Deep supply chain texture building and digital empowerment will help promote the high-quality overseas expansion of Chinese brands!

According to customs statistics, in the first half of 2022, the total value of China's import and export of goods was 19.8 trillion yuan, a year-on-year increase of 9.4%. Among them, exports were 11.14 trillion yuan. In 2021, the scale of China's cross-border e-commerce imports and exports was about 1923.7 billion yuan, a year-on-year increase of 18.6%, accounting for 4.9% of the total import and export volume. Among them, exports were about 1391.8 billion yuan, an increase of 28.3%.

The impressive data is helping more and more Chinese sellers to head for the wider world. However, going global is only the first step. To stand higher and more firmly, we need to consider brand building.

Marketplacepulse data shows that as of August 19, 2021, there are 6.3 million third-party sellers on Amazon. Another data shows that Chinese sellers accounted for about 42% of Amazon in May this year. In this way, there are about 2.65 million Chinese selling products on Amazon.

However, most of such a large number of sellers are engaged in trading, and there are very few real brand sellers. The proportion of Chinese brands searched by brand name on Amazon is not high.

For a long time, these trade sellers have been making a fortune in silence, and it is not an exaggeration to say that they "make money while lying down." However, all this was broken by the wave of Amazon account bans in 2021. The big sellers who were once considered to be on the altar by many sellers have suffered heavy blows one after another.

The original order was broken, and everyone suddenly realized that the companies that used to be the leading companies in this industry have become value-driven companies such as SHEIN and Encore Innovations.

In the "BrandZ™ Top 50 Chinese Global Brands 2021" list jointly released by Google and Kantar , SHEIN and Encore Innovations are on the list, ranking 11th and 13th respectively. Even Tencent (12th) is lower than SHEIN.

For a time, calls for brands to go overseas gradually became heard in the cross-border e-commerce field.

"As the market becomes more and more transparent, product transparency and competitive value will be increasingly suppressed by market competition. If you don't provide additional value, there is actually no intermediate meaning. Early cross-border e-commerce sellers just sold goods rather than helping customers solve pain points or problems, so the value generated was not great." When talking about why cross-border sellers have to shift from a sales-driven to a value-driven (brand-driven) model, Steven Chen, founder and CEO of 4KMILES said.

Steven Chen, Founder and CEO of 4KMILES

Recently, at the Global Digital Commerce Summit hosted by 4KMILES with the theme of "Opportunities and Future of Brands Going Overseas", Ennet interviewed Steven Chen.

4KMILES "Opportunities and Future of Brands Going Global" Global Digital Commerce Summit

Expanding a brand overseas is not a simple task. It is difficult to accomplish it relying solely on the strength of the seller. The process requires the seller’s own efforts as well as external assistance.

Steven Chen said that the difficulties currently faced by cross-border e-commerce sellers are largely due to the lack of differentiation in their supply chains, so they do not generate much value. "Chinese sellers going overseas must focus on the iteration and construction of their supply chains, understand the pain points and needs of local consumers, and make product iterations and solutions based on these needs to ultimately meet customer needs."

He believes that in the future, Chinese brands going overseas must have their own strong and deep supply chain and technical thresholds, "because what ultimately competes in the market is products rather than operational capabilities. Many European and American brands rarely operate themselves, and all their energy is spent on polishing the supply chain and innovating and designing (according to user needs)."

"The problem with most Chinese sellers now is that if supplier A is not good, they will switch to supplier B. It is difficult to do deep iteration in this constant change, and the capabilities of this supply chain are relatively superficial. However, European and American sellers are different. They often continuously iterate the product based on a demand."

Currently, both traditional equity institutions and the overall trend of the industry are generally optimistic about integrated industrial and trade sellers, believing that they have a greater chance of developing brands. The reason is that these sellers have a factory foundation, a deep understanding of products or supply chains, and the ability to continuously iterate and produce products.

"Brands need to create value for consumers. This value lies in your technological innovation, your user insights, or the solutions you provide." Steven Chen said: "Finally, good quality is actually a standard feature of a brand. I don't think it is a technical content." On the other hand, the biggest problem facing Chinese brands going overseas is cultural differences. "Many times, sellers directly push products to them without understanding their needs." Steven Chen pointed out.

The reason why there are cultural differences is actually because the overseas brands do not understand the local culture and cultural needs. Therefore, if you want to do a good job of brand overseas expansion, you must have a certain understanding of local consumer insights.

Earlier this year, Forbes published an article discussing the new trends in Chinese brands’ overseas expansion in 2022 and pointed out that using brand strategies to achieve localization and conform to the cultural habits of target consumers will be the key to the success of brand overseas expansion.

However, with the current high labor costs, coupled with professionalism and resource issues, it is difficult for sellers to carry out localized marketing. In this case, relying on the power of a third party is the best option for sellers.

The biggest advantage of 4KMILES is that it has a team and services that understand localization. At the same time, since it officially joined the digital commerce business department of Ascential Group at the end of last year, it has even stronger capabilities in localized marketing.

It is understood that Ascential Group has more than 2,500 employees in five continents around the world , providing localized professional services to customers in more than 100 countries and regions. In addition, Ascential Group has made unique product editorial recommendations to help Chinese brand sellers connect with 200 mainstream media overseas, including the New York Times. These professional media editors will help sellers make brand recommendations.

"This is actually just like what domestic branding people say, if you release a thousand Tik Tok videos, people will recognize you. If we have a large number of mainstream media and professional editors who keep repeatedly promoting your product, it will actually have a relatively large impact on the brand." Steven Chen is very confident when talking about this "killer" service.

Brands need to occupy the minds of users. These repeated recommendations can not only help tell a good brand story, but also be a process for brands to occupy the minds of consumers. "After determining your customer base, by repeatedly recommending something to them, people will remember it after many times, and after remembering it, they will assume that the brand is good," said Steven Chen.

SHEIN has fully utilized the comparative advantages of China's clothing industry and digital economy and has become the world's leading fast fashion brand in just a few years. I hope that in the future, with the efforts of sellers to polish their products and the help of companies like 4KMILES, more Chinese brands will stand out among the world's brands.

However, Steven Chen also reminded that most sellers are now in the 1.0 stage. The most important thing at this stage is to survive, and then think about brand investment after making money. However, building a brand is not a matter of overnight, but a long process that requires a long period of precipitation to reflect its value.

4KMILES

Ascential Group

Chinese brands go global