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Chinese brands on the way to sea service provider network, gradually standardized

The wind has already arrived.

Cross-border e-commerce has become the new frontier for traditional foreign trade. Over the past five years, the overall trade scale of China's cross-border e-commerce has grown more than tenfold, making it one of the most distinct opportunities in the current rare opportunities. This year, the growth rate of cross-border e-commerce has become even more apparent. According to the latest preliminary calculation data from the General Administration of Customs, in the first three quarters of 2024, China's cross-border e-commerce imports and exports reached 1.88 trillion yuan, a year-on-year increase of 11.5%, which is 6.2 percentage points higher than the overall growth rate of China's foreign trade during the same period.

The next question is, can traditional foreign trade practitioners seize the opportunity of cross-border e-commerce?

Looking back at the development of foreign trade formats over the past 20 years, it can be found that in the B2B model, foreign trade factories can only rely on traditional overseas channel customers to develop overseas markets and earn meager product processing fees through OEM. In most cases, the actual overseas distribution and retail resources are in the hands of channel customers.

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But today, the new format of cross-border e-commerce B2C has occurred simultaneously with the transformation and upgrading of China's manufacturing industry. This allows factories, in the actual situation of reduced traditional foreign trade order volumes, to adapt to changes in time and find new business growth points.

Product strength and industrial chain cooperation are the existing advantages of cross-border merchants. The challenge lies in the fact that more and more people are taking the cross-border e-commerce route. For the rapidly growing new format, where there are many people, rules and regulations must be formed to prevent congestion.

Among them, those who want to seize the opportunity are not only cross-border merchants but also service providers in the cross-border chain. For merchants, service providers, and platforms, they all need to form a joint force to build a new order of compliance in the cross-border e-commerce industry in order to become long-term winners.

Based on this, Amazon Global Store has launched the "third-party cross-border solution" tool, namely the Amazon SPN Service Provider Network. It mainly covers service sectors such as logistics, overseas warehouses, compliance and tax, operational support, marketing promotion, finance, brand services, and product display. By strict screening, it gathers third-party service providers from various fields to provide full lifecycle service support to hundreds of thousands of Amazon Chinese sellers.

In fact, most merchants who have just started cross-border e-commerce, due to a lack of understanding of market conditions and prices, find it difficult to find service providers corresponding to segmented and new services, and are also unclear about the requirements for compliance and tax, local policies, and other issues of the station. Similarly, the quality of cross-border merchant service providers is uneven, high-quality service providers face strong competition, and even professional service provider teams find it difficult to quickly establish trust or cooperation with sellers.

The advantages of SPN are reflected here - for merchants, it is like a treasure trove, which can get rid of cumbersome information identification and screening, and directly find high-quality service providers. For service providers, it is more like an accurate docking platform, which can find demand parties faster, solving the problem of difficulty in acquiring customers and facing complex competitive relationships.Today, with the assistance of the SPN service provider network, hundreds of thousands of Amazon China sellers can directly find professional service providers and enjoy efficient and convenient cross-border services. Currently, SPN can serve 19 major overseas Amazon sites, building a compliant and standardized path to the sea for Chinese cross-border merchants exploring overseas markets.

Having goods and good goods is a long-term advantage for Chinese cross-border merchants.

Under the OEM and ODM models, some foreign trade factories have high standards and high-quality production capabilities, while others have R&D and design capabilities with their own brands, which are the capabilities that cross-border merchants have always possessed. Therefore, in the new model of cross-border e-commerce, the key point of the test has become how to win in the new business form.

Ying Xiuzhen, Vice President of Zhongji Ningbo Group Co., Ltd., who has been engaged in the foreign trade industry for 40 years, can almost condense the changes in China's foreign trade methods into a microcosm - starting with B2B foreign trade and then beginning to expand into cross-border e-commerce platforms. In this process, it further turns to providing services for cross-border merchants.

Whether it is traditional foreign trade or cross-border e-commerce, it is actually a manifestation of the diversification of transaction forms. "The difference between traditional foreign trade and cross-border e-commerce lies in whether it is to B or to C, which is essentially a difference in the form of trade. The key lies in the different proportions of the two. For example, some merchants do 70% of their foreign trade to B and 30% of cross-border e-commerce. However, the speed of cross-border e-commerce is increasing, and the proportion of merchants doing it is also increasing accordingly." Ying Xiuzhen said to Xia Guang Society, this is the trend currently presented in the foreign trade industry.

A clear variable this year is that when more industrial belt merchants begin to expand into cross-border e-commerce, old problems are magnified - at this year's autumn Canton Fair, many merchants explained to Xia Guang Society a consensus: this year, for foreign trade enterprises that have just started doing cross-border e-commerce, how to avoid product homogenization is a problem that needs to be considered. In addition, the rapid growth of cross-border e-commerce has also made merchants' pricing more sensitive.

The difference in forms between cross-border e-commerce and traditional foreign trade falls on merchants as a test of foreign trade capabilities.

In Ying Xiuzhen's view, "People who do foreign trade know better what kind of products are needed in different countries and regions overseas. The products they develop are more targeted." However, under the traditional foreign trade model, merchants usually sell and distribute through middlemen or agents, so they lack high-quality customer data and user needs, making it difficult to accurately grasp market trends and make corresponding adjustments. In contrast, the cross-border e-commerce model requires direct communication with C-end customers, a longer chain, and more tests of merchants' supply chain control and operational capabilities.

Behind the seemingly different models, there is actually a core issue: how to establish a trust relationship. The credit of To B foreign trade comes from importers, and the construction of credit is condensed between people. However, cross-border e-commerce is different, facing a larger and more dispersed C-end market, merchants need to find more trustworthy partners, and the path to the sea can be smoother.

Through SPN, merchants can more accurately find service providers that meet their own needs, which establishes a more trustworthy and compliant path to the sea for cross-border merchants. With a screening mechanism and the fit of needs, trust breeds in the three-party run-in.When viewed from a longer time perspective, in the process of the industry's healthy development, the enterprises that can survive must be those with brand influence.

On the journey to branding and compliance, the healthy development of cross-border e-commerce is comprehensive and systematic. It requires third-party service providers to offer compliant operations in areas such as tax, logistics, and payment, which is the prerequisite for making the long road smooth and worry-free.

From Ying Xiuzhen, we can see a long-termist response: Knowing that compliance and branding are inevitable trends, how can one not fall behind in the variables of the times?

Identifying pain points and solving problems is the way the market communicates with people. Around 2020, based on her insights from doing cross-border business, Ying Xiuzhen began to try service business and digital exploration.

For example, Shanghai Yingsite Media Technology Co., Ltd. (hereinafter referred to as "Yingsite") is one of the wholly-owned subsidiaries of Zhongji Huitong Group. This is a company engaged in digital media solutions, whose business covers digital media technology applications such as video production/rendering animation, product photography, visual design, 3D modeling rendering, etc.

Yingsite founder Mr. Shen told Xiaguang Society that the initial desire to do digital media was because it was very inconvenient for many cross-border merchants to carry products to overseas exhibitions, and electronic sample books could not fully display the products. "If we can put these products online and allow customers to experience and view them through an iPad or an AR glasses, it can bring convenience in communication."

Yingsite was founded in response to such needs. However, as an innovative service provider, Yingsite initially also faced significant competitive pressure: on the one hand, facing new businesses like digital media, most merchants do not understand the final product form, which increases the communication cost for service implementation; on the other hand, Yingsite also needs to compete against significant competitive pressure, as most cross-border merchants do not understand the market, and services with lower quality and lower prices also flood the market.

The practical problem of bad money driving out good money leads Yingsite to find a path to make its voice heard in the market.

Currently, Yingsite has become a member of Amazon SPN service provider network. With the help of SPN, Yingsite can serve more merchants more directly. Mr. Shen said that in addition to the increase in the number of customers, "We can truly understand the enterprises with 3D modeling needs and get closer to the user needs, which is the most intuitive benefit of joining the SPN service provider network."

In addition, starting from the demand perspective, Yingsite also provides interactive services for the metaverse exhibition hall, allowing cross-border merchants to interact with foreign merchants through a simulated offline exhibition, in order to achieve more possibilities for expanding customers.With the assistance of SPN, Yingsite has enabled more clients to understand the true service capabilities of digital media, breaking free from the quagmire of price competition. "We have created an online exhibition platform that can help businesses promote their products to a larger number of buyers. Businesses can then display their logos (brand trademarks) in our online exhibitions. Why not take advantage of this opportunity?" said Mr. Shen. Thanks to such connections, many businesses have now started to model more products through Yingsite.

The SPN service provider network has provided an opportunity for service providers to showcase their capabilities and has also allowed high-quality service providers to meet more businesses, leading to further joint exploration.

Similarly, with more service providers joining, the SPN network can be strengthened and offer even better services. In terms of numbers, the SPN service currently covers 19 major overseas sites, and hundreds of thousands of Amazon Chinese sellers will need the support of SPN service providers throughout their entire lifecycle.

Looking back at the development of cross-border e-commerce, inventory and branding have always been mandatory choices written in the说明书 of enterprises going overseas.

In 2001, China officially joined the WTO. At that time, imports and exports and foreign trade took off. In the following six years, as a cross-border hub, Shenzhen's total export volume exceeded 160 billion US dollars, accounting for 14% of the country's total. This is equivalent to the annual GDP of Sichuan Province. It can be said that this was an era where money could be made just by exporting.

In the following 15 years, cross-border e-commerce has experienced the overseas dividend period and has also encountered the gray rhino caused by trade frictions. The effectiveness of cheap manufacturing no longer works; high quality, cost-effectiveness, and brand power have become filters. A group of merchants were cleared out, and only those who are compliant remained.

The pendulum of the times swings continuously between price and quality, just like the fickle psychology of consumers. And today, past experiences tell us again that the growth logic for cross-border merchants has not changed: the Chinese market has the most cost-effective goods, and cross-border e-commerce is the most direct channel to consumers.

But how to navigate this path more systematically is still a question being explored. More practitioners choose to be friends with time, merchants try to shake off the sand in their shoes, platforms filter the channels, and only those with quality can make the road ahead look better and have the qualifications to embrace more merchants. This is a new phase of bug fixing.

Foreign trade enterprises embrace new business forms, and cross-border e-commerce is the new potential energy in this change. Platforms, consumers, and brands cannot fight alone; SPN is the adhesive of brand value, calling for more outstanding service providers to come forward.

In the new development cycle, the joint efforts of SPN and service providers are needed to build a positive cross-border e-commerce environment and also win brand power for service providers.

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