Going overseas! Going overseas! The second generation of factory workers flocked to the "Four Little Dragons"

For foreign trade factories, will "riding on" domestic cross-border e-commerce platforms be a new way out?

At the beginning of 2023 , at an AliExpress investment promotion conference held at a hotel in Nanshan District, Shenzhen, this was the question that many business leaders attending the conference thought about rapidly when they faced the investment promotion PPT on the big screen .

After the beginning of the year, many domestic cross-border e-commerce platforms have accelerated their investment promotion efforts. The AliExpress investment promotion conference held in Shenzhen is just one of more than 100 investment promotion conferences held by AliExpress in February this year . At the same time, the same conference also took place in Guangzhou , Dongguan , Xiamen, Yiwu, Hangzhou, Shanghai, Qingdao and other cities.

In Yiwu, the "capital of small commodities", the same investment promotion conference , the same crowds , and the business cards of the participants are varied, but most of them have similar identities : the heads of foreign trade factories of the younger generation.

Photo: An offline investment promotion meeting of AliExpress

" I have seen today's scene in my dreams, because I have been working non-stop since last year , with only one goal: attracting investment! Attracting investment! And more attracting investment! " An AliExpress fully managed investment staff member did not forget to tell a joke while introducing the business on stage , but people at the scene were more concerned about the details of the investment PPT.

In fact, AliExpress is not the only one that chose to expand aggressively after the beginning of the year. Pinduoduo, Temu , Shein and other domestic platforms known as the "Four Little Dragons Going Overseas" all started competing for source factories almost at the same time at the beginning of the year in order to quickly expand overseas markets this year.

The second generation of overseas returnees welcomes the moment of succession

With the tremendous changes in foreign trade exports in recent years, factors such as the epidemic, reduced overseas demand, market runs on Southeast Asian factories, backward and aging production capacity, etc., traditional foreign trade companies can be described as being full of crises .

On the other hand, when the second generation of factory owners enters the critical period of " succession ", the ideas of these younger generations will produce new conflicts with the business philosophy of their parents.

The biggest difference between the two generations lies in their attitude towards "online".

Li Chao is a "second-generation factory worker" born and raised in Dongguan . He appeared at the Shenzhen investment promotion conference with his father, Lao Li . He has almost all the typical labels of a "second-generation factory worker" : born in the 1990s , returned from overseas, studied business abroad, is close to the Internet, and is proficient in various social tools.

In 2022, he followed his father and slowly began to learn how to take over and operate his own family factory , a leather shoemaking company that started with the "three-in-one" strategy . His father, Lao Li , is still worried about him and still takes him with him in everything.

The workers in the factory usually call the father and son " Big Mr. Li" and "Little Mr. Li". At first he was not used to this title, but this time when he came to the investment promotion conference, Li Chao brought his father Lao Li to attend.

Li Chao's father, Lao Li, often reminisces about the past few decades . Business would come to his door at home , and he would attend several large-scale exhibitions every year. Competitive products were the key . At that time , he received a lot of orders. Although he didn't make money easily, it was really worry-free.

When Lao Li was young, it was also the golden age when China's manufacturing industry joined the global division of labor . But in the past five years, the situation has slowly changed, especially after the global epidemic. Traditional foreign trade companies have to start learning how to change. It is always painful to leave the comfort zone , and looking for orders has become a daily routine for middle-aged Lao Li .

Now, when they wake up every day, the hundreds of brothers in the factory have to eat. After experiencing the epidemic and losing several long-time customers, Lao Li is even more anxious.

But as a member of the younger generation, Li Chao doesn't see it that way. He has studied abroad and knows the value of a pair of leather shoes after it sails across the ocean from a Chinese factory to a foreign country. In his opinion, the decline of the tide is inevitable , and the key is how to catch the next wave . Besides, the shoe factory "was ultimately established by my father , " and he hopes to "tell his own story " one day .

Orders are fragmented now , and cross-border e-commerce is a way for us to actively adapt . When the wave comes, we will get on board first, so that we can be closer to the market, and then we will find ways to develop our own brand in the future . This is what Li Chao, the "second generation of the factory" , repeatedly persuaded his father , and it was also the reason why he dragged his father to the investment promotion conferences of these domestic Internet cross-border e-commerce platforms.

Compared with the radical ideas of the younger generation, factory managers of Lao Li's generation have a more cautious attitude towards the Internet.

"Transformation, branding, from B2B to B2C , many people have heard about it over the years , but few have put it into practice . Is it that easy ? I have always advised him to listen and watch more first, and then think about it. " In Lao Li's opinion, his son has not experienced the difficult times of the entity, which is why he is worried.

But Lao Li also admitted that his son might be right . He had seen in his WeChat Moments a factory that supplied Shein . In less than two years, its scale had doubled. Factory owners younger than him had bought new houses and cars. Lao Li had seen it in his WeChat Moments . Now AliExpress also has a similar model. The cost is not high, so he could let his son give it a try.

The Four Little Dragons Riding the Wave

AliExpress, shein, Pinduoduo temu, and ByteDance TikTok are the four overseas e-commerce platforms known as the "Four Little Dragons Going Global". Among these platforms, shein was the first to run a cross-border e-commerce and factory cooperation model.

A few years ago, shein started to communicate with factories about the "small order quick return" model. In the beginning, many factories rejected it . For this reason , shein showed a lot of sincerity, including helping factories improve their factories, transform IT systems, train personnel, etc. In this way, shein accumulated little by little and "bitten down" small factories and incorporated them into the supplier system .

Subsequently, Shein almost became an invisible giant in the domestic cross-border e-commerce industry from scratch, with its valuation once reaching 100 billion US dollars.

The biggest advantage of this supply model is that it allows factories to continue to focus on "production" , but at the same time it also leaves a little gap to participate in the operation of cross-border e-commerce platforms, giving these factories the opportunity to pay attention to faster-paced consumer trends.

Along with the success of shein, Pinduoduo Temu and AliExpress also launched their own hosting business models at almost the same time. These Internet e-commerce platforms are no strangers to the industrial belt factories, and they have found the group they need to attract urgently: the "second generation of factories " like Li Chao who are taking over or have taken over the family factories .

Picture: Xiaohong: The second generation of factory workers returning to China to take over is a hot topic

With the "investment competition" of domestic Internet companies , the threshold for foreign trade factories to engage in cross-border e-commerce has been lowered invisibly : they do not need to know foreign languages, do not need to understand operations, do not need to worry about logistics and after-sales, as long as they can ensure product supply, they can engage in cross-border e-commerce.

In order to attract the attention of the older generation of factory managers, cross-border platforms have also introduced a keyword to attract these factories and enterprises to join : payment period. In the investment promotion poster of AliExpress, "0 commission, fast payment" is emphasized, which is also a point that foreign trade factories care about very much.

Compared with the hesitation to try new things, the anxiety of "missing out" brings greater to these small and medium-sized manufacturing business owners. " If it really only takes 10 days to pay back , then you can give it a try. " Mr. Li also emphasized this point when discussing with his son.

Investors: China's cross-border platforms go global, industrial belts are still the biggest advantage

Under the current inflation in Europe and the United States, consumers in the European and American markets are also more pursuing high-quality, low-priced and more cost-effective products.

"Low price" has also become an important decision-making indicator for European and American consumers. This provides a rare opportunity for cross-border e-commerce platforms and overseas trade companies. Inflation in Europe and the United States has accelerated the domestic manufacturing industry's " going overseas " through cross-border e-commerce .

The high prices overseas are still continuing. Since 2020, the inflation rates in Europe and the United States have continued to rise .

Figure: Inflation rates in the UK and the US Source: Trading Economics

Taking the UK and the US as examples, their inflation rates have remained around 8% since 2022. Ordinary people in Europe and the US are really eager for low-priced goods from China.

In the song advertisement recently released by Pinduoduo Temu during the US "Super Bowl", simple and direct lyrics such as "Shop like a billionaire" and "I feel like a billionaire" were emphasized .

Although shein, AliExpress, and temu all focus on cost-effectiveness, for foreign trade factories that have experienced the epidemic in recent years, the scarier thing is the lack of orders than the low prices . At present, using these platforms to go overseas , although the profit is not much, it is still a good opportunity for the factory to "recover blood".

Li Feng, founder of Frees Capital, has carefully analyzed this phenomenon : Currently, the strategies of Internet platforms are often formulated based on the overseas market environment. In the future , we will see more and more Chinese cross-border e-commerce platforms based on domestic supply chains spreading to more countries.

"China's several cross-border e-commerce platforms are expected to become strong competitors to Amazon in many countries around the world because the industrial belt advantages are still on our side. " Li Feng of Frees Capital concluded.

However, for those manufacturing companies that continue to participate in investment promotion conferences held by major Internet companies, the grand narrative of competition among these large companies and the rise of Chinese manufacturing may not be their daily focus .

A factory seller who recently planned to join AliExpress's full-management service expressed his New Year's wish: "I hope that 2023 will allow us to live a better life and make some money. The factory needs to operate and eat. After all, behind us are ordinary workers and their families. "

The Four Asian Tigers

Factory II