Yiwu Small Commodity City goes public in Hong Kong, betting on the foreign trade chain of Yiwu merchants

The Yiwu familiar to the public is a mega wholesale market for small commodities.

Global buyers come to Yiwu, check samples, inquire prices, consolidate goods, and place orders at stalls, then send products to all parts of the world via freight agents, payment, and logistics.

In 2025, Yiwu received 681,000 inbound business travelers throughout the year, a year-on-year increase of 19.74%, recovering and exceeding the pre-pandemic level.

As the core operator of the Yiwu China Small Commodities City market system, the A-share listed company Small Commodities City has been one of the biggest beneficiaries of market activity recovery over the past few years.

From 2023 to 2025, the company’s revenue grew from 11.3 billion yuan to 19.7 billion yuan, with a compound annual growth rate of about 32.2%; net profit increased from 2.68 billion yuan to 4.22 billion yuan.

But changes also occurred during the same period.

During the pandemic, overseas buyers couldn’t visit Yiwu as frequently as they used to. The traditional model of offline sampling and face-to-face ordering was impacted; more and more orders were placed directly online and overseas.

Merchants accelerated their shift to new customer acquisition methods: some turned to online platforms like Alibaba International, some engaged in cross-border e-commerce, while others expanded customers using overseas warehouses and local channels.

For merchants, this is a choice to adapt to the environment; for Small Commodities City, it means that simply relying on the Yiwu market is no longer enough. Wherever merchants go, its service capabilities must follow.

Recently, Small Commodities City submitted a Hong Kong IPO prospectus and explicitly stated in the use of proceeds that funds will be invested in overseas comprehensive business expansion, digital trade infrastructure construction, and enhancement of warehousing and logistics capabilities.

From overseas branch markets, the Chinagoods digital trade platform, Yipay cross-border payment network, to overseas warehouses and logistics fulfillment systems, Small Commodities City is attempting to integrate these originally separate businesses into a new narrative of a “Global Trade Infrastructure Platform.”

In the past, it earned money from “global buyers coming to Yiwu"; now, it wants to earn from “Yiwu merchants going global.”

Going Overseas with Merchants

The traditional Small Commodities City model can be understood as “the landlord of the wholesale market.”

By the end of 2025, the core physical markets of Small Commodities City include International Trade City Area 1 to 5, Global Digital Trade Center, Huangyuan Market, International Production Material Market, and Binwang Market. The markets' leasable area exceeds 1.6 million square meters, with about 80,000 business entities, covering 26 major categories, around 2.1 million single items.

The company rents booth spaces to merchants and provides market management, access, and supporting operational services. This part of the business has high gross margins and good cash flow, serving as the most stable foundation of Small Commodities City.

Because of global small commodities procurement’s reliance on Yiwu sources, booth occupancy rates in International Trade City Area 1-5 have remained above 98% for years, nearly fully leased.

In 2025, market operation business revenue reached 5.255 billion yuan, about 26% of total revenue; but with a gross margin rate of over 80%, it contributed about 4.36 billion yuan in gross profit, close to 70% of the company’s total gross profit.

By contrast, merchandise sales in the same period approached 10 billion yuan, but the gross margin was only 0.7%—more akin to revenue scale created by the company itself buying, selling, and distributing goods.

Income from booth leasing and market management has a strong prepayment attribute. Merchants typically pay rent and related fees in advance, which also continuously contributes to operational cash flow.

But from another perspective, this is still a capital-intensive rental business with limited cash efficiency.

Every new round of market expansion corresponds to a new cycle of land acquisition, construction, tenant recruitment, and operation. Booth rental fees have a ceiling. The real foundation of the Yiwu market is the activity of numerous small and medium merchants. Rising operating costs can actually weaken the market’s attractiveness.

From the external environment, cross-border channels like Temu, TikTok Shop, and Amazon continue attracting Chinese sellers. Overseas buyers are shifting from “coming to Yiwu to find goods” to “finding goods online, fulfilling locally.”

Customers, orders, and transaction scenarios are dispersing globally. If Small Commodities City remains focused on offline market operations, it will find it difficult to cover transactions occurring outside Yiwu.

In recent years, Small Commodities City has continuously extended along the transaction chain of Yiwu small commodities export, reaching into online matching, payment settlement, warehousing logistics, overseas display, and local fulfillment.

In 2020, Chinagoods officially launched, building a digital trade platform around finding goods, inquiries, and matching as core links.

Around 2021, Small Commodities City acquired KuaiJieTong, a financial subsidiary under Haier Financial Holdings, indirectly obtaining an internet payment license and then launched “Yipay,” formally entering the cross-border payment and settlement segment.

Additionally, in recent years the company has continuously ramped up warehousing and logistics infrastructure, strengthening capabilities in cargo consolidation, warehousing, booking, customs clearance, trunk transport, and overseas fulfillment via platforms like Zhijie YuanGang.

By the end of 2025, Zhijie YuanGang’s self-owned and managed FBC overseas warehouses have been deployed in 14 countries, totaling 20 warehouses, with a total storage area of 310,000 square meters.

Overseas branch markets are also accelerating. In 2025, the company added four overseas branch markets: Osaka in Japan, Bishkek in Kyrgyzstan, Luanda in Angola, and Melbourne in Australia; it is exploring a “storefront + warehouse” model using branch markets, overseas warehouses, and overseas showrooms in combination.

This full-chain expansion is driven by intensifying external competition. The system war surrounding trade services has long quietly begun.

Alibaba International is not just an online showcase and inquiry brand; it is also reinforcing payment, logistics, and fulfillment services. Amazon, through FBA and global logistics services, has deeply intervened in warehousing and distribution; emerging platforms like Temu and TikTok Shop are rapidly supplementing logistics, payment, and local fulfillment capabilities.

Meanwhile, large freight forwarders, cross-border payment institutions, and overseas warehouse companies are constantly expanding up and down the value chain, striving to keep more links within their own systems and build closed loops.

For Small Commodities City, its original core advantages were merchants and inventory. But if orders, cash flows, and logistics are continuously diverted by external platforms, the traffic advantage of the Yiwu market may be hard to sustain as platform service revenue.

New Business Still in the Cultivation Phase

Small Commodities City’s transformation is now more than just a matter of direction, but judging by the revenue structure, service business is still limited in scale.

In 2025, trade service revenue was 1.305 billion yuan, only 6.6% of total revenue.

This revenue mainly consists of three parts: digital trade services, warehousing logistics, and trade-related financial services.

Among them, digital trade services based on the Chinagoods platform are absolutely dominant, accounting for 1.076 billion yuan in revenue, a year-on-year increase of about 165%, and more than 80% of trade service revenue.

For merchants, Chinagoods provides online shops, product showcase, inquiry connection, and system tools; for the platform, revenue mainly comes from basic and value-added membership services, digital advertising, AI tools, etc.

Its imagination lies first in building on the density of offline merchants and SKUs, and second, once digital services reach scale, marginal costs are theoretically lower than offline market operations and warehousing logistics.

However, the prospectus did not disclose the GMV or conversion rate of the Chinagoods platform, so it is difficult for outsiders to judge its contribution to actual transactions via online matching.

The historical relationship between Chinagoods and the other platform “YiwuGou” also adds uncertainty to this segment.

YiwuGou platform was first launched in 2012, operated by Zhejiang YiwuGou E-Commerce Co., Ltd., established in 2014. Currently, Small Commodities City holds 51% equity via a wholly-owned subsidiary. In 2020, Small Commodities City launched Chinagoods, which it controls 100%.

YiwuGou has argued that both Chinagoods and YiwuGou serve Yiwu market merchants, with a high overlap in core business. In 2024, YiwuGou sued the then-chairman Zhao Wenge of Small Commodities City for damaging company interests.

Compared to business like Chinagoods, which is closer to a “digital marketplace portal,” warehousing logistics and trade-related financial services are still much smaller, both with single-item revenue about one-tenth of the former.

Warehousing logistics is more focused on fulfillment infrastructure and currently small in scale, mainly supporting overseas branches and cross-border transaction fulfillment. In contrast, Yipay is closer to the cash flow link in the transaction closed loop.

Yipay mainly serves cross-border B2B transactions, providing cross-border collection, settlement, and currency exchange to Yiwu merchants and overseas buyers.

Licensing and pilot policies have opened up business space for Yipay.

In November 2023, Yipay was approved to operate payment institution forex business. Subsequent policies expanded its direct receipt of cross-border export payments from Yiwu to all Zhejiang Province, and raised the single transaction limit for export settlement from market procurement from $50,000 to $150,000.

From 2023 to 2025, Yipay processed total cross-border payment transactions of 8.3 billion, 27.8 billion, and 43.7 billion yuan; by the end of 2025, it served 25,227 customers.

Small Commodities City’s operating plan for 2026 proposes an increase of over $10 billion in cross-border payment transactions.

The potential of the payment business lies in its proximity to the transaction closed loop compared to online display and inquiry matching. As long as merchants use Yipay for cross-border collection, Small Commodities City can accumulate transaction data to support credit, factoring, lending, and other trade finance services.

Compared to display, inquiry, and promotion, once payment becomes habitual, switching costs are higher.

However, cross-border payment itself is a highly regulated business. Geopolitics, anti-money laundering, KYC, forex management, and local compliance all increase operating costs for payment business.

Especially in the current global trade environment, cross-border payments are increasingly affected by geopolitical factors. Different countries and regions have inconsistent requirements for fund flows, cross-border data transmission, sanctions list screening, and payment institution access.

Once international relations change, trade friction intensifies, or financial sanctions expand, payment institutions may face risks such as adjustment of partner banks, restricted settlement channels, and contraction of business in certain regions.

Currently, Small Commodities City's performance is still mainly supported by booth leasing, foreign trade commodity sales, and other “old stories.”

In Q1 2026, Small Commodities City achieved revenue of 4.593 billion yuan, up 45.29% year-on-year; net profit attributable to shareholders was 990 million yuan, up 23.29% year-on-year.

The main reason for growth was the concentrated revenue recognition from booth and supporting commercial street, office building of the Global Digital Trade Center, rather than a sudden surge in trade service business.

Some projects in the Global Digital Trade Center entered the delivery phase, but a new capital expenditure cycle was also kicked off.

In 2025, the company bid about 3.223 billion yuan to acquire the land south of Zone 5 of Yiwu International Trade City, with total investment estimated at 7.863 billion yuan. Investment will continue for the next few years.

Whether the company can achieve market revaluation in the future still depends on whether trade services can truly scale up.

The real key is not the number of overseas projects, but whether Yiwu merchants are truly willing to keep inquiry, collection, logistics, warehousing, and fulfillment within the Small Commodities City system.

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