Fast-fashion online retailer Shein is helping Chinese small- and medium-sized enterprises (SMEs) to export. Take Zhang Min as an example. She took over her parents’ eyeglasses factory, which was founded more than a decade ago in Taizhou, Zhejiang province. The factory mainly received foreign trade orders and supplied various types of glasses for offline brand owners and dealers in the United States in its early stages of development. However, orders fell dramatically due to the impact of the Covid-19 pandemic. Looking to expand sales channels and reach more overseas consumers, Zhang decided to use cross-border e-commerce platforms and registered with Shein. “Consumer preferences vary in different countries, and we should dare to develop new products and open up new overseas markets,” Zhang said, adding that her company usually determines whether to increase production in line with the latest sales and market trends, instead of manufacturing new products or stocking up goods blindly. Zhang said the biggest takeaway since she opened an online store on Shein is that glasses are an important fashion accessory, with young consumers exhibiting strong demand for glasses in different scenarios, such as shopping, parties and tourism.
Currently, sales from Shein’s online marketplaces have accounted for nearly half of Zhang’s total revenue, with its turnover reaching nearly CNY10 million each month. Zhang is among millions of young Chinese entrepreneurs whose parents run factories that have survived operational difficulties by capitalizing on the emerging cross-border e-commerce platforms and digital technologies to secure new orders from international markets and rev up sales. Experts said the unique advantage of Shein lies in its “small orders, quick response” model, which refers to using real-time market demand to regulate production. Based on real-time analysis and tracking of fashion trends, the model involves starting with very small orders. If the sales trend is positive, sellers will ramp up production. However, if the sales fall short of expectations, production will be reduced or halted. The on-demand production approach not only meets the diversified demand from consumers and bolsters sales, but also minimizes inventory and waste, improves operational efficiency and reduces costs, thus making the production process more agile and flexible and enhancing the competitiveness of products, industry insiders said.
Founded in Guangzhou, Guangdong province, and known for its low prices and large selection of fashionable clothing and accessories, Shein is ratcheting up resources to help Chinese manufacturers and brands expand their presence in overseas markets, and give a strong boost to the transformation of traditional industries by making use of its digital and flexible supply chains. The company announced plans to extend its outreach to industrial belts in 500 cities in China in September, up from 300 in 2021. It hopes to facilitate the digital upgrade of more industrial chains, thereby helping them achieve on-demand supply.
For sellers who are good at designing and producing products, but have no overseas sales and operation experience, Shein said it will provide one-stop services, including commodity operations, warehousing, logistics, customer service and after-sales, to help sellers make forays offshore. In addition, Shein is accelerating steps to build a supply chain project in Guangzhou covering operations, warehousing, stocking, ordering, distribution, logistics and delivery. The project is expected to create 100,000 jobs and provide support for goods sold overseas.
“As a new form of foreign trade, cross-border e-commerce has become an important driving force for bolstering the steady growth of foreign trade, as well as promoting the transformation and upgrading of manufacturing and the global expansion of Chinese-made products,” said Zhang Zhouping, Senior Analyst tracking business-to-business and cross-border activities at the Internet Economy Institute. Zhang said an increasing number of Chinese sellers and manufacturing enterprises are leveraging cross-border e-commerce channels that feature innovative and flexible on-demand production to expand their global footprint, enrich product variety and build up new brands. By constantly monitoring market changes and collecting consumers’ real-time feedback, these platforms can make accurate predictions, while the flexible supply chain model is conducive to upgrading the entire industrial chain, from design and development to production, warehousing and logistics, Zhang added.
China's cross-border e-commerce transactions reached CNY577.6 billion in the first quarter, up 9.6% year-on-year, according to the Ministry of Commerce (MOFCOM). E-commerce exports stood at CNY448 billion, up 14% on a yearly basis. Other Chinese cross-border online retailers are also speeding up their globalization push. Temu, the cross-border e-commerce platform launched by Chinese online discounter PDD Holdings, has gained popularity among consumers overseas as it offers a wide selection of merchandise, including apparel, consumer electronics, jewelry, shoes, bags, cosmetics and baby products at competitive prices. First launched in the U.S. in September 2022, Temu has entered more than 50 countries in North America, Europe, Asia and Oceania. Experts said Temu’s business model removes middlemen from the equation, allowing Chinese suppliers to sell directly to U.S. consumers and ship directly from China, instead of building a network of U.S. warehouses, the China Daily reports.
