As competition in the cross-border e-commerce sector reaches fever pitch, companies are deploying substantial equity incentive programs to maintain rapid growth, boost employee motivation, and enhance corporate cohesion. Following similar moves by industry leaders like Cross Border E-Commerce and Aosom, Shenzhen-based powerhouse Huakai Yibai has now entered the fray with a groundbreaking half-price employee stock ownership plan that's drawing widespread attention.
Half-Price Shares: Huakai Yibai's Talent Retention Strategy
After completing its acquisition of Yibai Network in the first half of this year and undergoing rebranding, Huakai Yibai has strategically pivoted away from spatial environment art design to establish cross-border e-commerce exports as its core business. This shift clearly reflects the company's recognition of the sector's substantial profit potential.
Yibai Network, now Huakai Yibai's primary profit driver, delivered an impressive 106 million yuan net profit in H1 2022—surpassing annual profits of some competitors and demonstrating remarkable growth from 159 million yuan for full-year 2021. This performance underscores the logic behind the employee stock plan: maintaining a high-performing team is critical for sustained growth.
The proposed plan offers up to 8 million shares, primarily targeting employees contributing directly to Yibai Network's operations—including directors, supervisors, senior executives, mid-level managers, and core personnel. Notably, participation will be limited to 7 mid-level managers/core staff and 15 employees total, emphasizing focus on key talent.
The most eye-catching feature is the 7.36 yuan/share purchase price—exactly half the 20-day average preceding the plan's announcement. At the plan's announcement date closing price of 14.62 yuan/share, the company expects to recognize 58.08 million yuan in total expenses, demonstrating significant commitment to talent retention.
Not Without Conditions
The stock plan comes with stringent vesting requirements tied to both tenure and performance metrics.
Participants will unlock shares in two tranches: 50% after 12 months from the final share transfer date, with the remainder vesting at 18 months. This creates long-term alignment between employees and corporate growth.
Performance hurdles are equally rigorous. The first tranche requires Yibai Network achieve at least 270 million yuan in 2022 adjusted net profit (with partial unlocking for lower results), while the second demands cumulative 2022-2023 profits reaching either 600 million yuan (target) or 570 million yuan (minimum threshold).
Should targets be missed, unvested shares will be sold after 12 months, with employees receiving either their original investment plus interest or the sale proceeds—whichever is lower. This structure protects corporate interests while minimizing employee risk.
Equity Incentives: Strategic Advantage or Potential Pitfall?
Industry reactions to Huakai Yibai's plan are mixed.
Optimists note Yibai Network exceeded all performance commitments during its 2019-2021 earnout period, delivering adjusted net profits of 175 million yuan, 363 million yuan, and 216 million yuan respectively. With 106 million yuan already achieved in H1 2022, surpassing 100 million yuan in H2 appears achievable.
Skeptics question whether the 2023 targets—particularly the 570 million yuan minimum—are realistic. Final judgment awaits next year's results.
Equity incentives have become commonplace in cross-border e-commerce, with major players like Cross Border E-Commerce, Jinhong Holdings, Aosom, and XGIMI Technology all implementing large-scale plans. Available data suggests well-structured programs generally yield positive outcomes, though external factors could potentially create negative scenarios.
These programs serve as powerful tools to align employee and shareholder interests, transforming key personnel into stakeholders who benefit from capital appreciation alongside regular compensation. For cross-border sellers facing intense competition, such mechanisms are increasingly vital for retaining top talent.
Implementing Equity Incentives Responsibly
While equity incentives offer significant advantages, companies must avoid indiscriminate adoption. Successful implementation requires careful consideration of corporate circumstances, thorough agreement drafting, appropriate timing, and well-designed entry/exit mechanisms with realistic targets—all essential for creating true win-win scenarios for companies, owners, and employees alike.
Huakai Yibai's half-price offering exemplifies the escalating talent wars in cross-border e-commerce. As competition intensifies, effective talent attraction and retention strategies—with equity incentives playing an increasingly prominent role—will separate industry leaders from the pack.