Overseas markets should not only be the target of selling products, but it is important to become a globalized company as soon as possible to establish a real moat.
EqualOcean has recently completed writing of the 2022 Chinese brands expanding overseas research report, which starts from the background and development history of Chinese brands going abroad to sorting out the driving factors behind such a decision. Besides, it addresses the motivation of going abroad and the main challenges that may occur in the process. At the same time, the report focuses on the service providers that enable other brands to expand overseas and explores the important criteria for them to stand out.
Multiple factors drive Chinese companies to accelerate the pace of going abroad
Over the past 40 years of reform and opening-up, China has continuously promoted its opening-up policy while practicing innovation, which has created opportunities for outbound investment. After joining the World Trade Organization (WTO), China has accelerated its opening-up process and realized the historical turn from "introducing" to "going out" and from following to leading.
As China's economy enters a new phase of steady growth, overseas markets become more attractive than in the past amid intensifying domestic volatility. In 2020, the country's outbound direct investment grew against the odds, reaching USD 153.71 billion and ranking first in the world in terms of flow size.
In addition, the national government and relevant departments have been issuing a series of favorable policies in the field of international expansion. Besides, the increase in the level of openness towards the outside world has further motivated domestic brands to enter overseas markets. Lastly, the increasing improvement of the digital economy infrastructure including supply chain, mobile social commerce, the Internet and the rise of logistics, payment, SaaS/ERP and other tools have directly reduced the cost and significantly increased the convenience of going abroad.
Simultaneously, the new generation of Chinese entrepreneurs generally have overseas study or work experiences, and their global perspective and capabilities are more advantageous than those of the previous generation, helping China to demonstrate greater resilience and dynamism in the changing international context.
The offshore service provider market is fierce, but how to stand out is key
When going abroad becomes an unstoppable boom, the service industry related to it will also show a thriving trend. According to EDT (Chinese: 电数宝), a total of 50 Chinese offshore service providers have received investments from famous capitals such as GAO Capital, Zhen Fund and GGV Capital in 2021, totaling over CNY 7.15 billion.
With the increasing extension and improvement of the overseas expansion chain, the whole market has entered a relatively mature stage. Subsequently, a group of excellent service providers can be found in each segment to help businesses solve problems and improve their efficiency, but it is undeniable that the market development is uneven. As a result, there exist some relatively short-sighted service providers. Therefore, how should Chinese brands that wish to expand overseas choose their offshore service providers in this dazzling market?
EqualOcean believes that the following five criteria will be key for service providers to succeed:
- Ability to understand customer needs and stretch them reasonably
- Ability to provide high-quality products and stable services
- Long-term thinking and belief in long-termism
- Excellent resource integration ability
- Strong overall strength
Two heads are better than one, and behind successful brands there are always excellent service providers
EqualOcean has discovered that the current overseas service provider market can be divided into seven major segments, namely cross-border payment, cross-border logistics, overseas warehousing, SaaS, ERP, compliance, branding or marketing services, and some other selection and information platforms.
In the process of transitioning from simple manufacturing to intelligent manufacturing in China and the continuous extension of the value chain, representative service providers have emerged in each segment to help brands solve the pain points in the process of going abroad, and continue to broaden the boundaries of their capabilities with the accumulation of past cases and deep understanding of brands.
The global COVID-19 outbreak has disrupted the sales rhythm of many overseas brands, and the problems of traditional international logistics transportation, such as high cost, slowness, difficult customs clearance, high rate of lost/broken pieces and poor experience, became more magnified. However, this situation is changing rapidly.
The cross-border X-Day plan co-launched by Cainiao (Chinese: 菜鸟) and Aliexpress, through innovative and leading digital intelligence logistics technology, 6 eHubs, 9 distribution centers, overseas warehouses, Kaban network and terminal self-pickup network, provides sellers with tiered cross-border parcel solutions such as worry-free priority, worry-free standard and worry-free simple. Among them, the 10-day special line logistics service that cost USD 5 has covered more than 20 countries, providing merchants with the ultimate cost-effective cross-border parcel services while allowing consumers to have a more certain logistics experience. Therefore, it effectively solves the aforementioned problems.
As another important part of the consumer experience, the smoothness of payment is crucial in improving user experience and guaranteeing transaction completion. For small and medium-sized brands going abroad, they often lack an efficient solution that is able to handle different overseas markets, sales channels and rapidly changing payment scenarios. In the competitive third-party cross-border payment market, SUNRATE (Chinese: 寻汇) has become the leader with its strong technical capability.
Relying on SaaS service, payment and scenario, SUNRATE uses FX core technology to provide one-stop cross-border payment solutions for different industries such as B2B trade, cross-border e-commerce, online shipping and travel, industry platforms and financial institutions. Its payment product matrix covers international payment, corporate credit card, global collection, remittance e-data and others to meet the needs of different scenarios. Besides, SUNRATE has stronger competitive advantages in cost efficiency, product functionality, risk control compliance, service experience and other dimensions.
Atome, a brand of Advance Intelligence Group, has grasped the development opportunities of the Southeast Asian market and entered it through the new consumption model of buy now, pay later (BNPL). It has been well received by the millennials and new consumers of Generation Z. Market consulting firm IDC predicts that by 2025, BNPL services in Southeast Asia are expected to grow significantly by 8.8 times compared to 2020, reaching USD 8.83 billion.
Atome's flexible and generous payment services have enabled it to work more closely with merchants. So far, the platform covers 10 markets such as Singapore and Indonesia, with over 10,000 partner merchants and total annual payments of over USD 1 billion. At the same time, Atome helps brands increase exposure while also directing users to the brand's independent website to place orders and make purchases, making it the best platform for brands to extend their private domain traffic and further enhance transaction experience and repurchase rate.
Besides, Advance Intelligence Group also launched Ginee (Chinese: 聚灵) in early 2020, which is a retail SaaS brand with a profound understanding of the technology and the Southeast Asian market. It uses core products including ERP, WMS, Ads, CRM, Chat and Listing to provide an omni-channel system and accurate marketing services for local and cross-border merchants in Southeast Asia. Up to now, Ginee has processed over 300 million orders and facilitated over USD 3 billion in total merchandise transactions, making it the choice of more than 200,000 stores.
In the era of the digital economy's rapid development, deceitful acts such as personal privacy leakage and fraudulent transactions caused by the inability to accurately identify users have become one of the unavoidable problems for enterprises. As one of the world's leading digital identity verification service providers alongside Jumio and Onfido, ADVANCE.AI combines its global experience in digital identity verification and anti-fraud with the needs of Chinese overseas enterprises to expand their global business. It integrates digital identity verification, perception-free risk management and customized solutions for overseas companies at different business development stages. Moreover, it also launched StarWatch (Chinese: 星鉴), which is a digital identity verification and risk management solution can be widely used in various industries to help Chinese enterprises go abroad and expand global markets.
All of the above development of the foundation are inseparable from the word "compliance". In other words, security compliance is the lifeline of enterprises going abroad. Once lost, it is likely to bring huge losses, with the 2021 Amazon store massive closures being the best example. When compliance becomes an important weapon in the competition of enterprises going abroad, the demand gap gradually turns to intellectual property rights, trademarks, patents, salary compliance and others. Therefore, it is important to choose the right partner to create value together.
As a leading global offshore compliance technology service provider, STAR&SEA Group (Chinese: 辰海集团), with its rich resource accumulation, professional technical capability, excellent customer service, in-depth localization capability and forward-looking global vision, provides full-chain solutions for multiple trade participants by building "(A+B+C)*N" integrated service system. The firm can satisfy the diversified compliance needs of enterprises in different stages of development. In the future, the one-stop offshore compliance service platform integrating tax, trademark, patent, intellectual property, overseas industry and commerce, product certification, and taxation will become the best choice for more enterprises going abroad.
The above is an excerpt of the report. For more details, please click here to download the full version of EqualOcean's 2022 Chinese brands expanding overseas research report.
During Beijing time 19:30 to 21:00 of June 16, 2022, EqualOcean will hold the 2022 Chinese brand globalization trends and opportunities online forum and share the aforementioned report.
EqualOcean focuses on serving Chinese companies in their road to globalization and helping overseas companies and organizations to grasp China's development opportunities. It believes in the value of globalization, with the mission of connecting China and the world.
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