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Text/Zeng Jiaqi Jiang Yuyin Editor/Jiang Yuyin

Ningbo boss Xiang Lehong has further expanded his overseas business.

In early August, the company he led, Lejia Holdings, updated its prospectus for a private placement, planning to raise 400 million yuan for the construction of the Ellabell overseas warehouse project in Georgia, the United States.

More than a month ago, Lechuang announced that its wholly-owned subsidiary planned to sign a contract with Missouri construction company Clayco, and the project cost was estimated to be US$77.5 million, or approximately RMB 550 million.

In 2002, Xiang Lehong founded Lechuang. In his words, both products and business models "must keep pace with the times."

From OEM equipment brackets to lifting tables, Xiang Lehong sells products and services, with revenue exceeding 2.4 billion yuan in the first half of the year, an increase of more than 40%.

The overseas warehouse business he relies on has seen rapid revenue growth and has become Lechuang’s “second growth curve.”

Cross-border business

Xiang Lehong mainly deals in smart home and office products, mainly with its own brands, the domestic brand is "LOCTEK" and the overseas brand is "Flexispot".

Its specialty is the ergonomic series, with the main product being adjustable tables. From January to June, it sold products worth 1.337 billion yuan, with the gross profit margin remaining stable at around 40%.

Xiang Lehong sells goods domestically and abroad, online and offline, with a comprehensive layout.

In terms of region, overseas revenue is the largest source of revenue. In the past two years, the revenue share of this region has been above 90%.

For offline channels, overseas customers are mainly retailers, supermarkets, engineering and other clients, with OEM as the main focus; domestically, we mainly sell our own-brand products to physical stores, office furniture dealers, etc.

Boss Xiang also tried to open his own store.

He used Ningbo as a pilot city, opened three direct-operated experience stores, and opened 35 distribution stores in Beijing, Shanghai, Chongqing and other places.

Furniture is sold online mainly through independent websites and large e-commerce platforms.

"21CBR" reporters found that Lejia's Tmall flagship store has over 350,000 fans, and the top-selling products of lifting tables are priced between 270 and 2,300 yuan.

Cross-border e-commerce is growing rapidly, with revenue exceeding 900 million yuan in the first half of the year, a year-on-year increase of 20.36%. Sales are concentrated on Amazon and independent sites, accounting for a total of 94%.

Lechuang currently has 12 independent websites. Compared with third-party platforms, independent websites can meet customized needs and have higher per capita consumption. From January to June, its US independent website traffic ranked first among its major competitors.

When doing business at home and abroad, there are differences in Xiang Lehong's main products and pricing.

For example, some of the E7 series of lifting tables sold on the overseas FlexiSpot are available for sale on the domestic Lechuang official website, but are not available on Tmall and other platforms.

On FlexiSpot, the E7 height-adjustable table is priced at US$579.99, which is US$389.99 after discount, or approximately RMB 2,790. The same model on the Leckey official website costs RMB 2,199.

Relying on the core component of the linear drive lifting system, the team expanded its product matrix and launched new product categories such as electric sofas and ergonomic chairs. Its cross-border revenue accounts for about 8%.

The second half of the year is the peak season for sales. Based on last year's performance, Mr. Xiang is likely to achieve an annual revenue of 5 billion.

Xiang Lehong and Jiang Yi hold a total of 49.59% of Lechuang's shares. According to the current market value, the couple's net worth exceeds 2 billion yuan.

Self-built warehouse

In recent years, Xiang Lehong has focused his main energy on overseas warehouses.

The revenue proportion of warehousing and logistics business has been rising from less than 6% in 2021. The revenue in the first half of this year was 851 million yuan, accounting for more than 35%.

In terms of gross profit margin, this segment is only 15%, 25 percentage points lower than the main ergonomic products, and building one's own warehouse is a heavy asset investment.

Xiang Lehong is impressed by its ability to strengthen capital and increase efficiency.

Data shows that by 2023, 54% of third-party warehousing and logistics service providers will be able to complete warehouse processes such as "picking-weighing-labeling-shipping" within 60 minutes.

The home furnishing products that Lejia mainly sells are large in size and weight, and have high transportation costs. Storing them in overseas warehouses can reduce shipping costs.

Minsheng Securities has calculated that the warehouse delivery cost for a 3kg small appliance from Guangzhou to the West Coast of the United States is only half of that of direct delivery.

Earlier, Lechuang used Amazon's warehouse. Xiang Lehong weighed the pros and cons and established the first self-operated overseas warehouse in Silicon Valley in 2013 by leasing it.

"At the time, the monthly rent was $0.58 per square foot. When the three-year contract expired, the renewal price increased to $0.85."

Xiang gave up renewing his lease and found that there was an urgent shortage of warehouse resources in the United States when he was looking for a warehouse. He began to build his own overseas warehouses, which were located in Memphis and Houston.

From an efficiency perspective, in order to achieve a delivery speed of 1-2 days, at least ten more warehouses need to be built.

"The construction cost of a general warehouse is about $100 per square foot, so 100,000 square meters would cost $100 million. Based on 39 years of depreciation, the annual depreciation cost is (nearly) 20 million RMB."

Xiang Lehong considered renting the storage space not used by Lejia to domestic small and medium-sized enterprises engaged in cross-border e-commerce.

He has another consideration when he switches from being a demander in overseas warehouses to a water seller.

The final-mile logistics in the United States is mainly provided by UPS, FedEx, etc. "If a company ships more than 10 million large and medium-sized packages, it will become the world's top 100 customer of the final-mile logistics service provider, and the price it offers will definitely be good."

In May, Xiang Lehong announced the launch of a distribution platform, which means opening up independent site resources to help Lejia’s overseas warehouse customers sell goods on the platform.

He plans to build his own truck fleet to provide "customs clearance-trucking-warehousing-distribution" services after the containers arrive at the port, "completing the closed loop from logistics to sales and building a service-oriented and platform-based enterprise."

Keep moving

Xiang Lehong, born in 1971, was engaged in import and export trade in Ningbo in his early years. In 1998, he started his own business, initially doing foreign trade OEM for computer and TV stands, and thus Lechuang was born.

"If I want to sell my own products, I have to set up a warehouse in the United States," Xiang Lehong wrote in his graduate thesis.

He led the team to enter the field of ergonomics, developed its own brand in 2009, and later turned to cross-border e-commerce. In 2017, Xiang Lehong rang the bell at the Shenzhen Stock Exchange.

Xiang Lehong is also a million-dollar blogger. He shares his entrepreneurial stories and business insights on his Douyin account "Lege Xiang Dong Shuo" and has more than 2.75 million followers.

In recent years, Boss Xiang has frequently raised funds and worked hard to expand production capacity.

In 2021, the company will raise no more than 1.194 billion yuan through the private placement, which will be invested in smart factory projects for linear drive core technology products, 5G+ smart factory technical transformation projects with an annual output of 150,000 sets of smart linear drive products, and public warehouse and independent station information system construction projects.

In August of the following year, Leckey planned to raise no more than 300 million yuan in additional capital to be used for the Vietnam Flexibo smart home product factory. The project was completed at the end of March this year and put into trial operation.

Currently, Loctek has four manufacturing bases in Ningbo, Guangxi and Vietnam. The domestic bases are responsible for core components, while the overseas bases are responsible for peripheral manufacturing and assembly, etc., and can be exported to the United States with zero tariffs.

The company's linear drive lifting system products have an annual production capacity of over 2 million sets.

In terms of overseas warehouses, Xiang Lehong follows the idea of ​​"small warehouse for large warehouse" and gives priority to opening warehouses of more than 500,000 square feet.

In early July, Leckey announced that it plans to sell its overseas warehouse in Florida, the U.S. The target was purchased in January last year and the expansion was completed at the beginning of this year, with an area of ​​about 350,000 square feet.

The transaction is intended to recover funds and stock up on ammunition for the overseas warehouse in Ellabell, Georgia.

After the Ellabell warehouse is completed and put into operation, it is expected to increase the annual processing capacity by 2.09 million pieces. When it is in mature operation, it is expected to increase the overall profitability of the warehousing and logistics business.

At present, Lechuang has 17 self-operated overseas warehouses with a total area of ​​482,100 square meters, and has served 778 foreign trade companies. In the first half of the year, it handled more than 4 million parcels, an increase of more than 120% year-on-year.

This Ningbo foreign trade boss is consolidating his main business and expanding it in multiple areas.