Tag Archives: exports

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.

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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.

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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.

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The Economy and Me

October 26, 2009
I’m not an economist, so when China’s GDP figures were released last Thursday I reacted like any business owner would do, and looked at what that meant for my bottom line.
There are huge, complicated implications for any economic fluctuation – and while keeping informed on macro trends is important, the reality is that micro trends are going to affect most of us obviously and imminently.
It has been heavily reported that China exporters bore the brunt of the decrease in global demand following the economic crisis, in which case I should be worried. But my internal figures tell a different story.

It is offline trade that has seen the real impact of weakened export markets in China. My company, DHgate.com, has seen GMV increase by an average of 20% per month for the last 5 months, indicating that manufacturing companies in China are embracing new technology to reach international markets

Live interview on "Asia Business Tonight"

Live interview on "Asia Business Tonight"

With more than 30 years experience in international export, technology-wise China, via companies like my own, can provide mature solutions for suppliers allowing them to increase their capabilities and competitive advantage for global buyers.

Global demand is also improving, as DHgate’s figures will attest, with order increases recorded from international retailers in markets such as the US, Europe and Australia. Further, the Chinese customs agency said September exports fell 15.2 per cent to $115.9 billion US from the same period a year earlier, but that was the least in nine months, another sign that global demand is rebounding

In spite of what is happening in the global economy, I believe that if businesses can keep cost competitive, if they can differentiate, if they can provide a valuable and reliable service and/or product and if they can innovate, then there is a very good chance of success.

So when Bloomberg’s “Asia Business Tonight” show asked me to appear and discuss the results from my business’ perspective, I felt confident I could communicate these economic results from a real point of view – a business owner who wants to grow.

Has your business seen signs of the recovering economy? I’d love to hear your story, here.

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