fACES LIQUIDITY CRISIS AMID DELAYED SELLER PAYMENTS
There is an e-commerce platform, Qoo10 Group, based primarily in Singapore. Qoo10 operates subsidiaries in South Korea, including TMON and WEMAKEPRICE. Recently, concerns have been growing about a severe liquidity crisis within Qoo10 Group, as delays in seller payments have extended beyond 15 days. The company was founded by Koo Young-bae, a South Korean entrepreneur.
Koo Young-bae is also the founder of G-market, Korea’s first open market, which played a pivotal role in Korea’s e-commerce success story. After selling G-market to eBay in 2009, Koo established GeoCities in Singapore in 2010 through a 51-49 joint venture with eBay. This move led to the launch of the e-commerce platform ‘Qoo10’ focusing on the Southeast Asian region.
Qoo10 operates online shopping malls in Japan, Singapore, Indonesia, Malaysia, China, and Hong Kong. Koo chose to operate Qoo10 in Southeast Asia because, when selling G-market to eBay, he had agreed to a 10-year non-compete clause in Korea. Following the expiration of this period, Koo began acquiring domestic companies such as TMON, Interpark, and WEMAKEPRICE through Qoo10.
UNPAID AMOUNTS FOR TMON AND WE-MAKE-PRICE
When customers make payments, TMON and WEMAKEPRICE hold these funds and then disburse them to sellers according to the scheduled payment dates. The unpaid settlement amount that Qoo10 has failed to disburse to sellers is currently reported to be around $116 million. However, this amount only covers the payments due for May, so when including June and July, the total is expected to be significantly higher.
As the issue of unpaid amounts grows, the scale of refund requests from consumers is also substantial. Since the night of the 24th, thousands of consumers demanding refunds have gathered at the buildings where WEMAKEPRICE and TMON are located. Most of these individuals have dispersed after receiving assurances that the company would do its best to address the refund requests.
Current Situation
On the 27th, Koo Young-bae, Chairman of Qoo10 Group, stated, “The situation is rapidly worsening, making it difficult to devise a crisis response plan. We are fully committed to securing funds and formulating measures. We ask for your understanding in the meantime.”
To resolve the crisis, immediate financial support must be injected into TMON and WEMAKEPRICE. TMON is currently in a state of complete capital erosion, and it is highly likely that it has lost the financial capability to aid sellers and consumers. Similarly, as of the end of last year, WEMAKEPRICE’s current liabilities amounted to 309.8 billion won, which is five times its current assets of 61.7 billion won.
The problem is compounded by the fact that Qoo10 Group, the parent company, is also in a dire situation. Based in Singapore, Qoo10 has reportedly accumulated losses in the billions of won since 2019 and is in a state of capital erosion. With insufficient capital, Qoo10 has expanded by acquiring five platforms over the past two years, mostly through equity exchanges.
According to the ordinary shares shareholder status submitted to the Singapore Accounting and Corporate Regulatory Authority (ACRA), Koo Young-bae is the largest shareholder with a 42.77% stake. Monster Holdings, previously a major shareholder of TMON, holds a 25.65% stake, while Wonder Holdings, formerly a major shareholder of WEMAKEPRICE, owns 18% of the ordinary shares.
Initially, Koo Young-bae and eBay each held 51% and 49% stakes respectively when Qoo10 was founded. However, eBay’s stake is no longer traceable. It appears that eBay’s stake in Qoo10 was acquired when Qoo10 sold its Japanese business, Qoo10 Japan, to eBay in 2018. At that time, eBay stated, “As part of this transaction, we will cease investing in Qoo10’s non-Japanese operations.”
Future Scenarios
Examining the shareholder composition of Qoo10, there appears to be no significant shareholder who can share responsibility for the current situation. The presence of a global company like eBay could have provided potential funding, but such an entity is currently absent.
There are also calls for Koo Young-bae to invest his personal assets. Previously, during the sale of G-market to eBay in 2009, Koo is reported to have received $51.6 million.
In the worst-case scenario, bankruptcy of TMON and WEMAKEPRICE could be a possibility. If the two companies file for bankruptcy and the court accepts their petitions, a bankruptcy trustee would then liquidate the remaining assets and redistribute them to investors and sellers with outstanding payments.
