fallen into operational difficulties due to the impact of the epidemic, and its cash flow was exhausted. It decided to file for bankruptcy, resulting in a large number of employees' wages being in arrears. Although the company had received investments from multiple well-known capital institutions from 2015 to 2017, the rapid expansion and intensive recruitment of drivers brought about growing operating and labor costs, gradually causing the company's funds to be insufficient in the later stages. Ofo, which had a transportation contract with Yunniao Technology, went bankrupt and withdrew from the market, and the outstanding debts also made Yunniao "worse".

Weiji City Distribution has invested heavily in IT systems, offline warehouses and manpower. Previously, Wang Qi said in an industry event that the essence of retail is traffic + supply chain, and the essence of supply chain is goods + logistics. Supermarkets, catering and logistics are the business of fulfillment. Offline operational capabilities are very important. Weiji City Distribution invests heavily in the research and development of intelligent information systems every year to provide large customers with customized solutions and operational process data services. The "Sky Dome" intelligent system developed by Weiji Technology is not only used for its own operations, but also continuously exported to the outside world to enable the digitalization of the logistics network of partners.

At the same time, warehouse and distribution infrastructure is also a major investment. On June 7, Weiji City Distribution also announced that it plans to build five regional cold chain industrial parks in South China, East China, North China, Central China and Southwest China within five years. Combined with the existing 15 provincial warehouses, it can build a warehouse and distribution operation network covering 100 cities across the country.

As the demand for urban distribution continues to increase, more and more companies are entering the market. Companies that mainly target the C-end market, such as Cainiao, SF Express, and Lalamove, have also begun to enter the B-end urban distribution field. iResearch Consulting Group's research and analysis shows that for companies that mainly target the B-end market, they are in the middle link between upstream suppliers and downstream delivery in the freight market. They not only need to face pressure from customers and transportation supply, but also face the impact of cross-domain logistics giants entering the market. Under fierce market competition, whether they can have a wide network scale, stable transportation capacity, full-chain service capabilities, and sufficient financial and technical support will become the key to the competition of freight city distribution platforms.

Written by: Southern Metropolis Daily reporter Fu Xiaoling