CDIB ends two-year wait for Meilele deal

"We have known Meilele's executives since 2011 and have been impressed with the company's achievement thus far. Due to certain internal requirements, CDIB couldn't participate in the second round of fundraising last year," says Victor Gao, managing director of CDIB Capital, who now sits on the e-commerce company's board. "Meilele appealed to us as we believe the company is well positioned to become the category leader in this vast but fragmented furniture industry in China."

Established in 2008, Meilele was originally a store within Taobao, China's biggest C2C e-commerce site. It then set up its own B2C service, but moved away from the traditional Chinese e-commerce model by creating a bricks-and-mortar presence to complement online operations. The company now has 147 showrooms nationwide and provides home design and renovation services as well as standard retail.

Lightspeed Venture Partners provided Meilele's Series A round of funding and a $40 million second round came last June, led by Vertex Venture, a unit of Singapore sovereign wealth fund Temasek Holdings. Lightspeed, Xianfeng Huaxing Group, LionRock Capital and KTB Ventures also participated.

The fresh capital from CDIB will help fund the company's rollout of new showrooms, expand into new product categories and further improve supply chain management. Meilele is expected to open an additional 60 stores by the end of this year. The company has plans to establish its own brand in addition to importing other through its global network. Revenue is said to be doubling year-on-year and the medium-term objective is a US listing.

Backed by the parent company China Development Financial, CDIB Capital differentiates itself from other investors by offering resources and expertise in tapping Taiwan-customers and sourcing channels. Gao notes that many furniture manufacturers that have opened shops in Southeast Asia are Taiwanese by origin

For Meilele, regional expansion would represent the cherry on top of a large and still growing domestic Chinese market.

"The Chinese furniture retailing market is worth more than RMB1 trillion. Factor in home design and decoration and that's another RMB1 trillion ($162 billion)," Gao says. "Based on my knowledge, no single company has more than a 1% of the market share. But we do expect Meilele could exceed that level and become the industry leader."

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• Topics
• Greater China
• Consumer
• Investments
• China
• Consumer
• CDIB Capital