(Yicai Global) Sept. 15 -- Ymatou, a Chinese firm that specializes in cross-border e-commerce, will introduce strategic investment to help repay CNY238 million (USD34 million) of overdue merchants’ payments and unreturned customer deposits, The Paper reported yesterday, citing the company founder.

"We are diluting the founding team's equity and introducing strategic investment in order to pay off our debts in installments,” said Zeng Bibo. Buyers with huge and valuable business resources are greatly prized by merger-and-acquisition companies and will be attractive to strategic investors, he added.

As of May 1, Ymatou had no means of repaying CNY200 million (USD28.6 million) in vendor payments and CNY38 million of customer deposits, the report said.

A merchant who has been supplying Russian buyers through his shop on Ymatou for the past nine years is owed more than CNY6 million (USD859,000), he said yesterday. He started to have difficulties in withdrawing payments in February. First they said there was a delay in settlements as the company was planning to list, then it was due to system adjustments, now they are saying they have completely run out of money, he added.

Epidemic prevention and control measures have greatly impacted Ymatou’s import-export business, Zeng said in an open letter last month. The clearing of goods is taking much longer and this has affected customer payments. The cancellation rate of orders has jumped significantly, leading to a continuous decline in the company's business. The firm's capital chain has also deteriorated due to litigation from external suppliers and banks pulling back loans.

Shanghai-based Ymatou, which was once valued at CNY4 billion (USD570 million), had around 1,000 active buyers as of August. It has raised CNY1 billion (USD143 million) in seven fundraising rounds since it was set up in 2010.

Editor: Kim Taylor