The second phase of the 121st Canton Fair opened in Guangzhou yesterday. Unlike in previous years, when exhibitors competed for foreign orders in the exhibition hall, a team holding the banner of "Before relying on foreigners, now relying on Netease YEATION-10 billion procurement funds waiting for you" was particularly eye-catching yesterday.
"I have generally only seen exhibitors advertise to grab orders, but buyers have never seen anything that attracts exhibitors’ attention." A domestic buyer who has participated in the Canton Fair for five consecutive years said so.
At present, China’s foreign trade shows obvious signs of stabilization, but many foreign trade enterprises are still struggling to cope with uncertainties such as rising cost factors. As a representative of domestic ODM e-commerce, Netease YEATION made a high-profile "anti-grab" China manufacturers at the Canton Fair. On the one hand, Netease YEATION, which focuses on quality products, explored its own needs for high-quality supplier resources; On the other hand, with the obvious trend of domestic consumption upgrading, foreign trade enterprises that had advantages in production quality have a better market opportunity to explore the domestic market.
Foreign trade is picking upBut enterprisesStill havenip/chill in the air
According to the data released by the General Administration of Customs on April 13th, in the first quarter of 2017, China’s import and export of goods reached 6.2 trillion yuan, up 21.8% year-on-year. This is the year-on-year growth of China’s total import and export value for three consecutive quarters since the second half of last year.
However, Lu Wenbo, general manager of Guangzhou Puxin International Trade Co., Ltd., an exhibitor of Canton Fair, is still unhappy. Lu Wenbo’s company is mainly engaged in exporting refrigerators and air-conditioning compressors. Last year, with the depreciation of RMB and the recovery of emerging market countries in the United States and Southeast Asia, the company’s turnover increased to a certain extent, but its profits were compressed. "But because the price of steel doubled last year, and packaging materials such as plastics also rose sharply, the production cost rose, and we had to give up some profit margins to maintain our competitiveness."
Xu Bing, spokesman of Canton Fair and deputy director of China Foreign Trade Center, also reminded that since the beginning of this year, China’s foreign trade has continued the good momentum of stabilization and improvement since last year, and new development momentum is accumulating. However, the current world economic recovery is weak, the market demand has not been fundamentally improved, and "anti-globalization" has obviously risen. China’s domestic comprehensive factor costs are rising, and the traditional advantages of foreign trade are weakening. The foreign trade situation is still complicated and grim, and it still needs hard work to consolidate the stable and good momentum of foreign trade.
According to the report "Trade Statistics and Outlook" released by the World Trade Organization (WTO), the growth rate of global trade is expected to expand to 2.4% this year, and the uncertainty of major economies’ policies will curb trade activities. Higher inflation rate will lead to higher interest rates, and tighter fiscal policies and trade barriers will slow down trade growth in the next two years.
Exit turnOpportunities for domestic sales opportunities
When the reporter visited the museum, he learned that in order to share the potential risks brought by foreign trade uncertainties, some foreign trade enterprises not only choose emerging markets, but also actively promote the domestic market with great potential.
In fact, it is nothing new to talk about "exporting to domestic sales" at the Canton Fair. As early as 2009, when experiencing the global economic crisis, opening up the domestic market was an important topic for foreign trade enterprises. In that year, the Canton Fair even set up a domestic procurement center for the first time to invite domestic buyers to help foreign trade enterprises "save the market".
Exhibitor Yang Chongyi’s company is mainly engaged in the production of thermos cups for export. In addition to OEM for overseas brands, the company has launched its own brand since 2003, and the sales channels are very mature. Except for the layout of physical supermarkets, Tmall and JD.COM have opened flagship stores, but what makes Yang Chongyi a little helpless is that products with almost the same materials and quality can hardly sell at a good price as long as they are China brands and China designs.
Some exhibitors believe that with the general trend of domestic consumption upgrading, the ranks of the middle class are getting bigger. This group demands itself with high standards, and consumption preferences are beginning to be related to quality of life, emotional factors, personalization and sense of design. It is more appropriate to talk about "export to domestic sales" now.
"It can be said that the manufacturers at the Canton Fair have been doing OEM work for foreign countries, so their production capacity is very strong. Many of them have their own R&D centers and are very familiar with the needs of consumers in China. The Canton Fair has gathered the top domestic manufacturers. " Some domestic buyers said that although the foreign trade situation has stabilized, after this wave of economic crisis, many foreign trade factories have realized that they can’t rely solely on foreign markets. In addition, after the domestic consumption upgrade, Chinese people are more willing to pay for the quality of goods, and the "export goods" with high quality and price can also have a market in China.
Yang Feng Jianmin, an exhibitor, is the deputy general manager of a scissors manufacturing enterprise in Yangjiang. In the past, this enterprise was 100% an export order and contracted for a German brand. Two years ago, Feng Jianmin and his company participated in the Canton Fair, with the intention of expanding more overseas business. Surprisingly, it opened up domestic sales channels by mistake.
"At the Spring Fair last year, the head of Netease YEATION visited the Canton Fair to find high-quality domestic suppliers, and just came to our booth. After learning that we were OEM scissors for a famous German brand, we hit it off and started cooperation. Before that, we never took orders for domestic sales."
At present, the company has launched two scissors products in Netease YEATION, with the price ranging from 10 yuan to 20 yuan. With the same technology and materials, the price of scissors products manufactured by the company for German brands has reached more than RMB in 200 yuan. With high cost performance, the sales of two scissors products are very hot, and the current sales volume has reached more than 30,000.
Netease YEATION Supply Chain Strategyleave first
However, the reporter also learned at the Canton Fair that although the prospect of "domestic consumption upgrading" is bright, some foreign trade-oriented enterprises with relatively weak capital can only try hard to meet the domestic market because of the different transaction methods, trading rules and settlement methods between domestic trade and foreign trade.
According to industry insiders who have been engaged in foreign trade for many years, the transaction process of foreign trade-oriented enterprises in the past was very simple. After receiving the order-proofing and confirming to the customer-auxiliary materials for production-production of bulk goods-inspection and shipment-payment was received. However, in the domestic market, when the brand cooperates with the supplier, it adopts the "361" payment method, that is, it is paid in stages according to 30% advance payment, 60% withdrawal payment and 10% quality guarantee. When the brand pays the remaining 10% of the mortgage, it will not only pay interest, but also often deduct the factory money, which will make the enterprises interested in domestic sales bear huge financial pressure risks.
In this regard, the relevant person in charge of Netease YEATION introduced that Netease YEATION has a special fund to pay the interest on withholding money to all cooperative suppliers, thus forming a benign cooperative relationship with suppliers and changing their long-term passive position. According to the industry practice, 10% of the payment will be paid as the quality guarantee, and Netease YEATION will pay the interest of this deposit to the supplier according to the bank interest rate.
It is reported that in addition to the above preferential interest policy, in order to ensure the stability of cooperation, CEO Ding Lei also said at the first supplier conference of Netease YEATION last year that in terms of orders, every cooperation between YEATION and suppliers will last at least 3 to 5 years, which is equivalent to giving suppliers a reassurance.
For the exhibitors in the Canton Fair, Netease YEATION, a model of direct supply of ODM products by suppliers, is a new attempt for them.
"The market competition for OEM of foreign big brands is becoming more and more fierce, and brands are pushing down prices too hard; The gross profit margin of supplying to YEATION is generally slightly higher than the traditional OEM model. " Ye Guoan’s handbag manufacturing co., Ltd. has been with Netease YEATION for one year. He said that although most of the company’s sales still come from the traditional OEM mode, he has decided to increase the scale of cooperation with YEATION, recommend several self-developed products to YEATION for shelf screening every quarter, and split the large workshop that was previously produced to match large orders into several small workshops to adapt to the rhythm of e-commerce and respond quickly. He feels that his identity has changed from a simple OEM to a strategic partner of YEATION, and his independent space has become larger.
"Maybe now is the best opportunity to bring foreign trade goods back to China and open up the domestic market." Ye Guoan said so.
