China's fifth-largest marketing services provider for cross-border e-commerce customers is shifting to social media platforms and its own direct sales for growth

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Key Takeaways:

• Miduoduo has chalked up three years of losses ahead of its application for a Hong Kong IPO, but attributes that to costs associated with its recent business shifts
• The provider of cross-border e-commerce marketing services says its strong revenue growth last year reflects a tie-up with TikTok and focus on Southeast Asia

It's a familiar story when startups head for the capital markets with a track record of losses. Cross-border e-commerce company Miduoduo Group Inc. was one of the latest cases in point when it applied for a Hong Kong listing last week.

The company reported losses of $16.4 million in 2023, $163,000 in 2024 and $24.5 million last year, on revenue of $70.9 million, $71.1 million and $138.1 million, respectively. Prior to rule changes introduced in 2018, the Hong Kong Stock Exchange probably would have simply dismissed Miduoduo's application due to its earlier requirements for two years of profitability before an IPO.

Adjusted for certain non-cash items, the company's bottom line looks better – with a net profit of $59,000 in 2023, followed by a loss of $87,000 in 2024 and a $2.3 million profit last year.

Despite that bumpy profit record, more is going on with Miduoduo that merits a closer look beyond its bottom line. For one, the company's latest backers include sovereign wealth fund Central Huijin Investment, whose fresh funding last year valued Miduoduo at HK$5 billion ($638 million).

The company is trying to position itself more like a hot high-tech startup rather than a 14-year-old player in the mature ad services industry, counting on its most recent embrace of the exploding market for outbound e-commerce selling goods from Chinese merchants to buyers in other countries.

It wants investors to see it not only as a marketing services provider, but also as an operator of its own direct cross-border e-commerce platform with a focus on Southeast Asia. It says it will use IPO proceeds to bankroll localization and e-commerce warehouses in four key Southeast Asian markets – Thailand, Indonesia, Vietnam and Malaysia. Its recent partnership with the popular TikTok short video site, which operates the TikTok Shop e-commerce platform, is also an important part of its story. It credits that growing TikTok relationship for its recent growth, which saw its revenue nearly double last year after a mostly flat performance in 2024.

Corporate evolution

Minduoduo's rapid evolution from domestically focused ad services provider to an integrated provider of cross-border online selling services in some ways spotlights a rapidly emerging new corner of China's giant e-commerce industry.

With 15.52 trillion yuan ($2.3 trillion) in online retail sales in 2024, China represents roughly half of the global online retail market. Its cross-border e-commerce industry generated $461.7 billion in revenue in 2024, and is expected to grow 15.1% annually through 2029, according to the listing document. That's providing fertile ground for growth of the cross-border e-commerce services segment, which is projected to more than double from $36.3 billion in 2024 to $73.7 billion in 2029.

Five companies currently represent 36.5% of the total market for outbound e-commerce marketing services. Miduoduo is the smallest in that group, ranking fifth in 2024, with a tiny 0.5% market share. Guangdong Advertising Group (002400.SZ) is the leader, with 17.2% of the market, while unlisted Tec-do, Donson and Singoo Cloud are next, collectively representing 18.8%.

The group has faced pressure lately in the U.S., a major market for Chinese e-commerce sellers, following the closing of a loophole last year that previously let packages valued at under $800 enter the country tariff-free. A similar movement is occurring in Europe, as the EU prepares to abolish its own tariff waiver for parcels worth less than 150 euros ($173) starting next month.

Miduoduo's response to those and other pressures is a textbook study in resilience and opportunism.

The company started out as Huiyuan Information, a cross-border trade intermediary based in South China's Fujian province, initially working with Google to increase the U.S. company's advertising business from Chinese customers. In 2021, the company's co-founders, Chairman Ruan Weixing and CEO Deng Hai, began a pivot from providing inbound marketing services to offering outbound services for Chinese advertising agencies.

Direct e-commerce services

After 2023, the company also began doing business with individual brand customers in addition to its older business working with agencies. After May 2025, it began its own overseas e-commerce operations working with TikTok Shop.

Miduoduo's core business has been overseas marketing services since 2021, and that business still accounted for 93.1% of its revenues last year. Its own direct overseas e-commerce operations made up just 3.1% of revenues in the first year of that business. The key to Minduoduo's latest expansion beyond its core marketing services is its relationship with TikTok, which began in 2024. The relationship has since matured into a platform for the company's own direct e-commerce business as well as e-commerce advertising services.

As that relationship matured, TikTok's share of Miduoduo's revenues went from 0.2% in 2023 to 30.3% in 2025, with most of the rest coming from Google. Under its marketing services business model, Miduoduo buys ad space on platforms like Google and TikTok, and sells that to agency customers, and makes some of its money via rebates from the platforms. But Google's rebates went from $1.49 million in 2023 to just $838,000 in 2025, after the U.S. search giant reduced its rebate policy in 2023. By comparison, rebates from TikTok totaled $4.38 million in the first full year of that relationship.

Miduoduo gives full credit to TikTok for helping to increase its gross profit from $2.9 million in 2023 to $11.8 million in 2025, although its relationship with Google continues. Revenue from services provided through TikTok increased from $9.7 million in 2024 to $38.9 million in 2025, with the number of active customers rising from 706 to 1,209. The company's gross margin is quite low, reflecting its status as a middleman provider of marketing services. But the figure has been improving with the growing TikTok relationship and rise of its higher-margin direct e-commerce business, climbing from 4.1% in 2023 to 8.6% last year.

In addition to the ad services relationship with TikTok, the company's own TikTok Shop-based direct e-commerce business contributed revenue of $4.2 million last year, with a much higher gross margin of 72.1%. That business sold products to consumers in the U.S., Malaysia, Thailand and Vietnam last year, apparently confined to a single brand partner. But the company says three additional brand partners signed up for the service in the first four months of 2026, showing that business could have strong future potential.

It's probably too early to say whether Miduoduo's new relationship with TikTok will be able to keep delivering such strong growth and margin improvement over the longer haul. But its embrace of an outbound e-commerce model, combined with its Southeast Asian focus, look like smart moves amid growing Chinese tensions with the West and growing stinginess at Google, which is facing its own challenges as AI eats away at its core search business.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.