Climbing smile curve Cross-border e-commerce into foreign trade manufacturing enterprises jump new channel?

China's imports and exports totaled 23.12 trillion yuan in the first three quarters, up 0.7 percent, data from the General Administration of Customs showed On Oct. 13. Of this, exports reached 12.71 trillion yuan, up 1.8%, while imports reached 10.41 trillion yuan, down 0.6%.

The reason for this year's strong exports is simply that overseas consumption is concentrated in China, according to analysis by the China International Financial Research Institute. On the demand side, during the epidemic period, developed countries, represented by the United States, took drastic financial rescue measures, which enabled household consumption to continue to expand and boosted China's external demand. From the supply side, after the second quarter, the production of other overseas countries was halted due to the outbreak of the epidemic, while China's production recovered quickly due to the effective control of the epidemic, thus being able to undertake orders transferred from overseas. In addition, with the development of cross-border e-commerce and logistics in China and the introduction of various "stable foreign trade" policy support by the government, the order transfer effect has been further enhanced.

It is worth noting that cross-border e-commerce has ushered in a strong outbreak in this cycle. On October 28, Zhang Kuo, general manager of Alibaba International Site, revealed at the first Foreign Trade New Power Conference that GMV orders of Alibaba International Site have increased by 133% year on year since January 2020 until September 2020.

From October 22 to 26, reporters from National Business Daily went to Anji to investigate the foreign trade situation of swivel chair industry. They learned from the heads of several furniture enterprises that most of them are OEM manufacturers. Compared with traditional foreign trade orders, the growth of online B2B orders has become a big change from the past. In addition, tidewater's direction is changing. In addition to promoting online cross-border B2B business, the leading enterprises also lay out their own brands through cross-border B2C platforms and self-built overseas independent stations.

If the OEM is still at the bottom of the smile curve with low profits, then in this round of change, can the cross-border e-commerce channel become a jumping channel for foreign trade enterprises to launch their own brands?

A good time for foreign trade enterprises to develop their own brands

"A swivel chair with an ex-factory price of $30 can retail for at least $280 in foreign markets after foreign buyers buy it."

According to the head of a furniture factory in Anji, a swivel chair may have increased more than sevenfold from factory price to terminal retail price, but for their OEM factories, the gross profit margin may be only a dozen or so points.

In the past for a long time, in order to swivel chair this category, it is difficult for domestic OEM manufacturers to have bargaining space. In the industrial "smile curve", OEM foreign trade enterprises can only enjoy the "low value-added" part of the value chain.

Recently, a reporter from National Business Daily came to know in the process of investigating the export situation of swivel chair foreign trade enterprises in Anji that the current swivel chair foreign trade orders have been increasing rapidly since July, and many enterprises have placed orders until the first half of 2021.

It is worth noting that there is a structural change behind the explosion of foreign trade orders. Compared with traditional B2B offline foreign trade procurement, the proportion of foreign purchasers purchasing through e-commerce channels has been significantly increased this year.

Liu Shiyun, chairman of Guangdong Jituo Outdoor Products Co., LTD, said at the first Foreign trade New Power conference on Oct. 28 that the company tried to sell tents live on Alibaba's international website, taking customers to both exhibitions and factories. This year, the number of the company's cross-border customers increased by 10 times and the number of orders increased by 66 percent.

Zeng Wei, general manager of International Business Department of Henglin Shares, also introduced to the reporter that this year's foreign trade situation is good, and cross-border e-commerce develops rapidly. Among the products exported by Henglin, the proportion of cross-border e-commerce customers has increased.

According to the company's previous investor research announcement, from 2008 to June 2020, The annual export volume of Office chairs of Henglin Co., Ltd. ranked first in the industry. From January to June 2020, the export volume of office chairs of the company accounted for 6.53% of the export volume of office chairs nationwide. The sales modes of listed companies include OEM, ODM and OBM, and the overseas sales in 2019 are mainly ODM and OBM. In the next three years, Henglin said that on the basis of consolidating and improving the market share of overseas OEM and ODM, it will accelerate the realization of domestic and overseas OBM sales through cross-border e-commerce, customized home furnishing and independent brands.

Reporters learned that the current shortage of raw materials, labor shortages and rising costs, as well as the impact of the RMB exchange rate fluctuations, do OEM manufacturing swivel chair enterprise gross margins are further squeezed.

Zeng Wei revealed that At present, Henglin actively spreads risks and expands production at the production end, expands ergonomic product categories at the product end, focuses on developing cross-border e-commerce M2C business at the channel end and builds its own overseas warehouse in the United States. The increase in the penetration rate of cross-border e-commerce caused by the epidemic is a long-term change in consumption habits. In this context, For Henglin, the company's business model is transformed from B2B mode to M2C mode, and the upper limit of the whole value chain is equal to the sum of B2B+B2C mode, which brings about significant improvement in unit price and profitability. After the outbreak of the epidemic in Europe and the United States, the market share of the company's smart office products may continue to increase for a long time due to its cost-effective advantage.

A person in charge of a swivel chair enterprise believes that the channel changes brought by the epidemic this year are a good opportunity for foreign trade enterprises to develop their own brands, which can not only alleviate the risk of profit dilution caused by rising costs, but also enhance their right to speak in the industrial chain and increase their profit space. Of course, for enterprises, whether to make their own brands through cross-border e-commerce is welcomed by end consumers and whether to pay for them is still a big challenge, which also tests their business strategies.

Supply and demand structure adjustment, the Internet giant code layout

On October 28, Alibaba International Website, which focuses on cross-border B2B business, released a set of data. In the first half of this fiscal year (From April to September), the international website launched the first phase of "Spring Thunder Plan". The platform's actual sales volume increased by 110% year on year, the number of new sellers increased by 54% year on year and the number of active buyers increased by 84% year on year.

According to Zhang Kuo, three things are most certain in the future: China's structural role in global supply will be further strengthened under the pandemic; The classification of global consumption has been accelerated. Cost-effective and high-quality Chinese goods have become a firm demand, and brands face opportunities when they go abroad. The digital economy will bring the largest increase in China's exports.

From September 2020 to March 2021, Zhang Kuo revealed that the growth of new buyers of international stations is expected to increase by 200% year on year. How to do a better job of online connection and service between cross-border B2B buyers and sellers in a more detailed way, Zhang Kuo mentioned the launch of buyer layering program.

Why do buyer layering? In an interview with The National Business Daily, Zhang kuo said the plan is mainly based on the differentiation of customer groups served by many sellers on the international platform. For example, some buyers need flexible production and customization, while for some sellers in international stations, the production mode of small order, small batch and multi-batch is acceptable. In addition, for sellers on the platform, the order demands of different order volumes and product prices are different, so a layered scene should be provided for merchants on the platform to facilitate them to serve different buyers.

In the next three years, Zhang Kuo said that Alibaba International Station will help more than 10 million new small and medium-sized enterprises across the world to purchase cross-border, reach the transaction scale of more than 100 billion US dollars, build new logistics network and freight standards, and support the capacity of 1 million tons of air freight and 1 million teu sea freight, becoming the third largest freight platform in the world.

How to build the Internet ecology of foreign trade industry more quickly, the Internet giants also begin to increase the investment of capital in the Internet production factors of foreign trade industry. At the meeting on October 28, Zhang Kuo announced that Alibaba International site launched 10 billion foreign trade ecological investment fund. We will speed up the improvement of the digital new foreign trade track, and help all small and medium-sized enterprises open source, improve efficiency, and make goods accessible to the whole world.

It is understood that, before this, international station and Cainiao, world logistics cooperation to create a "Wenraja" supply chain, and strategic investment in foreign trade SaaS enterprise Xiaoman Technology.

Can cross-border e-commerce become a new channel for foreign trade manufacturers?

Zhang Kuo believes that different countries have consumption classification. The epidemic has affected many countries to varying degrees, and foreign consumers will return to rational consumption and need more cost-effective products. Foreign consumer goods are also going through a round of consumption iteration. Chinese brands of high quality and high cost performance can just meet this wave of consumer demand. The current time is also a good window period for domestic brands to go abroad.

Of course, how to grasp this window period, how to build the minds of overseas consumers and users, how to build a more effective overseas distribution channel, Zhang Kuo believes that still need to spend a lot of energy.