The Chinese E-commerce giant suddenly declared Bankruptcy in Shenzhen leaving many supplier to flock to the MoCan branch in Shenzhen to demand their dues from the company. However, when they arrived at the office of the company, they discovered that the space was empty. The dues were pending since long time.
MoCan is one of the top ten cross border E-commerce plat form company. It has a branch in Shanghai in the name of MoCan internet technology company. It mainly deals in clothing. However, in recent years unprecedented growth has been seen in the business and it has launched its 13th clothing chain with small shop owners and accessory suppliers. However, since last few months the companies progress was derailed when a news came out that the company owed wages to its various workers which remained unpaid for many years and further the company laid off many employees. Further the head quarters of the company were empty. According to a report VOVA, MoCan and Lebbay Guangzhou are the same owners. But they operate under different brands. However, MoCan is the representative unit to sign contracts with employees to work at VOVA.
Reason for Bankruptcy
As per the policy of Amazon one entity or person can have one account. But due to cross border transactions and various number of companies such platforms were having thousand of Amazon account. However if on inspection or review its found that the entities were related then all the accounts get suspended or all accounts gets infringed due to breach of policies.And the fate of this e-commerce company was sealed with one policy error. This is not new in china. Chinese company floats various number of subsidiaries in offshore units. One of the largest tech based company Ali Baba is having more than 900 subsidiaries. The kind of transaction of related party is involved is beyond imagination.
With such crackdown of Chinese government on technology companies, various companies are in process to file bankruptcy due to breach of various policies.
From CA Nishant Maheshwari and Vishal Vora
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