According to the Complaint, Baozun characterizes itself as “the leading brand E-commerce service partner in China.” The Company says that it helps brands execute their ecommerce strategies in China by selling their goods directly to consumers online or by providing services to assist with their ecommerce operations. The Company provides IT solutions, store operations, digital marketing, customer services, warehousing and fulfillment.
The Complaint alleges that during the Class Period, Defendants made false and misleading statements and/or failed to disclose adverse information regarding Baozun’s business and financial results. Specifically, the Complaint alleges that Defendants failed to disclose that Huawei Technologies Co., Ltd., a Chinese-based multi-national technology company, was one of the Company’s largest brand partners, on a historical basis, and paid more add-on fees for the work Baozun did for it, increasing the revenues Baozun received for Huawei work compared to the Company’s other brand partners. This caused Baozun to report outsized revenue growth during the first half of 2019, which would be abruptly cut off during the second half 2019, after Baozun restructured its relationship with Huawei, as Huawei took much of its online merchandizing in-house. As a result of this information being withheld from the market, the Complaint alleges that the price of Baozun ADRs was artificially inflated throughout the Class Period.