Two Chinese fast-fashion exporters started from the same supply base with the same playbook. One listed in Hong Kong this autumn. The other was declared bankrupt in a Shenzhen court five weeks later.
The ruling
On 15 October, Kuajingtongbao E-commerce disclosed that it had received a bankruptcy ruling from the Shenzhen Qianhai cooperation zone court declaring Shenzhen Safu Commercial bankrupt.
Safu is not a household name, but it operated ZAFUL, which eight years ago was the closest competitor SHEIN had.
As of the end of September 2025, the company held less than RMB 78.5 million in book assets against RMB 813 million in liabilities, leaving net assets at negative RMB 735 million.
Five weeks earlier, on 1 September, SHEIN listed on the Hong Kong exchange in the largest fashion IPO of the year. The stock broke its issue price on the first day and the company still carried a market value of roughly HKD 200 billion.
How ZAFUL scaled
The brand’s resources, supply chain and operating method came from Globalegrow, founded in Shenzhen by Xu Jiadong. Xu had studied mathematics at Peking University and left for a doctorate in the United States, where he noticed the gap between Chinese manufacturing cost and overseas retail price.
He built an English-language site in 2007, sourced from the Huaqiangbei electronics market and followed eBay sales data. In 2011 the company raised RMB 50 million from Shenzhen Capital Group and Hongtu Ventures.
In 2014 the listed company Bainiu Kuye acquired Globalegrow outright for RMB 1.032 billion, attaching strict profit commitments that rose each year from RMB 65 million in 2014 to RMB 170 million in 2017. The acquirer renamed itself Kuajingtongbao, and the first Chinese cross-border e-commerce listing was created.
ZAFUL was incubated inside Globalegrow that year and chose swimwear as its entry category, which suited social platforms because the product photographs well. The brand signed close to 100,000 overseas influencers, targeted women aged 18 to 24, recruited campus ambassadors, sponsored music festivals and fashion weeks, and ran its own community to convert paid traffic into an audience it could reach again.
It held a cadence of 50 to 100 new styles a day, moving from design to listing in one or two weeks.
By 2018 SimilarWeb recorded 28.7 million monthly visits to the ZAFUL site, above SHEIN’s 27.83 million. In 2019 the brand reported 39.864 million registered users, roughly 23 million monthly active users, 166 million monthly visits and a 42 per cent 90-day repurchase rate. On the BrandZ China global brand list it ranked second in online fast fashion, behind SHEIN.
What broke
The first blow was category exposure. In 2020 travel and beach holidays stopped, and swimwear was the first category to be hit.
Retention collapsed faster than traffic. The 90-day repurchase rate fell to 12.39 per cent in the first half of 2020, to 11.96 per cent by the end of that year, and to 8.55 per cent in the first half of 2021, roughly an 80 per cent decline from the peak.
Visits in the first half of 2020 were still 172 million a month, slightly above the 2019 level. Conversion fell from 1.5 per cent to 0.69 per cent over the same period.
SHEIN widened its catalogue while ZAFUL stayed in a narrow one. A shopper who came for a swimsuit bought a swimsuit. A shopper who came to SHEIN bought a swimsuit, a dress and loungewear in the same session, which produced more occasions per acquisition.
The deeper difference was inventory. SHEIN built a small-batch, rapid-reorder system that connects thousands of small factories and tests styles at low volume before scaling the winners. ZAFUL combined small-batch production with outright inventory purchases. That works when capital is available and turns against you when it is not, because unsold stock consumes the cash needed for the next cycle.
ZAFUL also bought from factories rather than integrating with them. Buyers selected styles, factories produced to order and the brand applied its label, with no data flowing back from sales into production planning.
Why the traffic was never the moat
ZAFUL rented its audience. Nearly 100,000 influencers and a campus ambassador programme produced reach, but the relationship belonged to the individual creators. When acquisition costs rose and the category lost its season, the reach did not convert into repeat purchase.
SHEIN converted the same kind of rented reach into a data asset. Every style test produced demand information that fed the next production decision, which lowered markdown risk and raised the number of cycles per year.
The industry condition has also changed. Low-price drop-shipping depended on a tariff environment that is closing, and compliance costs at the border have become a fixed line item rather than an exception. Stable profit and cash flow are now the entry requirement, not the ambition.
ZAFUL was an early demonstration that Chinese supply chain plus cheap social traffic could build a global brand quickly. It also demonstrated that neither half of that formula is durable on its own.
Editor’s note: This is an adapted translation of the original 36Kr report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://36kr.com/p/4059703122482055.