Qoo10 platforms scramble for takeovers to escape cash crisis

WeMakePrice, TMON and other Qoo10-owned platforms are looking for buyers to unburden themselves from the parent company's liquidity crisis with the CEO's blessing.

WeMakePrice's headquarters in Gangnam District, southern Seoul has been temporarily closed down amid the ongoing liquidity crunch facing its parent company Qoo10 and affiliates. [YONHAP]

Qoo10-owned e-commerce platforms are scrambling to find buyers for potential takeovers to break free from the liquidity crisis plaguing the Singapore-based parent company that has resulted in an estimated 1 trillion won ($734 million) in overdue payments.

The CEOs of WeMakePrice, Interpark Commerce and AK Mall have reportedly been pursuing potential buyers for acquisition deals as of Thursday. Qoo10 CEO Ku Young-bae told media outlet News1 that “all opportunities were being considered” and that the affiliates have “agreed to independently look into solutions for survival.” AliExpress Korea, however, denied any plans to acquire WeMakePrice in response to a report from Thursday morning that WeMakePrice is looking for a buyout from Chinese retailers Alibaba and Temu.

“AliExpress is currently not considering taking over WeMakePrice, nor was there any contact with the company,” a spokesperson for AliExpress Korea told the Korea JoongAng Daily.

AliExpress Korea could not confirm if WeMakePrice had contacted its Chinese parent company, Alibaba Group.

Temu had not commented on the matter as of press time.

Interpark Commerce CEO Kim Dong-sik has also been looking into potential deals as well as means to secure funds as of Thursday, the company told the JoongAng Ilbo, an affiliate of the JoongAng Daily.

Wish, a San Francisco-based e-commerce platform Qoo10 bought for $161 million in a finalized deal in April, is not up for sale, Ku said.

Sellers listed on TMON and WeMakePrice who have not been given their due payment read a statement in front of the Seoul Gangnam Police Station in southern Seoul on Thursday, ahead of filing a lawsuit against Qoo10 executives Ku Young-bae and Mok Ju-young, TMON CEO Ryu Gwang-jin and WeMakePrice CEO Ryu Hwa-hyeon. [NEWS1]

Platforms scramble for a deal, feasibility questionable Industry experts are unsure whether acquisitions are attainable. WeMakePrice and TMON are in a state of capital impairment, with 239.8 billion won and 638.6 billion won in liabilities as of 2023 and 2022, respectively, according to the Financial Supervisory Service. Even e-commerce platforms that are fairing relatively better such as 11Street and SSG.com have not been able to land acquisition deals as of yet.

“If the receivership that [WeMakePrice] filed is accepted, the company must have a mediator approved by the court to pursue a buyout; even then, it is common for a takeover to take place through an auction between willing firms after the business’s value is determined,” a judge with experience with the rehabilitation court told the JoongAng Ilbo.

“Selling off shares also requires approval from the court,” the judge added.

The Chosun Ilbo reported Thursday that WeMakePrice plans to approach Alibaba and Temu about an acquisition separately from TMON or Qoo10, citing a “high-ranking executive” at its parent company.

“We are planning to hand over shares [to Chinese retailers] at whatever amount, whether it be 50 billion won or 100 billion won, continuing business with them then turning over 100 percent of the stake,” the source reportedly said.

The source also estimated the total amount of unpaid earnings to sellers on TMON and WeMakePrice as of July to be 1 trillion won, with WeMakePrice carrying 300 billion to 350 billion won of that debt and TMON accounting for the remainder. This was the first time a Qoo10 executive had given an approximate for all due payments calculated up until July.

Qoo10 CEO Ku Young-bae enters his residence as it is raided by the prosecution on Thursday. [YONHAP]

In a message sent to News1 on Thursday following the release of the Chosun Ilbo report, Qoo10 CEO Ku said WeMakePrice co-CEO Ryu Hwa-hyeon was pursuing a buyout independently through his personal network while also seeking loans for Qoo10.

The Qoo10 chief also reportedly expressed frustration toward the vicious circle his company has entered.

“To resolve the situation, we have to operate the websites, but that is impossible as payment gateways are all blocked,” Ku wrote.

“We must resume business to minimize damages for customers and sellers. That’s how [the company] will raise its value for an acquisition and for its shares to recover. It’s frustrating how the situation continues to worsen.”

Authorities on high alert Meanwhile, Finance Minister Choi Sang-mok said on Thursday that the government may pour in additional financial support to mitigate the liquidity crisis if needed.

“The government will promptly execute the previously announced financial support of more than 560 billion won to minimize damages to consumers and sellers, and devise measures to provide additional liquidity if needed,” said Choi during a meeting on the macroeconomic environment held at the Korea Federation of Banks in central Seoul.

Finance Minister Choi Sang-mok speaks during a meeting on the macroeconomic environment held in central Seoul on Thursday. [MINISTRY OF ECONOMY AND FINANCE]

The comment from the finance minister came as card companies and payment gateway vendors initiated the payment cancellation process that day.

The vendors, which briefly deactivated cancellations after the payout delays emerged, resumed the process and began to explain to customers how to apply for card transaction cancellations starting last Saturday. But refund requests have not yet been processed as the vendors had to confirm with TMON and WeMakePrice that sellers have not delivered the purchased products or services.

The two platforms provided shipment information for ordered goods — except for travel packages — to payment gateway providers on Wednesday, according to the financial authorities. Some refund requests for smaller transactions are expected to be processed as early as Thursday.

The finance minister also vowed to bolster relevant regulations by “reviewing the adequacy of the e-commerce law and the Electronic Transactions Act.”

Update, August 1: Added details about other Qoo10 companies, comments by finance minister, recast headline.

BY KIM JU-YEON, SHIN HA-NEE [kim.juyeon2@joongang.co.kr]