Vancl.com admits owing suppliers payments

Source:Global Times Published: 2013-10-13 23:48:01

A commuter looks at a Vancl billboard in a subway station in Beijing Sunday. Photo: Li Qiaoyi/GT

A commuter looks at a Vancl billboard in a subway station in Beijing Sunday. Photo: Li Qiaoyi/GT

Source: www.itxinwen.com Graphics: GT

Source: www.itxinwen.com Graphics: GT


Vancl.com, a Chinese online clothing retailer, denied Sunday there is any problem with its capital flow although it admitted it is late on payments to many of its suppliers.

According to posts on China's Weibo microblog service, some suppliers came to the headquarter of vancl.com in Beijing on Friday, asking for payments owed to them. A staff member from the public relations department of the company, who asked to be anonymous, confirmed this to the Global Times Sunday and said he believed these suppliers received "satisfactory solutions."

Hong Shushu, an operation director at Honru Co. Ltd (Honru), a garment producer based in Wenzhou, East China's Zhejiang Province, told the Global Times Sunday that there are hundreds of suppliers in an online chat group to whom vancl.com owes arrears.

"Vancl.com has owed our company more than 100,000 yuan ($16,339) since we started to sell our products on it in July," Hong told the Global Times.

"According to our contract with vancl.com, we should have received our payment 14 workdays after a transaction is made, but we have not received payments from July to September so we have suspended our sales on the website," Hong said.

Speculation has emerged since last week that vancl.com might be in danger of running out of money but the anonymous PR staff denied this.

Vancl.com moved to a new office in September and has been going through some personnel adjustment, leading to a disruption in communications with suppliers and delayed payments, the PR staff said, noting the company has started to deal with the issue Saturday and will solve it this week.

But Hong said her company Honru has contacted different departments of vancl.com frequently since September over the delayed payments but the departments just passed her company's problem on to each other instead of solving it.

In addition to suppliers, vancl.com also owes payments to make-up artists and models who posed for photos for the website.

Qiao Feng, a make-up artist told the Global Times Sunday that vancl.com owes him about 70,000 yuan in total. The earliest delayed payment should have been paid last year.

"Vancl.com also owes payment to independent models and model agencies in different amounts from about 100,000 yuan to a million," Qiao told the Global Times.

"Vancl.com is in a bottleneck this year," Chen Shousong, an independent e-commerce analyst told the Global Times Sunday, noting that the company's strategy of being a third-party retailing platform in addition to operating its own garment brand Vancl puts it under bigger pressure, especially as it faces strong competitors such as tmall.com and jd.com.

Media reports have said that vancl.com was in negotiations to receive new investment worth $200 million in August but the anonymous PR staff said he had no knowledge of that. 

Many Chinese e-commerce websites including vancl.com need continuous investment to attract new customers, which is a cash-burning phase in which it is hard to make any profits, because Chinese online shoppers are sensitive to prices and not loyal to brands, Feng Lin, an analyst from China E-commerce Research Center, told the Global Times Sunday.

If the problem with delayed payments lasts any longer, it may damage investors' confidence in the company, Feng said.

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