"The pandemic has dramatically disrupted the development of the entire industry." As the largest overseas warehouse operator in China, Li Cong, vice president of Zongteng Group, summed up the feelings of the past two years in such a sentence.
The overseas warehouses that were squeezed out in 2020 have undergone adjustments that began in the second quarter of 2021, and the overall growth rate has declined, so that the cross-border e-commerce market has gradually returned to the development speed before the epidemic. However, the solid data makes business owners still optimistic about the development of cross-border retail business, and the advantages of China's supply chain and policy support also provide them with long-term protection.
Li Cong said: "We are still optimistic about the development of cross-border retail business, including cross-border e-commerce, after all, the advantages of China's supply chain are very strong, and the cross-border e-commerce model provides a good customer experience. Even if the market fluctuates in the short term, it will not adjust the general direction of the company. ”
Staged hot
Under the global epidemic, cross-border e-commerce has become a "dark horse" in foreign trade in 2020, growing rapidly. According to the data of the General Administration of Customs, in 2020, 2.45 billion votes were checked and released through the customs cross-border e-commerce management platform, an increase of 63.3% year-on-year.
This also makes the important link of the cross-border e-commerce B2C export supply chain - overseas warehouse ushered in a year-round prosperity scene, "a warehouse is difficult to find, open one will be full". In the case of the U.S. e-commerce market, penetration (e-commerce as a percentage of total retail spending) has been achieved in just a few months.
The main reason behind this is that in the case of cross-border logistics obstruction caused by the epidemic, the export goods are delivered to overseas warehouses through cross-border logistics to increase inventory for stocking, and after the completion of sales on the e-commerce platform, and then through the "last kilometer" tail distribution, it has become a more time-effective and stable advantage than direct mail.
However, such a hot scene began to cool down after the first quarter of last year, and showed a downward trend in the second quarter.
"Everyone is beginning to find that 2020 is a sudden state, and the popularity of overseas warehouses is staged." Li Cong told First Finance and Economics that the reason is that some categories of "home economy" in 2020 are too rapid to consume, and the market in 2021 is overdrawn. At the same time, the ban was lifted overseas under the popularity of vaccines, people can travel, the "home economy" heat plummeted, and Europe began to impose VAT on all air express packages from July 1, 2021, so that the original hot cross-border e-commerce market resumed its previous development trajectory.
According to the Census Bureau of the U.S. Department of Commerce, with the rapid recovery of offline consumption, the development of the U.S. e-commerce market has returned to the trend of more than a decade. The data shows that since the first quarter of 2020, the e-commerce penetration rate has been significantly higher than the expected level before the epidemic, even if the third quarter of 2020 has declined, but it has been above the expected level, until the third quarter of 2021 fell below the expected level - in the third quarter of 2021, the actual penetration rate of E-commerce in the United States was 12.4%, while the expected value of e-commerce penetration given in the same period according to the trend of the past 5 years before the epidemic was 12.6%.
Taking the Zongteng Group as an example, the overall business growth rate of the company's overseas warehouses has been reduced in 2021, although the area has increased, but the turnover rate of goods in the library has declined, and the enthusiasm for replenishment is not as good as in 2020.
Zhejiang Anji Wanbao Furniture Co., Ltd. (hereinafter referred to as "Wanbao Furniture"), which produces products such as office chairs and e-sports chairs, uses B2C cross-border e-commerce as the main export method. Xue Dong, general manager of Wanbao Furniture, told First Finance and Economics that "the explosion in 2020 is indeed abnormal", and the price of products on the market in the third quarter of 2021 is relatively low, the reason is that the hot market in 2020 has attracted a large number of new sellers, and also allowed the overseas stock to increase significantly, and many sellers have to reduce the price in order to deal with the previous inventory. It was not until mid-November 2021 that the overall selling price on the cross-border e-commerce platform was adjusted to the price of raw materials and the increase in sea freight, up about 30% year-on-year.
However, U.S. consumers are still spending more online than before the pandemic. Data from the Census Bureau of the U.S. Department of Commerce shows that U.S. e-commerce sales have significantly exceeded pre-pandemic expectations since the first quarter of 2020. In the third quarter of 2021, U.S. e-commerce sales reached $204 billion, while according to pre-epidemic expectations, e-commerce sales in the same period were $183 billion.
Policies provide safeguards
In Li Cong's view, 2020-2021 has completed a fluctuation cycle in the development of overseas warehouses. The sharp fluctuations in the overseas warehouse market in 2021 are not only an adjustment to the extremely hot in 2020, but also the beginning of the development of cross-border e-commerce gradually returning to rationality and normalcy under the epidemic, achieving a rebalancing.
He believes that the foreign trade market in 2022 still needs to be observed, the main uncertainties come from the trend of maritime prices, and the rising rent and labor costs of overseas warehouses have put forward higher requirements for the operation of enterprises, whether it is overseas warehouses or direct mail models. On the other hand, how Chinese enterprises can build a new competitive advantage in the changes in the retail landscape, including whether many Chinese brands can expand more emerging markets and sales channels, and improve consumer awareness of brands as soon as possible, these factors will have an important impact on the development trend in 2022.
What makes Xue Dong feel relieved is that after the Christmas season, the inventory in the chair segment has been almost digested. With the development of the "home economy", people have also become accustomed to products such as e-sports chairs as Christmas gifts, so some products can still be sold smoothly even if the price has increased by 35%, which shows that market demand still exists.
Although there are fluctuations and uncertainties in the short term, in the long run, Li Cong is optimistic. "Think outside the 2020 mindset as soon as possible to think about future developments, neither as radical as 2020 nor affected by some negative emotions in 2021." He said, "Even if the market fluctuates in the short term, it will not adjust the general direction of the company." ”
The data shows that the scale of Cross-border E-commerce in China has increased by nearly 10 times in the past 5 years, which has promoted the transformation and upgrading of foreign trade, especially playing an important role in stabilizing foreign trade under the impact of the epidemic. In the first three quarters of 2021, China's cross-border e-commerce imports and exports increased by 20.1%, and market procurement exports increased by 37.7%.
In this context, the state has also continuously introduced supportive policies at the policy level.
The executive meeting of the State Council held in December last year determined cross-cycle adjustment measures to promote the stable development of foreign trade, and deployed to implement the Regional Comprehensive Economic Partnership Agreement after it takes effect.
Among them, it is pointed out that it is necessary to further encourage the development of new foreign trade formats such as cross-border e-commerce, increase the number of cross-border e-commerce comprehensive pilot zones, cultivate a number of offshore trade center cities (regions), and increase support for the construction and use of overseas warehouses in accordance with market-oriented methods.
In November last year, the Ministry of Commerce issued the "14th Five-Year Plan for High-quality Development of Foreign Trade", which also clearly accelerated the development of new trade formats, including promoting the sustained and healthy development of cross-border e-commerce and accelerating the development of overseas warehouses.
For example, we will solidly promote the construction of cross-border e-commerce comprehensive test areas; explore the innovation of the whole process of cross-border e-commerce transactions; support cross-border e-commerce enterprises to create flexible supply chains with agglomeration of elements and rapid response; establish a marketing system that integrates online and offline and link between home and abroad; and promote infrastructure construction such as cross-border e-commerce online comprehensive service platforms.
In order to accelerate the development of overseas warehouses, the above plan proposes to promote regulatory innovation and encourage and guide multiple entities to build overseas warehouses. Cultivate a number of representative overseas warehouses with distinctive characteristics in information construction, intelligent development, diversified services, and localized operations. Encourage overseas warehouse enterprises to integrate domestic and foreign resources and extend services to the upstream and downstream of the supply chain. Accelerate the construction of overseas warehouse standards, and launch a number of national or industry standards with international influence. Promote the digital development of overseas warehouses and explore the establishment of overseas smart logistics platforms. Relying on overseas warehouses to establish and improve a new type of foreign trade logistics network covering the world and coordinated development, we will create a smart carrier that optimizes the layout of the international supply chain.
These policies have given Chen Cong greater confidence, "the market is fluctuating, but the policy level provides a long-term guarantee for future development."
Although there are still many unstable and uncertain factors facing the development of China's foreign trade, and the situation of high oscillation of sea freight and tight transportation capacity will continue, every large and small enterprise is trying to find better development opportunities in the crisis.
Different from the general small and medium-sized foreign trade enterprises, Xue Dong, who has been laying out cross-border e-commerce since 2017, is a direct agreement signed with the shipping company, which has certain advantages in price and space, "for example, the price of the shipping company on the market has increased by 3000 to 4000 US dollars, we have only risen by 400 to 500 US dollars, and there is also a certain amount of security, such as we have agreed on 3000 containers, and the shipping company will give 1500 guaranteed cabins." This has left them relatively little affected by soaring maritime prices and tight capacity.
At the same time, after the rapid penetration in 2020, it is becoming more and more expensive to obtain new traffic online, and the main sales force has shifted more to brand owners.
To this end, Xue Dong has established an independent e-commerce platform for their own brands overseas while adding overseas warehouses in Germany in 2021 and cooperating with platforms such as Amazon.
Both Chen Cong and Xue Dong mentioned the potential of emerging markets. "We recruited agents in Malaysia in 2019, and used to sell our brand in 2 to 3 cabinets (containers) per year, but by August 2021 they ordered 50 cabinets, which has doubled dozens of times." Xue Dong said, "Originally they wanted to order 200 cabinets, but Malaysia suffered from heavy water, many warehouses were flooded, so the amount of orders has been reduced, according to the plan for 2022, the original is to order 200 cabinets of goods, and then add 500 cabinets in the second half of the year." ”
With the official implementation of RCEP this year, emerging markets and evolving agents like this will also show greater vitality, becoming the tentacles of Chinese goods to continue to extend to the world.