VIPShop, a Chinese luxury discount marketplace, announced raising US$ 50 million in Series B funding from DCM and Sequoia Capital, which is the largest Series B funding in southern China B2C market. The discount site had raised US$ 20 million in its Series A in last Oct from the same investors, which is also the largest Series A funding in Chinese ecommerce area.

Generally, more investors would be introduced in e-commerce companies’ Series B funding, but interestingly, VIPShop received funding from the same investors (DCM and Sequoia Capital) in both rounds of funding. VIPShop CEO Wu Hongbo explained this by saying:”By drawing in capital, we are looking for a reciprocal relationship to grow together rather than only taking money from investors. We carefully singled out DCM and Sequoia Capital for neither of them were ever involved in a scramble for stakes with shareholders. ”

It seems now with the boom of e-business in China and more money flow into the area, startups are enjoying more choices with venture capital, and they now bear in mind that they are not just looking for money, but also for partners who can help them grow.

No.1 B2C retail site in Southern China

On top of unique business models and promising prospects, the fact that VIPShop is now the No. 1 B2C site in southern China may be primary reason why DCM and Sequoia funding the company again.

Launched in late 2008, VIPShop was then the first and only luxury flash sales site in China, with a business model of flash sales on luxury goods, designer brands and high-grade cosmetics etc. The vertical now enjoys 2.3 million registered customers and over 10,000 daily orders on average. It also has a 20,000-square-metres warehouse, probably one of the largest in southern China B2C companies.

According to iResearch, a Chinese market research company, VIPShop’s 2010 sales reach RMB 300 million (US$ 46.2 million), with a monthly visitors of over 14 million. VIPShop’s customers spend on average RMB 160 (US$ 24.6) per transaction, similar to what VANCL enjoys.

Southern China Catching up in B2C game

A iResearch report shows that B2C sites in northern and eastern China are in leading position at present, while their southern counterparts are still catching up given the grand economic status of southern China.

Quick Facts about Guangdong, the powerhouse of southern China:

  • The Largest manufacturing base in China or even on the planet
  • Small and medium-sized enterprises account for more than 1/3 of the national total, important infrastructure base of ecommerce
  • E-commerce sales volume of the area is growing 30% annually
  • Existing international manufacturing and logistical center

With all the advantages listed above, Guangdong is expected to become the Asian international B2C center in 2012 and world-class international ecommerce center later on. And since the area is catching up with players from other parts of China, more opportunities could be explored here.