Category Archives: Trend Insights

Chinese Parliament and You

March 14, 2010

Now that the spectacle of the Chinese Spring Festival has finished, China is back to business. Whereas February is the festival season, March is politics season. This week I want to focus on some pressing economic and financial issues because of their importance to US buyers of Chinese products.

Beijing has become the focus of China as over 3000 government and people’s delegates descend on the capital for a ten day Congress which decides the economic, social, legal and other policies of the country. It is a particularly important and timely meeting as there are a number of pressing economic and financial issues, like inflationary pressures and the valuation of the Chinese currency the yuan, that are uppermost in many people’s minds – Chinese and foreigners alike.

February was a great month for Chinese exports which were up about 45% on the previous year. There is guarded optimism that this trend will continue and I believe that cross-border ecommerce will be a driving force.

Looking at our transactional data and talking to our DHgate.com Chinese suppliers, I believe that foreign companies, particularly US firms, are replenishing their inventories and introducing new product lines. This is a strong sign of increasing confidence in the future.

Also in my discussions with Chinese and international clients and colleagues, I am constantly asked about my opinion on the direction of the value of the RMB. Clearly this has a direct impact on the costs of sourcing and has tremendous importance. You will no doubt have seen and read numerous analyses, commentaries and articles on this issue.

I don’t want to get into a debate of the rights and wrongs of this issue, but I think it’s suffice to say that there’s a lot of misconception and misunderstanding on both sides. I believe though that there will be no significant movement in the value of the RMB in the short term. Whether there will be a slight rise in its value later in the year as some are predicting will depend on the economic performance of the country. In the meantime, China-sourced products continue to remain extremely cost competitive for SME buyers. Stay tuned as there is a lot more to come on this issue.

The other major Chinese financial issues that have the potential to affect Chinese suppliers and overseas buyers are the specters of inflation, wage rises and looming labor shortages.

Despite a recent spike in inflation (particularly in the food, housing and wages sectors) over the past few months, the Government appears to have it under control. With respect to the labor market and costs, I’ll post on this issue in the future.

On a final note, during the Congress, the Government announced a major commitment to the development of China’s ecommerce platform, particularly in the SME sector. This is the first time it has been made a ‘front and center’ policy. A number of initiatives will be promoted to introduce SME online suppliers and manufacturers to better business practices and ecommerce trade. This is a welcome development.

My own company, DHgate.com, is actively developing its training and education programs for our online Chinese clients and welcome this Government policy which complements our vision for the future of high-quality product and service offerings from China’s manufacturing sector. I’ll talk more of these initiatives in a later post.

Also posted in Business News, Events and Happenings, Personal Insights – 0 Comments

China Brands on the Move

March 4, 2010

In my last post I touched on the Chinese Government’s ‘Made in China’ promotional advertisement. I took the view that Chinese companies were increasingly serious about their products quality and integrity and becoming brand aware.haier

Recent surveys by the World Bank and the leading international brand development and valuation companies show that Chinese brands are on the move internationally. The big State-owned banks, technology and oil companies are now consistently in the top 100 and a number of them threaten the top 20 in the near future.

Remember that these brands (for example, banks like ICBC and Bank of China, the oil giant Sinopec and China Mobile) essentially did not exist 10 years ago. Much in the same way that the top Japanese brands like Sanyo, Panasonic and Toyota were 30 years ago, and Korean companies like LG, Samsung and Hyundai had no international presence 10-15 years ago.

We are all aware of the times when the phrase ‘Made in Hong Kong/Japan/Korea’ was used in a derisory manner to indicate low quality and unreliability. How things have changed (even despite Toyota’s current woes).

There are now a large number of Chinese companies that are poised to move into the world’s best brands lists in the next decade. Companies like Huawei, Midea, BYD and Haier to name a few.

Take Haier for example. One of China’s largest companies, they are now the 4th largest home appliance manufacturer in the world. You may have seen their low-cost and energy efficient refrigerators and air conditioners in your local stores. In many ways Haier have outmarketed and outplayed GE and the Japanese producers. Expect to see this company rocket up the leading brand lists in the future.

BYD (Build Your Dreams), the Chinese car manufacturer which has a special interest in electric vehicles and is the recipient of Warren Buffet investment, is also a brand that could be on everyone’s lips in the future. I will talk more of them in later posts.

And what does this increased brand awareness and success mean for online retailers sourcing products from China? One of the flow-on effects is that small to mid range Chinese manufacturers, including online suppliers, are rapidly improving their game in order to remain competitive – both in terms of cost and quality. We are currently seeing this on DHgate.com

Read more blogs like this on my “The View from China” blog at Practical eCommerce. Don’t forget to let me know what you think!

Also posted in Know-How, Personal Insights – 0 Comments

China Sourcing Trends

March 1, 2010

In the January issue of the UK’s ‘Internet Retailing’ magazine, I wrote the below piece for their ’Insights from Around the World’ column on the sourcing trends in China for overseas retailers. It includes some information that many of you will find interesting. Let me know your thoughts!

Insights from Around the World: China

Despite the winter chill, China was red-hot at the close of 2009.The country’s manufacturing activity accelerated in December at its fastest pace in several years and foreign exports were up USD$130.7bn, up 17.7% year-on-year. J.P. Morgan said it expects China’s growth momentum to continue throughout 2010. All this at the same time as internet shopping in the UK grew at its fastest rate for 22 months in December, as millions of shoppers migrated online to buy their Christmas goods.

Controversy over Beijing’s policy of pegging its currency to the U.S. dollar may continue to concern economists, but for the time being the fixed exchange rate gives China’s factories a nearly unbeatable price advantage against manufacturers in other countries.

The price advantage has grown even larger after the U.S. dollar, and therefore the Chinese yuan, fell sharply against other major currencies last year. Combine this financial situation with the growth of an already mammoth manufacturing industry and you get a retail buyers market.

Retailers purchasing inventory in China via DHgate.com demonstrated some interesting trends in 2009. Although Apparel and Accessories remained strong, technology purchases ranked as the most popular, accounting for around a third of transactions and a rise of over 10% on the previous year. Strong growth was also seen in the Health and Beauty and Home and Gardens categories, both showing year-on-year increases of around 40%. And with total Christmas stock purchasing representing DHgate’s busiest in its five year history, Chinese manufacturers are expecting to see huge growth in 2010.

With an increasing number of Chinese businesses setting up wholesale and manufacturing operations online, those who source from China will have a distinct advantage.  Traditionally it has been the Big Box retailers who benefit from China sourcing. The new evolution of this industry online allows smaller business to also benefit and pass on savings to their customers – increasing profits.

As consumers resume normal spending habits, retailers capitalizing on the surge of quality goods provided by Chinese manufacturers have the potential to expand their market share.

Also posted in Know-How, Personal Insights, Press – 0 Comments

Made in China: The Brand

February 11, 2010

As I write this entry, the Chinese Spring Festival is upon us. It is the most important Chinese festival and celebrates the start of the Chinese New Year and the advent of spring. It is traditionally a time for people to gather and indulge in a weeklong celebration of food, family and festivities. Think of it as all the merriment of western holidays rolled into one, but with a lot more fireworks!

Spring Festival also involves one of the largest annual human migrations with well over 200 million people making their way around the country; usually back to their home town for a family reunion.

Not surprisingly, China closes down for a week or so. Officially the country is on holiday from the 13th to the 20th February; however, the Festival can unofficially run from a week before to a week after these dates. In the case of businesses, most will only close for a few days of the official holiday. For example, at my company, DHGate.com, our customer service team be on holiday between the 13th and the 16th but will operate with a skeleton staff from the 17th to the 20th .

Most Chinese suppliers and shipping companies will be closed for a few days; therefore slight delays in processing overseas orders may be encountered. The shipping of products that are warehoused in the US and UK should not be affected.

During my recent business travels around Asia and the US, something that has caught my attention is an ad that promotes the ‘Made in China’ brand which is frequently appearing on international television. You may have seen it on CNN. The slick advertisement is a deliberate attempt, (the first to my knowledge), by the Chinese Government to rebuild and promote the China brand in the international market. Have a look at the ad here.

The theme of the ad is ‘Made in China, Made with the World’. Clearly the intention of the Government is to rebuild trust with overseas consumers after a string of product safety and quality issues and also to allay fears that cheap Chinese products take jobs away from overseas countries.

The message is that it’s a collaborative effort. People don’t often realize that over 60% of Chinese exports to the US are produced by firms owned by foreign companies. A computer ‘made in China’ is likely to contain a large portion of imported components. Also, although the final assembly and testing is done in China, the design and specifications were created overseas.

One of the other themes in the ad is that China is now very serious about the integrity of its brands both national and product specific. The commitment to product safety, quality and integrity by the Chinese government and manufacturers is greatly improving. In the future, I’ll detail the efforts being made in these areas.

Also posted in Events and Happenings, Know-How, Personal Insights – 0 Comments

The View from China

February 3, 2010

I was recently selected by Practical eCommerce, the industry’s leading resource site for online merchants, to keep their readership updated on the changes and happenings in China via an expert blog. My first post in ‘The View from China’ is below or can be found here.

To keep regular readers of this blog in the loop, I will repost my monthly entries here – So you will have a single hub for all my thoughts on entrepreneurship, running a business and the developing supplier and eCommerce situation here in China. And, if you have any areas you would particularly like me to cover, why not drop me an email or comment below? I’d love to hear form you.

“The View from China”

by DHgate.com Founder and CEO, Diane Wang

On the eve of the Year of the Tiger, I’m proud to present a new blog to readers which will give regular updates on the events and opportunities within the Chinese ecommerce scene. Here, I aim to give an insight into doing business in China and an insider’s eye into the world’s most exciting emerging market.

International ecommerce and ecommerce technology have been my passion for the last two decades. After leaving the security of senior management at Microsoft and Cisco I decided to go it alone. My first company, online consumer marketplace Joyo.com, was acquired by Amazon in 2004, and that same year I founded DHgate.com. My purpose was to create a platform which connects SMEs to the manufacturing hub which is China, and therefore level the playing field.

Despite the global financial crisis, 2009 was a great year for China. GDP growth for 2009 was 8.7% and the country’s manufacturing activity accelerated in December at its fastest pace in several years. Foreign exports rose to US$130.7billion, up 17.7% year-on-year, and analysts expect that the Chinese growth momentum will continue in 2010. Although the Chinese Government is playing it down, it has been confirmed that China has overtaken Germany as the world’s biggest exporter.

As an increasing number of Chinese businesses, large and small, are setting up wholesale and manufacturing operations online, I believe that there are now great opportunities for US retailers, particularly SME’s, to source products directly from China.

Recently, as part of its extensive stimulus packages, the Chinese government has implemented a policy to spur the growth of SME manufacturers and suppliers throughout China. In particular, it has directed local and provincial governments to encourage emerging industries through reform, assistance with market access and fostering local banks to provide finance to expanding businesses.

At DHgate.com, we have seen a surge in the number of Chinese SME manufacturers and suppliers who have migrated online. As these numbers grow, so do the opportunities for US retailers to be cost effective. I believe that there has never been a better time for US retailers to take advantage of the Chinese online sourcing market.

Because of this, I believe it is timely to introduce a blog on the Chinese ecommerce scene which will post regular updates on the ecommerce market in China with a particular emphasis on B2B sourcing.

The regular reports will focus on issues such as trends, new platform innovations, technological and other improvements and government initiatives and policy developments. I will also address pressing consumer issues such as product quality and safety.

Also posted in Know-How, Personal Insights, Press – 0 Comments
« Older posts
Newer posts »