As a foreign trader who has been in business for many years, Liu Xiangyang has successively launched products from more than 10 characteristic industrial belts, such as clothing in Zhengzhou, cultural tourism in Kaifeng, and Ru porcelain in Ruzhou, to overseas markets. Several hundred million, but an epidemic that started in early 2020 has brought the original foreign trade business to an abrupt end.
The difficulties of the industry and the decline of the company’s performance once made Liu Xiangyang confused and confused, but now, he and his team have found a new direction, trying to solve some core “pain points” in foreign trade through the newly established “digital factory”.
Of course, it is not only Liu Xiangyang who are transforming foreign trade people. In fact, more foreign trade businessmen who have been at the forefront of foreign trade for a long time in the Upper Delta and Pearl River Delta are accelerating the pace of transformation.
Difficult
Shiling Town in Huadu District, Guangzhou is well-known as the “Leather Capital”. There are 8,000 or 9,000 leather goods manufacturers in the town, most of which have foreign trade business. However, a new crown epidemic has led to The sales of many local foreign trade leather goods enterprises have been disrupted, foreign trade orders have dropped sharply, and the inventory of the past has become a burden stranded in the warehouse. Some enterprises originally had 1,500 workers, but due to the sharp drop in orders, they had to lay off to 200 people.
A similar scene also occurred in Wenzhou, Zhejiang. Some local foreign trade and OEM shoe companies also encountered crises such as shutdown and bankruptcy due to the impact of the international environment and the epidemic.
Recalling the impact of the epidemic on the foreign trade industry in recent years, Liu Xiangyang said that the logistics cost, “from the original 3,000 US dollars per container, has risen to more than 20,000 US dollars.” What’s more fatal is that it is difficult to expand new overseas customers, and the old Customers continued to lose, which eventually led to a continuous decline in foreign trade business.
Ministry of Commerce spokesperson Shu Jueting once said that some foreign trade enterprises are affected by the epidemic and face staged problems such as blocked production and operation and poor logistics and transportation. At the same time, problems such as rising raw material costs, poor cross-border shipping, and supply chain bottlenecks have not been fundamentally alleviated, and foreign trade enterprises, especially small and medium-sized enterprises, are facing greater operational pressure.
Xia Chun and Luo Weihan, chief economists of Yinke Holdings, also wrote an article at Yicai.com, pointing out that under the impact of the epidemic, the global industrial chain and supply chain that have been carefully designed and built by humans for decades are particularly fragile. Foreign trade enterprises, especially small and medium-sized enterprises that focus on mid-to-low-end industries, are more sensitive, and any seemingly minor shock may bring a devastating blow to them. In the context of the complicated domestic and international situation, the prosperity of foreign trade enterprises is far away.
Therefore, when China’s import and export data for the first half of 2022 was released on July 13, Liu Xiangyang found that although the total value of China’s import and export of goods in the first half of 2022 was 19.8 trillion yuan, a year-on-year increase of 9.4%, but A lot of the increase is contributed by energy and bulk commodities. Specifically, in the foreign trade business of small and medium-sized enterprises, although some industries are recovering, there are still many small and medium-sized foreign trade enterprises struggling in the predicament.
The latest data from the General Administration of Customs shows that from January to June this year, foreign trade orders fell in consumer goods industries including household appliances and mobile phones. Among them, household appliances fell by 7.7% year-on-year, and mobile phones fell by 10.9% year-on-year.
In the small commodity market in Yiwu, Zhejiang, which is mainly exporting small commodities, some foreign trade companies also reported that the various uncertainties caused by the repeated epidemics caused the loss of large-scale orders, and some companies even planned to close down.
Pain points
“Chinese products, in the eyes of foreign businessmen, are most interested in ‘cost-effectiveness’.” Liu Jiangong (pseudonym), Liu Xiangyang’s partner, said that as a result, foreign businessmen who purchase products in China will also compare prices everywhere. See who has the cheapest price. You quote 30, he quotes 20, or even 15. At the end of the price, when the foreign businessman calculates, even the cost of raw materials is not enough, so how can it be produced? Not only are they interested in “cost-effectiveness”, but they are also worried about being shoddy. In order to avoid being deceived, they will send people or entrust a third party to “squat” in the workshop. .
This makes it difficult to gain trust between foreign businessmen and domestic factories. Foreign businessmen are worried about product quality. Some domestic factories, in order to get orders, will also “groom and wear”. Hang it up in a workshop that looks bigger.
Liu Xiangyang said that when “foreigners” make inquiries about buying goods, they will inquire about all the factories they can know and shop around. It has become bad money driving out good money, and even foreign businessmen feel that it is “unreliably low”. The price is already very low, and if there is a profit, it can only be done when the existing testing methods cannot detect it. Reduced.
As a result, some uneasy foreign businessmen thought of “squatting factories”, but it is impossible to keep watch 24 hours a day, and at the same time, it is impossible to accurately grasp the error rate of products.
“What we (industrial enterprises) used to do in the past was to either scrap the product or communicate directly with the customer, reduce a discount, and charge less,” Liu Jiangong also said. There are also some factories that simply hide it. If it is shoddy, if you don’t tell him (foreign businessman) that he can use it without any problems, then we (industrial enterprises) will escape the disaster. “This is the method commonly used in traditional manufacturing.”
As a result, foreign businessmen are even more afraid to trust factories.
Liu Xiangyang found that after such a vicious cycle, how to gain trust and be trusted has become the biggest obstacle in the foreign trade industry. On-site inspections and factory inspections have almost become an inevitable step for foreign businessmen to purchase in China.
However, the epidemic that started in early 2020 has made this kind of business relationship that sees believing difficult to achieve.
Liu Xiangyang, who is mainly engaged in foreign trade, soon discovered that the hurricane caused by the butterfly caused by the epidemic caused losses to himself – an order with a total amount of nearly 200 million US dollars was sent; Procurement plans have also been cancelled due to the epidemic.
“If the order could finally be completed at that time, there would definitely be a profit of tens of millions of yuan.” Liu Xiangyang said that for this order, he has communicated with the other party for more than half a year, and the other party has also flown to China many times. , Accompanied by Liu Xiangyang and others, they went to the factory to inspect the factory many times. Finally, the two parties signed an agreement at the end of 2019.
The first order to test the customs clearance process was issued soon, with an amount of hundreds of thousands of dollars. Next, according to the plan, the country will send people to squat in the factory to meet the production of subsequent orders. Guess what, the epidemic has come.
If you can’t see the arrival of the raw materials with your own eyes, and you can’t see the production of the order with your own eyes, the other party would rather not purchase. From the beginning of 2020 to July 2022, the order was delayed again and again.
Up to now, even Liu Xiangyang has not been able to confirm whether the other party will continue to advance the order of nearly 200 million US dollars.
“It would be great if there was a factory where foreign businessmen could sit in the office and ‘squat a factory’ online.” Liu Xiangyang thought about it, and began to ask around, wanting to get rid of the current predicament of traditional foreign trade. What he thought of was how To further gain the trust of foreign businessmen, upgrade traditional foreign trade, and transform traditional factories into “digital factories”.
Therefore, Liu Xiangyang and Liu Jiangong, who has been studying digital factories for 10 years, came together and jointly established the Yellow River Cloud Cable Smart Technology Co., Ltd. (hereinafter referred to as “Yellow River Cloud Cable”), and used this as the “secret” to explore the transformation of electronic cable foreign trade. arms”.
Transformation
Liu Xiangyang said that in traditional foreign trade, there are two ways to obtain customers, online, through platforms such as Ali International, offline, through foreign distributors, but for order transactions, both ways can only display products online. Real-time factory data cannot be displayed to customers.
However, for the Yellow River Cloud Cable, it can not only open the digitized factory to customers in real time, but also show the real-time data of more than 100 nodes in the cable production process, what specifications, materials and raw materials are used, and when the equipment should be used. Operation and maintenance, how long until the order is finally completed, can be displayed in real time through the computer background.
“In the past, foreign businessmen had to go to the workshop to see data. Now, when they turn on the computer, they can see the real-time data of each of our devices.” Liu Jiangong used a vivid analogy to say that now, customers see The production process of a product is like the life cycle of a person. From the birth of the child to the development and growth, it can be seen at a glance: starting from a pile of copper, the origin and composition of this pile, and then to the corresponding points after each node. The production data, parameters, as well as real-time video and pictures, customers can view in real time through the computer background. “Even if it is a substandard product, it can be deduced in reverse, which link caused it, whether it is the temperature of the equipment, or the illegal operation of the workers, or the unqualified raw materials themselves.”
One end links to smart factories, and the other end develops digital trade. Liu Xiangyang said that their new platform has more than 10 self-operated and OEM factories, a complete inspection and inspection system, a complete quality control system, and a full-process IoT traceability system. Therefore, although it has only been online for more than a month, it has It has attracted attention among foreign businessmen. Some of the old customers who have cooperated for many years have also expressed their intention to cooperate. “Currently, the amount of inquiries has reached more than 100 million US dollars.” Liu Xiangyang told Yicai.com.
However, Liu Jiangong also admitted that their industrial Internet practice based on digital factories is still somewhat “high and low”, “Some colleagues approached me privately and said that you have taken off your factory’s ‘underpants’, and in the future , you can’t play tricks if you want,” the other party even said to Liu Jiangong half-jokingly, your data is so transparent, be careful when the tax department comes to you.
But Liu Xiangyang is still determined, “The digitalization of factories is definitely an unstoppable trend. Only by embracing the trend can we survive. Look, haven’t we seen the rising sun now.”
And some of their foreign trade counterparts have begun to develop cross-border e-commerce in order to get rid of the predicament.
A shoe company in Wenzhou, Zhejiang Province with a history of foreign trade of branded shoes for more than 20 years, saw that its peers were in a crisis of shutdown and bankruptcy, and began to realize that in order to survive, it must not only rely on the meager profits of foreign trade, but must expand Domestic sales channels, hold the sales channels and products in their own hands.
“The foreign trade business seems to be large and stable, but in fact, the profit is very thin. It is very likely that a sudden incident will lose a few years of savings.” Mr. Zhang, the person in charge of the company, said that for this reason, they are in Alibaba, Douyin, etc. The platform opened a flagship store and started a new industrial chain and digital transformation.
“Digital transformation has given me new hope for growth.” He said that in the past, when doing foreign trade, one order received millions of pairs of shoes, but the profit was very low and the account period was very long. Now, by introducing “small orders” The production method of “quick reverse” started from the order of hundreds of thousands of pairs of shoes, and now a line of 2,000 pairs of shoes can be opened. The production method is more flexible, which not only avoids the risk of inventory backlog, but also has higher profit margins than before. .
“We have been doing foreign trade for more than 20 years. After the epidemic, we began to explore the domestic market.” Ms. Xie, the person in charge of a company in Guangdong Province that specializes in outdoor camping products, said that although the epidemic has caused difficulties for the company’s foreign trade business, when the company transformed into domestic sales, Just riding the east wind of camping, now, the monthly sales of the company’s own brand has nearly doubled year-on-year.
Post time: Oct-18-2022