Category Archives: Business News

Facebook for Fun and Facts

June 23, 2010

Over the last year, the team at DHgate have been investing a lot of time and energy into making our platform easier, and generally more enjoyable, to business with. We’ve implemented countless improvements to the site based on extensive feedback and customer insights information. We’ve added chat tools that connect with a live team member to answer any immediate questions or queries. We’ve introduced new customer service policies that make the dispute process simpler, quicker and more generous. We’ve hosted training seminars all over China to teach our suppliers about service etiquette, best practices and long-term customer relationship methods. We’ve improved search, payment, logistics, vale-added options. We’ve launched a resource driven microsite www.introducingsuccess.com to provide free, helpful insights into starting and running an e-business. And that’s just to name a few of our recent initiatives.

In short, we have been trying really hard to make our brand promise equal our user experience.

Of all our activities, no where has taught us more about our customers, and allowed us to understand the way they work, their personalities, their issues and their preferences more than our social media presence.

We host competitions, offer special discounts, arrange giveaways, deal with questions, provide reviews, etc in a multimedia format that get’s our buyers talking. They talk because we listen and – crucially – we act.

Our promise equals our customers experience.

We have a way to go in making improvements to our business, but we are letting our customers know that we are working for them. And they appreciate it.  Transparency is key and 2.0 is the perfect channel to keep all informed and ask for feedback.

Have you been using social media to connect with your customers? If so, what approach do you find works?

visit www.facebook.com/dhgate to see what we’ve been up to lately.

Also posted in DHgate, Know-How, Trend Insights – 0 Comments

Silver Lining in Eurozone Financial Crisis

May 23, 2010

The European financial crisis has sent shockwaves through the global economy and has a number of ramifications for the international trading sector, especially sourcing product from China via ecommerce platforms. However, like in all things, there is a silver lining for many companies, particularly from the US, who can take advantage of the situation.

Back in March of this year I somewhat hesitantly predicted that there would be no significant movement in the value of the Chinese currency (RMB) as against its major trading currencies like the US dollar and the Euro in the short term. This is still a hot topic of discussion and contention for many international and Chinese clients of my company, www.dhgate.com, as it has a direct impact on the costs of sourcing products from China.

Currently, the Chinese RMB is informally ‘pegged’ to the US dollar at a rate of about 6.8 and this undervaluation was arguably causing trade imbalances between the US and China. The argument goes something like this: while it was good for US importers and Chinese exporters to have the RMB at an artificially low level, at the same time it made products imported from the US into China artificially high thereby hurting US companies

In the past few months it was thought that there was a consensus amongst Chinese policy makers that the peg would be broken and the Chinese RMB would be allowed to gradually rise about 3-5% thereby cushioning the impact on the Chinese export sector. This, of course, was on the basis that the world economy was steadily recovering from the Financial Crisis and there were no other major financial crises in the world.

Well what a difference a couple of months makes!

The dramatic European debt crisis as a result of the Greek bailout and the plunging value of the Euro has meant that any plans for a slight rise in the RMB as against the US dollar are now on hold…again.

The Euro has plunged to its lowest level against the RMB in almost a decade. It has fallen 14.5% in the past 4 months alone and the future is uncertain. The dramatic slump has prompted Chinese authorities to publically warn that China’s exports to Europe are threatened. Indeed, there are a number of anecdotal reports from clients of my company that European importers are cancelling or significantly reducing product orders. This appears to be by virtue of an inability of European companies to obtain normal trade finance because of the severity of the debt crisis together with heavily reduced purchasing power of the Euro.

A number of Chinese domestic economic issues also cloud the picture. The Chinese Stock Exchange has fallen sharply in recent times. This is mainly due to the Chinese government’s attempt to restrict the availability of credit in order to prevent the real estate property bubble from bursting.

All of these factors mean that there will be no short term revaluation of the RMB as against the US dollar. There are important trade and economic bilateral talks next week between the US and China and it appears that the revaluation issue, always a perennial topic in these trade talks, has been taken off the table. The US Government has recently stated that it intends to press China on other trade issues like market access for US companies and increasing the value of US exports to China. The US has announced that it wants to double US exports to China over the next decade.

What does all this mean for US SME importers of Chinese products? I believe that the situation presents great opportunities as the prices of Chinese products available for export will remain low for the foreseeable future and there appears now to be no likelihood of major costs increases as a result of exchange rate issues. From my discussions with my Chinese manufacturing clients, there is now a lot of opportunity to lock in these prices for the future.

More importantly, because of the problems in the European import market, many Chinese suppliers and manufacturers will now shift their focus to other markets, particularly the US. This means that there is the ability to achieve much lower prices from Chinese exporters because of the excess product available. It maybe that there has never been a better time for US SME companies to commence or increase sourcing product from China.

The European financial crisis has sent shockwaves through the global economy and has a number of ramifications for the international trading sector, especially souring product from China via ecommerce platforms. However, like in all things, there is a silver lining for many companies, particularly from the US, who can take advantage of the situation.

Back in March of this year I somewhat hesitantly predicted that there would be no significant movement in the value of the Chinese currency (RMB) as against its major trading currencies like the US dollar and the Euro in the short term. This is still a hot topic of discussion and contention for many international and Chinese clients of my company, www.dhgate.com, as it has a direct impact on the costs of sourcing products from China.

Currently, the Chinese RMB is informally ‘pegged’ to the US dollar at a rate of about 6.8 and this undervaluation was arguably causing trade imbalances between the US and China. The argument goes something like this: while it was good for US importers and Chinese exporters to have the RMB at an artificially low level, at the same time it made products imported from the US into China artificially high thereby hurting US companies

In the past few months it was thought that there was a consensus amongst Chinese policy makers that the peg would be broken and the Chinese RMB would be allowed to gradually rise about 3-5% thereby cushioning the impact on the Chinese export sector. This, of course, was on the basis that the world economy was steadily recovering from the Financial Crisis and there were no other major financial crises in the world.

Well what a difference a couple of months makes!

The dramatic European debt crisis as a result of the Greek bailout and the plunging value of the Euro has meant that any plans for a slight rise in the RMB as against the US dollar are now on hold…again.

The Euro has plunged to its lowest level against the RMB in almost a decade. It has fallen 14.5% in the past 4 months alone and the future is uncertain. The dramatic slump has prompted Chinese authorities to publically warn that China’s exports to Europe are threatened. Indeed, there are a number of anecdotal reports from clients of my company that European importers are cancelling or significantly reducing product orders. This appears to be by virtue of an inability of European companies to obtain normal trade finance because of the severity of the debt crisis together with heavily reduced purchasing power of the Euro.

A number of Chinese domestic economic issues also cloud the picture. The Chinese Stock Exchange has fallen sharply in recent times. This is mainly due to the Chinese government’s attempt to restrict the availability of credit in order to prevent the real estate property bubble from bursting.

All of these factors mean that there will be no short term revaluation of the RMB as against the US dollar. There are important trade and economic bilateral talks next week between the US and China and it appears that the revaluation issue, always a perennial topic in these trade talks, has been taken off the table. The US Government has recently stated that it intends to press China on other trade issues like market access for US companies and increasing the value of US exports to China. The US has announced that it wants to double US exports to China over the next decade.

What does all this mean for US SME importers of Chinese products? I believe that the situation presents great opportunities as the prices of Chinese products available for export will remain low for the foreseeable future and there appears now to be no likelihood of major costs increases as a result of exchange rate issues. From my discussions with my Chinese manufacturing clients, there is now a lot of opportunity to lock in these prices for the future.

More importantly, because of the problems in the European import market, many Chinese suppliers and manufacturers will now shift their focus to other markets, particularly the US. This means that there is the ability to achieve much lower prices from Chinese exporters because of the excess product available. It maybe that there has never been a better time for US SME companies to commence or increase sourcing product from China.

Also posted in Events and Happenings, Know-How, Personal Insights – 2 Comments

The Competitive Situation in China

April 22, 2010
In recent posts, I have been discussing payment systems in China. Before I continue on that in my next post, today, I would like to talk about Alibaba’s recently developed hacker-technology and how this relates to another important aspect of the business environment here: the competitive situation in China.
One of the key challenges facing China is moving away from low-quality imitation of products and services to more innovative, high-quality equivalents. In fact, this is a key area of investment for my company, DHgate, as we development support and education systems for Chinese manufacturers. Previously, Chinese businesses could create value by lowering production overheads; however, in the twenty-first century, being ‘cheap’ is not enough. I believe the goal should be for Chinese businesses to create value in a totally different way: by innovating beyond the competition.
In recent years, what we have seen is the emergence of a vanguard of dynamic new Chinese businesses that are capable of this. Through DHgate.com, I have found that fostering this attitude internally has allowed us to achieve rapid expansion in international markets. In the West, audiences respond to originality and not, as has been the case in China, to replication.
This has been at the forefront of my mind recently, as one of our key competitors Alibaba, developed and introduced a mechanism which allows its suppliers to access rival backend system and pull content over to their site. This competitive imitation is the hallmark of the old way of doing business in China, and it is a worrying sign that a recognized company such as Alibaba has resorted to these tactics.  This is not the environment in which Chinese business will thrive and become true international market-share contenders.
The philosophy we espouse at my own company, DHgate, is that to be the best you have to be able to innovate beyond the competition. First-mover advantage has proven to be key in online industries, but by the time a new feature has been widely replicated, a truly innovative company will already have developed another improvement.
The competitive situation is improving in China. Government regulations are slowly being rolled back, industries are becoming more diverse and dynamic, and a growing number of Chinese businesses have shown they have what it takes to be global leaders in their field.
China’s future lies in developing high-tech, fast-paced, competitive new industries, and I believe fostering a inventive business atmosphere, not competitive imitation, is the quickest and  way to get there.

In recent posts, I have been discussing payment systems in China. Before I continue on that in my next post, today, I would like to talk about Alibaba’s recently developed hacker-technology and how this relates to another important aspect of the business environment here: the competitive situation in China.

One of the key challenges facing China is moving away from low-quality imitation of products and services to more innovative, high-quality equivalents. In fact, this is a key area of investment for my company, DHgate, as we development support and education systems for Chinese manufacturers. Previously, Chinese businesses could create value by lowering production overheads; however, in the twenty-first century, being ‘cheap’ is not enough. I believe the goal should be for Chinese businesses to create value in a totally different way: by innovating beyond the competition.

In recent years, what we have seen is the emergence of a vanguard of dynamic new Chinese businesses that are capable of this. Through DHgate.com, I have found that fostering this attitude internally has allowed us to achieve rapid expansion in international markets. In the West, audiences respond to originality and not, as has been the case in China, to replication.

This has been at the forefront of my mind recently, as one of our key competitors Alibaba, developed and introduced a mechanism which allows its suppliers to access rival backend system and pull content over to their site. This competitive imitation is the hallmark of the old way of doing business in China, and it is a worrying sign that a recognized company such as Alibaba has resorted to these tactics. This is not the environment in which Chinese business will thrive and become true international market-share contenders.

The philosophy we espouse at my own company, DHgate, is that to be the best you have to be able to innovate beyond the competition. First-mover advantage has proven to be key in online industries, but by the time a new feature has been widely replicated, a truly innovative company will already have developed another improvement.

The competitive situation is improving in China. Government regulations are slowly being rolled back, industries are becoming more diverse and dynamic, and a growing number of Chinese businesses have shown they have what it takes to be global leaders in their field.

China’s future lies in developing high-tech, fast-paced, competitive new industries, and I believe fostering a inventive business atmosphere, not competitive imitation, is the quickest and way to get there.

Also posted in DHgate, Know-How, Personal Insights – 5 Comments

Maturing eCommerce Means Web Retailers Must Think Differently

April 14, 2010

I saw a very interesting article on the Financial Times online today and thought I would share it here.  Entitled “Maturing ecommerce means web retailers must think differently” Michael Ross, director at eCommera, put some interesting points forward for small businesses.

Read highlights below or the full article here

...But the indicators of ecommerce’s problems are not so obvious as long queues or a tired looking store front are to a physical high street retailer.

For online retailers, store layout means optimising the position of their most popular and most profitable products; check-out queues equate to the ease and speed of completing an order and the time from order to delivery. For the friendliness of the affable village butcher, online retailers must think about their after sales care and the tone and tailoring of their outreach.

Online, a company with a compelling and competitive service has an almost infinite catchment area, and it is often the big names who are investing most in understanding the science of effective retail and will prevail in the land grab.

So to avoid going the way of local stores, squeezed out by the major players – the supermarkets of the physical world – online retailers of all sizes must monitor and understand the importance of several key metrics.

First comes the number of visits and orders, and the source of traffic. This allows more sophisticated analysis than physical in-store footfall as it not only reveals total consumer number but also how they are finding the site – whether driven by direct marketing, banner ads, affiliates, search or other means…

And finally, the most obvious KPI for businesses to monitor – customer satisfaction. Many say they do so but their methodology is often based on the wrong metrics.

Businesses need a holistic view of end-to-end customer service and the efficiency of the website and back-end in delivering what those consumers want, when they want it…

Also posted in Know-How, Trend Insights – 1 Comment

Payment Systems in China

April 11, 2010

A couple of recent news items regarding ecommerce payment systems got me thinking about the current state of electronic and ‘cashless’ payment options and methods in China. It’s a market that has changed dramatically over the last decade and transformed Chinese society.

It’s also highly relevant to US retailers and wholesalers who are currently sourcing their products from China, and also to those who are planning to do it in the future, because as the Chinese ecommerce market gets more sophisticated, secure and multi-faceted, the ease of doing business with Chinese suppliers becomes less of a headache, particularly for small to medium businesses and new players.

The first item was that MasterCard was entering the booming online marketplace by launching its own web shopping mall called’ MasterCard Market Place’. Clearly the move is an attempt by the company to boost its revenue in the face of cutthroat competition from its rivals like Visa and American Express and also form alternative, cheaper and newer (and hence more attractive in many ways) ecommerce payment systems like PayPal. I think this is the first time a giant global credit card company like Visa or American Express has entered this market in a substantial way. Whether consumers will flock to a shopping site run by a payment systems company rather than a retailer or a B2B intermediary site like my own company, www.dhgate.com, remains to be seen.

The second item was a recent report that for the first time in living memory US consumer credit debt fell for the 13th month in a row. Clearly as a result of the recession and faltering labor market, Americans are curtailing their addiction to credit card and other consumer debt…for the moment. Maybe the days of credit-fuelled spending in the US are over. We will see.

‘Plastic money’ was invented in the US and its rise together with the benefits to the US economy, most notably for the banks, finance houses and retailers, and the resulting personal debt mountain and heartache for consumers has been well-documented. From a Chinese point of view, though, the situation could not be more different.

Credit cards and other forms of consumer credit are a relatively new concept in China. China is still a cash society. It is not unusual to see an ATM (also a new relatively new concept) user   withdrawing thousands of RMB at increments of 2000rmb ($285) per transaction to pay their monthly rent. The highest denomination is a lowly 100rmb, about $14. Consumers will often make major purchases like cars, high-end electronic goods and even apartments with suitcases and bags of cash, literally.

The Chinese are generally fiscally very conservative. They are the greatest savers in the world. Although estimates are difficult, it is thought that the Chinese save between 30-50% of their disposable whereas the US rate is close to 0%. Also Chinese are much less leveraged than their counterparts in emerging and developed countries. Total consumer debt as a percentage of disposable income is estimated to be about 30% compared with 94% in the US.

The situation is, however, changing dramatically. As the Chinese economy booms and the level of disposable income of its people has increased, the rise in popularity of credit cards, online ecommerce payment systems and other forms of personal consumer credit has exponentially increased. I’ve talked in previous columns about the extraordinary rise in online shopping. This is largely been brought about by the rise of the credit card and other ecommerce payment options.

China is encouraging non-cash payment options, and the banks are aggressively marketing these avenues to boost revenue. Although the area is still relatively small, (for example, only 5% of Chinese have a credit card compared to 60% in the US), the industry is expected to boom in the future. According to a recent report by McKinsey & Co, China has issued only about 50 million credit cards. By 2013, it is estimated that the figure will surpass 300 million. The increasing comfort and ease in using non-cash payment options means that there will be increasing innovation and sophistication, particularly for online buying and selling and the B2B market.

My own company, www.dhgate.com, has been at the forefront in the B2B field through our innovative partnership with one of the leaders in the online payments market, PayPal which has give our overseas clients and Chinese suppliers a safe, reliable and fast payment system.

Which leads me to my third item of interest: PayPal have recently announced a partnership with China UnionPay, the national bankcard association of China which has to date issued over 2 billion ATM, debit and credit cards. The partnership means that China UnionPay card holders can use PayPal to shop online domestically and internationally. I believe it has the potential to position PayPal and its Chinese partners like my company as the number one online payment option in the future.

In my next post I will talk more about how US small to medium online retailers and wholesalers can now take advantage of the using innovative, safe and reliable B2B online payment systems.

Also posted in Know-How – 8 Comments
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