Is the "world factory" heading southeast? This report from Alibaba Research Institute tells you the truth with numbers

Will Vietnam and other Southeast Asian countries replace China as the new world factory? In the first half of this year, this topic has been one of the focuses of public and media attention. Recently, the Cross-border E-commerce Research Center of Alibaba Research Institute released the "Research Report on the Transformation and New Comparative Advantages of China's Cross-border Industrial Chain in the Digital Trade Era " (hereinafter referred to as the "Report") at the "2022 China International Fair for Trade in Services" .

By analyzing the export of upstream and downstream products in key industries such as clothing and consumer electronics on Alibaba's cross-border e-commerce platform , Alibaba International Station, from 2019 to 2022 , the report pointed out that although Vietnam's industrial chain and the domestic cross-border industrial chain currently have both competitive and complementary relationships, it is difficult to replace China's important position in the global value chain. In addition, in the era of digital trade, China's cross-border industrial chain is ushering in an important opportunity period for the establishment of new comparative advantages .

( Establishment of cross-border industrial chain for key export products of the international station )

The demand for cross-border e-commerce in ASEAN countries has grown strongly, with intermediate products and raw materials accounting for more than 80%

The report found that Alibaba International Station 's exports of clothing and consumer electronics upstream and downstream products to Southeast Asian countries have been significantly differentiated at multiple times. For example, from Q2 2020 to Q1 2021, Alibaba International Station 's exports of downstream clothing to Southeast Asia showed a significant differentiation, with intermediate clothing exports faster than finished products . Consumer electronics products had already seen a similar situation as early as 2019 .

Ouyang Cheng, deputy director of the Alibaba Research Institute and director of the Alibaba Cross-border E-commerce Research Center, believes that the growth rate of Chinese companies' exports of clothing and consumer electronics upstream and downstream products to Southeast Asian countries on the international platform reflects, to a certain extent, the structural adjustment of the local countries' industrial development, that is, intermediate products and raw materials are increasingly becoming important products imported from China. Combined with China Customs general trade data, in 2021, China exported 49.12 billion US dollars of textiles to the ten ASEAN countries, a year-on-year increase of 24.9%, far exceeding the 4% year-on-year growth rate to the United States; among them, clothing intermediate products and raw materials represented by textile fabrics and yarns accounted for more than 80%.

( The growth rate of downstream (intermediate products-finished products) of the international station clothing industry is poor month-on-month )

( The growth rate of the downstream ( raw materials -finished products) of the international station clothing industry is poor month-on-month )

The report data also shows that the average growth rate of international station exports to major countries has remained high from 2017 to 2021. Among them, the average growth rate of exports to the United States and South Korea exceeded the overall growth rate of the platform. Developed countries such as Europe and the United States are still the main markets for China's cross-border e-commerce exports. However , a vertical comparison of the growth rate of international station exports to various countries in recent years shows that the growth rate to Southeast Asian and South Asian countries such as Malaysia, the Philippines, and India has increased significantly. In 2021, the growth rate of international station exports to Malaysia increased by 42%, to India by 32%, and to the Philippines by 30%. ASEAN countries have become the most eye-catching high-growth market for international station exports in recent years.

China's important position in the global value chain is difficult to replace, and exports of technology and resource-intensive industries are still mainly finished products.

According to a study by the Institute of World Economics of the Chinese Academy of Social Sciences, 53% of Vietnamese industries have formed a competitive relationship with domestic industries such as general production transfer, and 42% have formed a complementary relationship with domestic industries such as cross-border value chain trade. However, from the perspective of the full scope of Chinese industries, China still has an overwhelming industrial advantage over Vietnam.

"From the survey, we learned that China's current clothing industry has the advantage of over 70% of the world's raw material production, and has internationally leading independent spinning, weaving, printing and dyeing technology and equipment advantages, as well as flexible supply and small-order fast-return production capabilities based on a complete chain system . " Ouyang Cheng said that coupled with the "1-hour parts supporting circle" capability that can be achieved by the consumer electronics industry , it is difficult for Southeast Asian countries such as Vietnam to replace China's important position in the global value chain.

( Diagram of the cross-border industrial chain and comparative advantages of textiles and clothing )

It is particularly noteworthy that new energy products on the international site, agricultural machinery and equipment, machine tools, industrial robots and other mechanical products, geotechnical materials, wood, stone and other construction products, exports to Southeast Asia are still mainly finished products , and the demand for intermediate products and raw materials is relatively weak.

In the era of digital trade, cross-border industrial chains are facing an important opportunity to establish new comparative advantages

The report also uses customs statistics to compare the exports of international cross-border e-commerce products with those of the same type of products exported through general trade. From Q1 2019 to Q2 2022, the average growth rate of exports of clothing raw materials in customs general trade (42.2%) was higher than the average growth rate of exports of finished clothing products (10.4%). The difference in the average growth rate of exports between the two was 31.8%, showing a differentiated trend.

During the same period, the average growth rate of clothing raw material exports from the international station ( 45.2%) was close to the growth rate of customs general trade exports, but the growth rate of clothing finished product exports ( 22.8%) was significantly faster than the growth rate of customs general trade exports, and the growth rate difference between the two (22.4%) was smaller than the general trade export level of customs data. The comparison of the consumer electronics industry is even more prominent.

(Comparison of the export growth rate of clothing upstream and downstream of the international station and the export growth rate of the same category of domestic customs )

It can be seen that for the clothing and consumer electronics industries, the degree of industrial chain differentiation through online exports of cross-border e-commerce such as the International Station is weaker than the degree of industrial differentiation of general trade with offline as the main form of export. In addition, the report found that the cross-border e-commerce model represented by the International Station can help merchants to a certain extent alleviate the impact caused by the rising costs and prices of raw materials, labor, etc.

" From a practical perspective, cross-border e-commerce platforms represented by Alibaba International Station can help Chinese foreign trade companies continuously improve their digital capabilities, thereby establishing a new comparative advantage for China's cross-border trade in the digital age. " Ouyang Cheng believes that the transformation trend of global trade digitalization has provided soil and opportunities for the establishment of new comparative advantages in China's cross-border industrial chain. The advanced practices and capacity reserves of China's cross-border e-commerce platforms will provide important support for more industries in China to participate in international competition and cooperation and accelerate the global layout, while contributing positive forces to China's construction of a new development pattern of "dual circulation" and the realization of high-quality development.

Take the international station as an example. This year, it has transformed from a marketing platform to a service platform. The full -process one-stop digital foreign trade service system being built will greatly reduce the uncertainty of foreign trade going overseas. In terms of logistics alone, Alibaba.com Logistics, a logistics sub-brand launched in March this year , has more than 26,000 dedicated transport lines in more than 220 countries and regions around the world, effectively reducing traditional logistics costs by nearly 30%. " These will become new comparative advantages for the development of China's digital trade in the future, and will also better create a ' digital outlet ' at the doorstep of every small and medium-sized business . " Ouyang Cheng said.