Vatai delivers new e-commerce story with focus on cross-border trade

The provider of compliance services for cross-border e-commerce companies has filed to list in Hong Kong, boasting 66% revenue growth in the first half of this year

Key Takeaways:

• Vatai Holdings has applied to list in Hong Kong, providing a fresh, high-growth angle to the maturing e-commerce story by focusing on fast-growing cross-border trade
• The company’s Americas revenue growth slowed sharply last year after the U.S. eliminated an import tax loophole, exposing one of Vatai’s few vulnerabilities

By Doug Young

E-commerce as a category feels a bit like yesterday’s news, with giants like Alibaba and Amazon failing to generate as much excitement as they did a decade ago. One exception to that rule is cross-border e-commerce, which has been booming in the last few years as a growing number of Chinese merchants and brands sell their products directly to consumers across the globe.

One company well positioned to profit from that boom is Vatai Holdings Ltd., which provides compliance services for companies engaged in cross-border e-commerce and last week filed to for a Hong Kong IPO. While big names like Temu and Shein have captured headlines for their ability to sell Chinese goods directly to consumers around the globe, Vatai caters to the thousands of smaller e-commerce companies engaged in such cross-border e-commerce.

Specifically, the company had 246,245 paying customers last year, up 47% from the 167,133 it had a year earlier, showing just how big demand for these compliance services is. That’s not too surprising, since cross-border e-commerce typically takes Chinese companies into very unfamiliar terrain in terms of compliance with local rules on things like taxes and product standards.

Truth be told, there’s not much to dislike about this company. It’s the world’s largest provider of such compliance-related services, according to third-party data in the prospectus. With 21.5% of China’s cross-border e-commerce compliance platform market last year, Vatai says its sales value exceeded the combined total of the second- to eighth-ranked market players combined.

If there’s one slight cause for concern, it’s the current uncertainty surrounding cross border trade. The U.S. and Europe have become wary of getting flooded by cheap Chinese goods in the last few years, and have begun erecting some trade barriers to slow that inflow. That shows up in some of Vatai’s recent data, which we’ll discuss shortly.

But with the exception of that one caveat, this company really looks quite strong.

Well-positioned

Vatai has positioned itself at the center of a global cross-border e-commerce market worth a massive 14 trillion yuan ($2.09 trillion) in 2025, and expected to reach 22.2 trillion yuan in 2030, according to third-party data in the prospectus. Much of that is flowing from China to the rest of the world, as Chinese brands and merchants become increasingly adept at selling to consumers overseas, often over platforms like Amazon and Alibaba’s AliExpress.

Despite its relatively small size, Vatai’s listing has some relatively major backers, including leading domestic investment bank CICC as one of its main underwriters. Its early investors also include Boyu Capital, which made headlines last year when it became Starbucks’ new China partner. And most recently, tech giant IDG also invested in the company.

Founded in 2019, the company was already worth $260 million two years later when Boyu invested in 2021. No valuation was given after IDG’s pre-IPO investment earlier this year, but we wouldn’t be surprised if Vatai rose to “unicorn” status with a valuation of more than $1 billion after that funding.

Next, we’ll zoom in on some of Vatai’s financials, which also look quite impressive for such a young company. Its revenue grew 66% in the first half of this year to 386 million yuan from 233 million yuan a year earlier. That marked an acceleration from the 51% growth it recorded for all of 2025, and 46% for 2024, showing the company’s growth has yet to peak.

Vatai makes its money from fees for its various services, which it breaks down into four categories. Significantly, the top three of those are all posting strong, consistent growth. Leading that list was environmental compliance services, which rose 70% year-on-year in the first half of this year to account for 44.7% of revenues. Tax compliance services rose by a similar 70% over that period to account for 36.1% of revenue, while product testing and certification services rose 71% to account for 14.5% of revenue.

Globally diverse

Geographically, the company gets nearly all of its revenue from outside China. It started out providing tax compliance services for Chinese e-commerce companies selling into Germany, and expanded from there to the other major EU markets of France, Britian, Italy and Spain. It says it’s now active in 121 countries and regions globally.

Europe remains its largest market, accounting for 83% of its revenue in the first half of this year. The Americas was a distant second, accounting for 9.3% of sales during that time. The Americas also offers an important data point that illustrates Vatai’s vulnerability to the risk from changing trade policies. After nearly doubling in 2024, revenue growth from the Americas slowed to just 28% last year, before rebounding to 62% in the first half of 2026. By comparison, Europe didn’t really see any slowdown in 2025.

Last year was significant for Chinese companies selling to the U.S., because that’s when the Donald Trump administration eliminated a loophole that had previously allowed foreign packages containing goods worth less than $800 to enter the country duty-free. That exemption, known as de minimus, was officially eliminated for goods coming from China in February that year, and was later expanded to cover goods coming from all countries.

Europe, meantime, took a similar step by imposing a temporary 3 euro customs duty on packages containing goods entering the bloc worth 150 euros ($174) or less from February this year. Such goods had also previously been allowed to enter duty free. The fact that Vatai’s Americas business bounced back this year, and the lack of impact to its European business in the first half of 2026, seems to show that this type of trade measure should have relatively little impact on the company over the longer term.

Vatai has also shown quite good ability to scale its business without incurring high costs. That helped the company to boost its adjusted profit, which excludes share-based compensation and restructuring charges, by 70% in the first half of this year to 74.1 million yuan from 43.6 million yuan a year earlier.

The company’s cash flow is also quite strong, with its cash rising to 563 million yuan by June from 122 million yuan a year earlier, which was also helped by its pre-IPO funding earlier this year. That might lead some to wonder why Vatai is listing now, since it doesn’t seem to need the cash. Our guess is it wants to raise its profile and improve its technology, and possibly expand its services to e-commerce sellers from other markets besides China.

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