Zhang Wenzhong, a wealthy entrepreneur in Qingdao, has gained another IPO.

Author: Lu Zhigao

Source: ChinaVenture

Zhang Wenzhong, a wealthy entrepreneur from Qingdao, has achieved another initial public offering (IPO).

On December 6, Dmall officially went public in Hong Kong. Up to the time of publication, this retail digital solution service provider based in Beijing has a market value of HK$16 billion.

From successfully listing Wumart Commercial on the Hong Kong Stock Exchange in 2003 to finally achieving the listing of Dmall, which has made four attempts to list in Hong Kong and succeeded in 2024, the 62-year-old "Father of Chinese Supermarkets" has waited for more than 20 years to obtain his second IPO.

Nowadays, Wumart Commercial has been delisted for many years. However, Metro Supply Chain, which is controlled by Zhang Wenzhong, has also embarked on the road to listing in Hong Kong. With the successful listing of Dmall, Zhang Wenzhong, who has a wealth of RMB 18.5 billion, has ushered in his own rewarding moment.

Another IPO of the "Father of Chinese Supermarkets"

Dmall is another IPO achieved by Zhang Wenzhong.

After graduating from the Department of Mathematics at Nankai University, he later obtained a master's degree in economics from the same university and became a doctor at the Institute of Systems Science, Chinese Academy of Sciences. In order to further explore academia, he also went to Stanford University in the United States to conduct postdoctoral research in systems engineering.

After returning to China, Zhang Wenzhong founded an information technology company and developed a digital system for retail enterprises. When the product promotion was hindered, he established Wumart Supermarket in 1994 and used this digital system for a pilot project.

The nearly 200 million yuan in sales in the first year of the first store made him realize that the digital system plays an important role in the development of the traditional retail industry. Relying on the chain operation model, Wumart Supermarket was able to expand rapidly and was listed on the Hong Kong Stock Exchange in 2003, becoming the first privately-owned retail stock in the mainland.

At that time, Zhang Wenzhong was hailed as the "Father of Chinese Supermarkets" by the outside world. However, a prison disaster changed the trajectory of his life. Eventually, this wrongful case was vindicated, and Zhang Wenzhong once again embarked on the road of entrepreneurship.

With the idea of using technology to change traditional retail enterprises, he and Zhang Feng, among others, founded Dmall in 2015. As Zhang Wenzhong's nephew, after graduating from Huazhong University of Science and Technology, Zhang Feng founded a physical retail store that sells 3C products of various brands.

After selling this company, Zhang Feng obtained a Master of Business Administration for Senior Executives from the Marshall School of Business at the University of Southern California in August 2014. According to Zhang Feng, after half a year of preparation, the entrepreneurial project Dmall was basically established at the end of 2014, and the Dmall APP Beijing Station was officially launched in April of the following year.

In the same year, Dmall began to provide services to Wumart Group, thus embarking on a fast track of development. By 2019, they launched the proprietary one-stop Dmall OS system, which can meet the all-round operational needs of retailers.

Since 2020, this company has extended its reach to overseas markets. Currently, they have expanded their business to other countries and regions in Asia, including Hong Kong, Macau, as well as Cambodia, Singapore, Malaysia, Indonesia, the Philippines, and Brunei.

After several years of development, Dmall has not only grown into a star unicorn in Beijing but also become a well-known retail digital solution service provider in China.

Over 4.5 billion yuan in revenue in three and a half years

By providing retail digital solution services, Dmall can help retailers digitize and optimize their operations.

The key role here is the retail core service cloud including the Dmall OS system and the AIoT solution. Under the Dmall OS system, from procurement, supply chain and warehouse management to product display and store operation, they can help retailers digitize parts of their operations.

In the words of this company, the procurement management layer helps retailers gain insights into consumer needs and identify changes in user preferences, while the supply chain management layer provides real-time tracking and demand forecasting; the warehouse management layer optimizes inventory and improves classification and packaging efficiency, while the product display management layer makes product recommendations based on the specific situation of each retailer.

In addition, they also provide an AIoT solution that combines AI technology with the Internet of Things infrastructure to solve practical and immediate application scenarios for retailers, thereby improving in-store management efficiency and enhancing the personalized shopping experience for consumers.

Currently, Dmall has implemented its cloud solution in the national store network of Wumart Group. In this process, they have refined the product to be applicable to chain supermarkets, warehouse supermarkets, department stores, convenience stores, specialty retailers, and new retail formats (such as membership stores and discount stores).

From Chongqing Department Store Group, Yinchuan Xinhua Group, Metro Group, to brands such as Wellcome, Mannings, Guardian, Giant, and 7-Eleven (Hong Kong), Dmall has provided services to 444 customers in the first half of 2024.

By charging a certain percentage of the total transaction value of customer goods processed by the Dmall OS system, or collecting subscription fees according to the individual needs or financial situation of customers, the company's revenue has been continuously increasing in recent years.

The prospectus shows that from 2021 to June 2024, their revenues reached approximately RMB 848 million, RMB 1.328 billion, RMB 1.585 billion, and RMB 939 million respectively, equivalent to over RMB 4.5 billion in revenue in three and a half years.

Frost & Sullivan states that calculated based on the revenue in 2023, Dmall is not only the largest retail digital solution service provider in China but also the third largest in Asia.

However, affected by factors such as R & D, share-based payment expenses, and changes in the fair value of convertible redeemable preferred shares, they are still in a loss-making state. During the same period, the company's net losses were approximately RMB 1.825 billion, RMB 841 million, RMB 655 million, and RMB 249 million respectively.

Since 2021, the company has cumulatively invested more than RMB 1.8 billion in R & D, and ultimately has 282 registered trademarks, 139 registered patents, 294 software copyrights, and 10 domain names.

IDG and Tencent have both invested

With Zhang Wenzhong in charge, the financing of Dmall has also been smooth.

Shortly after its establishment, IDG Capital invested 100 million US dollars in them, becoming the earliest investor of this company. In July 2018, Dmall completed an 80 million US dollars Series B financing, with investors including IDG Capital, Tencent, etc. At the same time, they became a unicorn.

Three months later, the company received approximately 50 million US dollars from Shenzhen Investment Holdings and others. In July 2019, Dayu Global, Yuncai Development, etc. invested approximately 46 million US dollars in them.

In August 2020, Dmall completed a approximately 370 million US dollars Series C financing, with investors including IDG Capital, Tencent, Industrial Bank, Lenovo Capital, Futian Guidance Fund, Tianya Capital, Kingdee International, Guojuan Shihui, and State-Owned Adjustment Fund, etc.

At that time, in the opinion of IDG Capital, Dmall will create a new smart retail ecosystem, creating more value for partners such as consumers, retailers, brand owners, and service providers, and promoting the Chinese retail industry into a new digital era.

The State-Owned Adjustment Fund believes that Dmall is a technology company and fresh and fast-moving consumer goods platform that uses data-driven to assist the digitalization of chain retail. It is a concrete manifestation of the "Industrial Internet" in the field of chain retail supermarkets and convenience stores, in line with the two major trends of consumption upgrade and industrial digitalization and intelligence.

In October 2021, after completing a approximately 51 million US dollars financing invested by IDG Capital and others, the company's valuation exceeded 3 billion US dollars (approximately RMB 21.7 billion).

Before the listing, Zhang Wenzhong holds more than 55% of the shares; IDG Capital holds 7.67% of the shares, being the largest external shareholder; Industrial Bank holds 3.32% of the shares, Tencent holds 3.26% of the shares, the State-Owned Adjustment Fund holds 2.9% of the shares, and Shenzhen Investment Holdings holds 2.64% of the shares.

According to the "2024 Hurun Rich List" released by the Hurun Research Institute, Zhang Wenzhong ranked 265th with a wealth of RMB 18.5 billion. With the successful listing of Dmall, he has once again obtained a substantial return.

Reference Materials:

1. "In six years, more than 15,000 stores have been transformed. Zhang Wenzhong started his second entrepreneurship, leading this enterprise to launch a breakthrough battle in retail digitalization", China Entrepreneur Magazine

This article is from the WeChat public account "ChinaVenture", author: Lu Zhigao, and 36Kr is authorized to publish it.