"We have been installing fully automatic car washing machines in China in recent years, and we entered the Thai market at the beginning of this year. Tang Xiaodong, president of Kärcher Greater China, told CBN that Kärcher China's products are gradually moving to neighboring countries after several years of independent development.
At this year's China International Consumer Goods Expo (hereinafter referred to as the "Expo"), Chinese R&D and Chinese brands going overseas have almost become the "standard" for domestic and foreign exhibitors. For example, the above-mentioned set of car wash equipment and solutions developed by the Kärcher China team and mainly developed for the needs of the Chinese market were displayed through virtual video at this year's Consumer Expo, starting from China and moving towards larger markets such as Southeast Asia. This is also the first time that Kärcher has installed the products developed by the Chinese team in overseas markets, becoming a high-end intelligent manufacturing case of "Chinese wisdom" replacing the products developed by the German headquarters and exporting them to the world.
With the reshaping of the global value chain and the transformation and upgrading of China's supply chain, the "going out" of Chinese enterprises and Chinese products is increasingly changing from "going overseas" made in China to "internationalization" of Chinese technology and Chinese brands. This means that the industries and product categories included in the overseas army are becoming more and more diversified, and "going out" has also added a more multi-dimensional and rich "international" connotation.
"China Sells the World" and "The World Sells China"
In addition to the above-mentioned Chinese R&D, Chinese brands that benefit from the advantages of Chinese manufacturing have also run out of "acceleration" to go overseas, and strive to find sustainable global opportunities while gaining a firm foothold in the complex and volatile international trade environment.
The "2024 Consumer Goods Industry Trend Insights" released by EY at this year's Consumer Expo summarizes the new highlights and trends of China's consumer goods industry as a "new era of 5G", in which the "G" stands for "Go Green", "Growth" and "Global Footprint".
"It's not just China that sells globally, a very big definite trend at the moment is that the world sells globally. On the one hand, China's production lines and supply chains have gone to Southeast Asia, South America and even Europe, on the other hand, from the perspective of consumers and buyers, they also need more diversified products from around the world, which puts forward higher requirements for Chinese companies to find richer supply for consumers in the world.
In order to open up overseas markets, Yao Dong, the head of Huzhou children's clothing foreign trade enterprises who just returned from Southeast Asia in late March, will go there again in late April, "this time mainly to recruit people, and to connect with local e-commerce platforms." In just a few months this year, he has finalized 5,000 square meters of office space and the stall of Southeast Asia's largest clothing wholesale market, and is stepping up the renovation and recruitment work. Although the company plans to establish a foothold in the local market in the form of wholesale, the clothing it exports is sold under its own brand. Choosing to leave R&D and design in Huzhou Zhili, the "capital of children's clothing", and allowing manufacturing to follow the international layout of the market is the focus of Yao Dong's efforts in the next few years.
Regarding the trend of Chinese brands going overseas, Zheng Mingju, EY Greater China Retail & Consumer Goods Industry Leader, told Yicai that the categories of overseas consumer goods are becoming more and more diverse, and each category has its own unique performance and market positioning. For example, "home appliance companies are the first to go overseas and accelerate the process of globalization through self-built production bases and mergers and acquisitions; electronic brands such as mobile phones have occupied a significant share in overseas markets through technological innovation and brand building; local self-owned brand clothing and domestic beauty products are sought after with their unique products and designs; and the future market size of some tea drinks and restaurants should not be underestimated."
At the same time, the destinations of Chinese brands have become diversified. Zheng Mingju believes that with the huge market size and consumption power, the European and American markets are still the main destinations for Chinese brands to go overseas. With the advancement of the "Belt and Road" initiative and the rapid development of cross-border e-commerce, emerging markets such as Southeast Asia have also become gold nuggets for Chinese brands. In order to better adapt to overseas markets, Chinese brands are increasingly implementing deep localization strategies, from product design and marketing strategies to supply chain management, all of which strive to match local markets and consumer needs. Chinese consumer goods no longer only rely on "price involution", but pay more attention to the shaping and promotion of brand value, so as to improve consumers' awareness and loyalty to the brand.
"Go out" to participate in the competition
The market-oriented approach of opening up the international market and better meeting local demand, superimposed on challenges such as overcapacity and tariff costs, is the driving force and pressure for Chinese enterprises to expand their international layout in the process of building brands.
In Tang Xiaodong's view, overcapacity has caused price competition in the Chinese market to a certain extent, and involution has its reality, so how to export China's production capacity and serve the market outside China is urgent for every company. With the gradual enhancement of Chinese products in terms of technology and application universality, products with cost advantages have more opportunities to enter the larger international market, which also provides new opportunities for the export of Chinese products and brands - products with higher standards of quality and a certain technical threshold will seize the international market at a relatively reasonable price.
Unlike the declining birth rate in China, the birth rate in Southeast Asia is still rising, driving the continuous growth of the children's clothing market. Yao Dong told Yicai that customers in Southeast Asia have begun to become the main force in placing orders, quickly making up for the decline in orders in Europe and the United States, and the strong demand in the local market is fully revealed. Their product positioning is mid-to-high-end, which is different and advantageous compared with the children's clothing produced in local factories in Vietnam.
On the other hand, a large number of Chinese companies have honed the ultimate cost performance in the fierce competition - in addition to maintaining price advantages, Chinese products also have the response speed, design ability and quality that can meet market demand in a timely manner.
Official data show that in the first quarter of this year, the ex-factory prices of industrial producers fell by 2.7 percent year-on-year, and the purchase prices of industrial producers fell by 3.4 percent year-on-year. Wang Lingjun, deputy director of the General Administration of Customs, responded at a press conference of the State Council Information Office on April 12 that the decline in producer prices does not mean the so-called overcapacity, and the decline in product prices is often related to various factors such as fluctuations in raw material prices, technological updates and iterations, and producers' active concessions. Chinese products are widely welcomed around the world, relying on innovation and quality. For example, with strong R&D and production capacity, the intelligence and greening of China's home appliances have brought consumers a better experience and met the needs of a higher quality of life. For example, reliable and durable, strong performance, complete after-sales service of China's construction machinery is sold all over the world, "these are the results of our corporate efforts, but also the rational choice of the majority of users and consumers."
Tang Xiaodong said that this year's products they developed in China have taken the first step of "going global", which proves that the Chinese team not only has the ability to serve local customers, but also has the ability to radiate markets outside China.
Zheng Mingju concluded that the advantages of Chinese brands are mainly reflected in cost control, product diversification, complete and flexible supply chain, improvement of innovative and intelligent manufacturing capabilities, and rich online marketing experience.
According to customs data, in the first quarter of this year, the mainland's imports and exports to the Belt and Road countries increased by 5.5 percent, accounting for 47.4 percent of the total import and export value, an increase of 0.2 percentage points year-on-year, and the total imports and exports to the European Union, the United States, South Korea and Japan accounted for 33.4 percent.
Zheng Mingju believes that as Chinese brands increasingly penetrate into emerging markets, the price sensitivity of these markets will not slow down the transformation of Chinese companies, because relying solely on low-price competition strategies is unsustainable, and Chinese companies need to win the market by improving product price-performance, brand value and service, or through product innovation and differentiation. Transformation and upgrading is also a process, and enterprises should achieve transformation and upgrading in stages according to priority and importance. It is worth noting that green development has become a global trend. In addition to Europe and the United States, environmental awareness in emerging markets is also increasing, and consumer demand for healthy and environmentally friendly products is growing rapidly, and the market potential is huge.
Regarding the brand's going overseas, he pointed out that the most important thing to open up new markets is to return to the basics, that is, to know your customers. This means that systematic market research is necessary, and the development of different markets requires the development of differentiation strategies, fully understanding the cultural differences, consumer behavior differences, religious beliefs, and consumer sensitivity to price and quality balance in different markets. In contrast, the challenges of emerging markets are mainly due to the unstable political and economic environment, the legal and regulatory system and infrastructure to be improved, and the difficulty of establishing an efficient localization team, while the development of European and American markets requires more attention to geopolitical risks and market censorship standards.
(This article is from Yicai)