East Buy Holding Ltd’s [东方甄选] Bubble Bursts with a 54% Drop: What Does it Mean?
(Let 东方甄选 be East Buy Holding Ltd)
East Buy Holding Ltd, the Chinese e-commerce company, is facing a crisis after allegations of selling fake products emerged. On March 15th, East Buy Holding Ltd issued a public apology on their official Weibo account after accusations of selling farmed shrimp as wild-caught. This resulted in a 54% drop in their stock price, with a market value of HKD 355 billion.
The controversy began when a customer with the surname Wang ordered frozen shrimp from East Buy Holding Ltd’s live stream channel. The label on the product stated that it was a 100% wild-caught white shrimp from Ecuador. However, upon receiving the product, Wang noticed that all the shrimp were the same size and suspected that they were farmed instead of wild-caught.
After investigating, Wang found that the shrimp was indeed farmed, which goes against the labeling and advertising by East Buy Holding Ltd. The company’s customer service initially claimed that the shrimp was caught in the wild but later admitted that it was farmed. East Buy Holding Ltd’s CEO, Sun Dongxu, apologized for the incident and promised to resolve the issue.
However, the damage had already been done, and the incident caused a significant loss in East Buy Holding Ltd’s stock price. The company’s shares fell by over 7% on the day of the apology, and the stock price plummeted by 54% in total. The event shocked many investors, raising questions about East Selection’s commitment to quality control and consumer satisfaction.
East Buy Holding Ltd’s response to the allegations was to blame their supplier, Langhaiqing Flagship Store. East Buy Holding Ltd claimed that they had blacklisted the store due to various quality issues, such as short-weighting and underfilled packages. Langhaiqing Flagship Store is a subsidiary of Qingdao Langhaiqing Economic and Trade Co., Ltd., which was established in June 2019 with a registered capital of CNY 1 million. However, some reports suggest that the company might be a shell company, as they have zero social security participation and a possibly fake business address.
The incident has raised concerns about East Buy Holding Ltd’s business practices and has caused some investors to question the reliability of their live stream channels. Many customers and investors have taken to social media to express their disappointment and anger towards the company, with some calling for a boycott of East Selection’s products.
East Buy Holding Ltd has been one of the fastest-growing e-commerce companies in China, with a particularly strong presence on Douyin, the Chinese version of TikTok. The company has reported impressive financial results, with a year-on-year increase of 262% in revenue and a net profit of CNY 585 million in the first half of 2022. However, this incident has exposed the company’s vulnerability to reputational damage and the importance of maintaining quality control.
In conclusion, East Buy Holding Ltdn’s recent scandal has highlighted the importance of transparency and accountability in the e-commerce industry. The incident shows that companies must be vigilant in maintaining the quality of their products and ensuring that their advertising is truthful and accurate. East Buy Holding Ltd’s response to the allegations has been criticized by many, and it remains to be seen if the company can recover from this crisis.
Sources:
