What will the next round of growth of cross-border e-commerce rely on?
At the “New Tides in Qiantang River · Digital Silk Road” 6th Global Cross-border E-commerce Summit held over July 28th and 29th, nearly 60 guests held discussions for two days, seeking an answer.
Brand awareness buds: is brand-building the only endgame?
Song Xiaojun, Vice-President of Amazon China and Director of Chinese Seller Services of Amazon Global Selling, said that global consumers’ awareness and purchase intentions for Chinese brand products have increased, and many companies are keenly aware of the trend. During the past four years, the number of Chinese sellers who have completed brand registration on Amazon.com has increased by 40 times, far exceeding the growth rate of Chinese sellers on the platform over the same period.
“But when it comes to brands, especially the building of international brands, many companies don’t know how to start,” added Song.
Wu Zhuohui, General Manager of E-commerce Service Division and Vice-President of Anker Innovations Technology Co., Ltd., said that the Chinese produce the world’s best products in some consumer goods sectors, which can be the source for great brands. So, if Chinese sellers focus on overseas consumers, setting up localization mechanisms overseas, and design products with localized thinking, they can find opportunities to succeed.
He Ding, Founder and CEO of Shenzhen Thousandshores Technology Co., Ltd., said that there is no right or wrong, when it comes to boutique stores or brand products, and the strategy could be different for companies at different stages. “When you are thinking about survival, you may take cash flow and profit as a priority. But in the long run, brand development is a must, because it is only excellent brands that can endure.”
Wang Lujian, Executive Director and General Manager of Aofeis Technology, said that although everyone knows that a famous brand is a good thing, most sellers are far away from building a brand. They have to survive and develop a certain size before talking about brands.
Frank Zheng, CEO of Hangzhou Juying E-commerce Co., Ltd, said that he agreed with the brand development direction of cross-border e-commerce, but added that brand development was not the only path, and one had to choose a suitable path based on resources and capabilities.
Chen Shirong, Chairman of the Board of Hangzhou Eskimo Bedding Co., Ltd., said that traffic channels had been changing, and there were different traffic dividends in different eras. So, no matter how traffic changed, sellers had to consider how to maximize benefits at different stages. And as long as one could come up with good products or services, build consumer trust, and gain repeat purchases, the brand would be established naturally.
“I don’t think it is necessary to put out a lot of advertisements and promote brand stories. When your products have a user base which stays large enough and long enough, and you live long enough, this may become a brand naturally,” Chen said. So, developing a product, spending time on creating the image, and trying to live long enough would possibly provide the opportunity to create a brand.
Chen Quncheng, Founder of Lita Tech and the brand APORRO, said that the biggest trap for cross-border e-commerce sellers’ when it came to brands was the solidified thinking of over-reliance on traffic and product selection when doing e-commerce sales. For brands, he said, there was need for a three-dimensional insight into users – their spiritual level; their understanding of the product’s physical attributes; and a focus on statistics and bestseller products when it came to sales.
According to Chen, when focusing on building a brand, the brand founder had to go into the game and brainwash himself first. “Without such a thinking, it will quite probably end in failure.”
Building an independent website: an obsession or a necessity?
The importance of a “private domain” was self-evident, and the independent website was regarded as a real private domain. Therefore, Xiang Lehong, Chairman of the Board and Chief Product Manager of Loctek Ergonomic Technology Corp., said that at present, Loctek’s independent website accounted for 40% of its overall overseas business, and was the destination for further investment.
However, running an independent website was much difficult than doing business on a third-party platform. And Wang Lujian, Executive Director and General Manager of Aofeis Technology, said, if one started an independent website before gaining experience on third-party platforms like Amazon and Walmart and having a considerable size, it would possibly end in failure. The reason was that an independent website needed high traffic to succeed. And if the supporting services, management and other aspects did not match, there was no way to handle the traffic even it was there.
In this regard, Xie Heming, Founder of Keta Furnishing, said cross-border e-commerce sellers should not regard an independent website as one more channel. These are two battlefields requiring two operational thinking models. Moreover, an independent website was not equal to a brand. And what an independent website offered was the direct interaction between sellers and users.
Li Cong, Vice-President of Zongteng Group, said that omni-channel retailing and the integration of B2B and B2C would become mainstream market opportunities. Moreover, in the future, high inventory would become a common phenomenon, and would be unavoidable. Therefore, circulation and multi-channel sales would become very important.
Zheng Chenglie, Chairman of the Board of Suncha Technology Co., Ltd., said that given the uncertainties in the overseas market environment and operating costs, enterprises had to be good at seeking development opportunities from various business patterns, platforms and channels.
Zhang Jianfei, Founder of Jiye Changqing Innovation Tech Group, said that it was not necessary to put all efforts into pursuing a perfect product, and that about 20% could be used on building channels. Cross-border e-commerce was only one of the channels, and brand globalization did not equal to cross-border e-commerce.
What are the key points in the shift from price competition to value competition?
Zhang Kuo, Vice-President of Alibaba Group and General Manager of Alibaba.com, said that over the past two years many sellers had gone in for cross-border exports and found “pandemic dividends”. But he said that things were different this year, and the lack of confidence of small and medium-sized enterprises caused by inflation in overseas markets, geopolitics, changes in the global supply chain and other factors had created cyclical pressure. As a result, Chinese export-oriented enterprises would have to forge a digital capability in order to survive the downturn.
Nie Linhai, Chairman of China Electronic Commerce Association Alliance and Former Counselor of Department of Electronic Commerce and Informatization of the Ministry of Commerce, said that low-price competition would become a thing of the past, while brand- and quality-based marketing would become the mainstream in cross-border e-commerce.
Xiang Lehong, Chairman of the Board and Chief Product Manager of Loctek Ergonomic Technology Corp., said that cross-border e-commerce had entered a new stage. And to achieve the shift from low price to high quality, companies should extend their value chain, instead of working as OED/ODM. At the same time, Chinese enterprises had to be good at “going overseas in a group”.
Jiang Tao, Partner Business Director of Shopify Greater China, said that Chinese globalization-oriented sellers should pay attention to four points in their strategic positioning: 1. Compete on value rather than price; 2. The price of winning customers was getting higher and higher, and the focus should be on loyalty-based marketing; 3. Build a resilient supply chain; 4. Embrace the concept of sustainable development.
“The issue of sustainable development will become more and more popular. More than half the consumers buy brands that have a commitment to sustainable development. Businesses can start with some small actions, such as packaging with degradable and environmentally friendly materials, offering products with green environmental certification, and calculating the full-range carbon emissions of products from the factory to the consumers,” Jiang said.
Liang Zhixing, General Manager of Master Concept China, said that the cross-border e-commerce market had calmed down and that sellers had begun to focus on lean marketing, i.e., to do a good job in the loop of “advertising-purchasing-satisfaction-repurchasing”.
Fan Fan, Director of Atome China, said that Chinese e-commerce practitioners were a very powerful lot. And if they were placed anywhere in the world, from the perspective of supply chain, goods and service quality, they would be an overwhelming presence. But one thing needed to be re-developed in their globalization push. When it came to DTC brands practitioners, they needed to learn how to provide localized services in overseas markets, including payment, logistics and customer service to cater to local consumers.
Liu Qian, General Manager of East China Division of Shoplazza, said that cross-border e-commerce had to “start from the beginning”, by taking products and brands as the core, and realizing an ACE-type model with global layout and online and offline scalability.
Where are the challenges and opportunities in the dual-circulation development of foreign trade and domestic trade?
Xiang Lehong, Chairman of the Board and Chief Product Manager of Loctek Ergonomic Technology Corp., focused on the development path of Locteck, and said that global brands also needed to “come back” as China’s domestic market was quite huge, and was worth exploring by foreign trade-oriented companies.
Yang Baoqing, Chairman of the Board of Zhejiang Topsun (Holding) Group, had suggestions for foreign traders focusing on the domestic market:
Export-oriented products do not conform to domestic standards, and the positioning and prices are also different. Foreign trade enterprises must re-develop products according to the needs of the domestic market;
The financial pressure of the shift from foreign trade to domestic sales will be relatively large due to the delay in full payment by domestic sellers. It takes time for market acceptance and there may be a large amount of backlog, which require enterprises to be prepared for a time-consuming success;
Most foreign trade companies, lacking the brand operation ability, have mainly focused on OEM production, product development, and quality and production efficiency, as well as raw material procurement and production organization for years. However, domestic trade is a B2C operation, so attention must be paid to brand building, and the use of digital technology to accumulate market operation and product promotion capabilities.
The Southeast Asian emerging market looks promising, but the focus of cross-border e-commerce and brand globalization continues to be Europe and the United States
Chen Shi, Funding Partner of Frees Fund, said that in the future, there would be two main tracks for Chinese enterprises to go overseas – the Internet-based cross-border e-commerce with developed Occidental countries as the main players and the globalization ecosystem in developing countries with Chinese as main players. The main opportunity for Chinese companies to overtake at the bend would be the digital economy.
He said that the essence of Chinese companies’ globalization was the spillover and use of the capability elements developed in China in target countries, including the business model, manufacturing, technology research and development, operation and management, creativity and operation talents, all of which had to go global.
Na Xin, CEO of PONGO, said that Southeast Asia was the most noteworthy market for Chinese brands to go overseas. The reasons for this were that Southeast Asian consumers had high recognition when it came to Chinese brands, the region’s first- and second-tier cities had high population density and strong spending power, and were shifting from offline to online consumption.
“At present, online content on such products in the Southeast Asian market is very low. So, it is a good time for brands to build their content and occupy a favorable position in the search engines,” Na Xin said.
Nie Linhai, Chairman of China Electronic Commerce Association Alliance and Former Counselor of Department of Electronic Commerce and Informatization of the Ministry of Commerce, said that ASEAN had become a must-win market for e-commerce and the implementation of RCEP would help. But in the near future, the focus of cross-border e-commerce and brand globalization would still be in North America and Europe as consumers there were more mature and had higher requirements for e-commerce brands, quality and services.
Wang Qi, Partner of Vision Plus Capital, said that globalization of Chinese companies would depend on new products and technological iterations. And it was only in a mature market with long-term demand that Chinese enterprises would have the chance to build their brands.