Chinese exporters need to build brands

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“Do you need a U.S. warehouse?”

“Do you need a Mexico warehouse?” “Shipping to Europe?”

Salespeople, speaking in Mandarin Chinese, weren’t shy about pushing their logistics services when I attended the 10th Shenzhen International Cross-Border E-Commerce Expo this week. One logistics company even hired foreign-looking models in glittery silver dresses to parade around the venue.

It’s one of the biggest events of the year for companies selling from China to the U.S. and other countries via the internet. In the midst of a tepid truce in the U.S.-China tariff war, many companies appeared eager to enter the U.S. market.

But the game to survive has changed.

“The past 30 years have helped Chinese companies to become very mature in supply chain integration,” Tina Hsu, partner at startup AIGC Empower, told me in Mandarin at the expo. “Today, if there is a tool that can help [businesses] tell a story better, resonate with users … they could go overseas with the identity of a brand to operate in a healthier manner that’s longer term and with higher profits.”

AIGC Empower claims it has those tools. At a joint launch with Amazon and Wayfair in Zhuhai, China, last month, Hsu said AIGC introduced two generative AI-powered products: a system for quickly researching local markets to understand consumer needs, and a tool for producing images for product advertisement. The service starts at 10,000 yuan ($1,390) per product per year — and has already received around 100 orders, Hsu said.

“To be honest, it’s not every customer here who can appreciate the value” of our product and the need for branding, she said, noting it’s Chinese entrepreneurs who studied abroad that understand it best. But she warned that without inherent differentiation, Chinese companies will find it hard to survive overseas in the next 30 years.

While a few companies with Chinese roots such as Temu and Shein have grabbed the most attention when it comes to cross-border e-commerce, several smaller Chinese businesses have also been tapping the internet to sell directly to overseas consumers, as competition at home has intensified.

“The U.S. consumer market is still the world’s largest, and the destination for most cross-border e-commerce sellers,” said Li Xiaoming, distribution manager at Miao Shou, which sells software that allows merchants to analyze data from multiple e-commerce platforms in one place. That’s according to a CNBC translation of his Mandarin-language remarks.

Although companies have turned to other countries, they’re still holding onto some resources for deploying into the U.S. market — if conditions improve in the next few months, he said.

Regardless, Chinese sellers are piling into the cross-border e-commerce trend.

Miao Shou claimed that it had a total of 800,000 customers as of June, with around 200,000 companies joining the platform in the past six months. Li said the company aims to double clients’ sales transaction volume on its platform this year.

To stand out in such a competitive environment, these companies need better branding and marketing, especially in the current trade climate.

“We believe tariffs this time mark a process of complete market reshuffling,” pushing out companies that previously only relied on price, not product quality, to compete, Bear Huo, China general manager at fintech startup FundPark, said in Mandarin, translated by CNBC.

With $750 million in financing from Goldman Sachs and HSBC, FundPark lends money to smaller Chinese businesses selling their wares overseas. Huo, who used to work at Alibaba, said that the startup has become an official loan provider for certain Chinese sellers on Walmart, and aims to reach a similar partnership with sellers on Amazon later this year.

Huo said FundPark is lending more to businesses for advertising as clients have ramped up their marketing spend to up to 20% of the product transaction value — a jump from 3% to 5% in 2023.

While ad spending can lead to short-term spurts in sales, building a brand is a longer-term process, and a far more challenging task. Even advertising legend John Hegarty has described the difficulties of getting…