Chinese e-commerce firm Club Factory finally suspends India operations; puts sellers’ payments on hold

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Published: July 14, 2020 10:51 PM

Club Factory, which has over 30,000 sellers on its marketplace, informed them in an email that their payments have been “put on hold until the ban of the Club Factory app and website is lifted".

Along with other Chinese online retailers including Romwe and Shein, Club Factory was also running operations despite the government’s ban.

Over two weeks after the Modi government had banned 59 Chinese apps including Zhejiang-based Chinese e-commerce portal Club Factory, the latter has finally suspended its operations in India. In an email sent to its sellers, a copy of which was seen by Financial Express Online, the company informed about the “temporary suspension of our operations in India”. Club Factory, which has over 30,000 sellers on its marketplace, also told them that their payments have been “put on hold until the ban of the Club Factory app and website is lifted.” Along with other Chinese online retailers including Romwe and Shein, Club Factory was also running operations despite the government’s ban. While Romwe paused its services on July 7, Shein followed suit on July 11, according to the information available on respective portals.

“The government’s ban on Club Factory app, along with 58 others, also mandates a temporary suspension of business activities until the ban on the app and website is lifted. Club Factory team is dedicated to complying with the government’s directive and is closely working with the government in order to resolve any queries they may have and submit all necessary documentation required from time to time,” Club Factory said in its official statement.

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The company informed sellers about the suspension of settlement with sellers “during the continuation of the force majeure event”. The time period for the suspension remained indefinite until government’s further notification on the issue. However, Club Factory assured sellers that their payments would remain safe without any impact of the ban. “We look forward to your support in these tough times and hope to come out even stronger once the ban is lifted,” the email read.

Since the ban on Chinese apps was enforced by the government, Club Factory has been looking to circumvent it. The company had changed IPs and was using a family of domains for its mobile website and app such as track.clubfactory.com, raven.clubfactory.com, fromfactory.club and its subdomains like app.fromfactory.club etc. to get around the ban, according to a source aware of the development told Financial Express Online. These URLs, however, are now defunct.

The company had also collected significant amount from customers for prepaid shipments but have not been able to deliver them as sellers, who have pending dues, are not ready for delivery as they fear their payments will not be cleared, the source added. Club Factory owes a large amount of outstanding to various courier partners as well and has stopped making payments to them except some small payments which are released from time to time just to portray that they are still making some payments, the person added.

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