In the bustling province of Guangdong, Southern China, Kent Liu, co-founder of Xinflying Digital Printing Production, is gearing up for an exciting adventure.
He’s packing his bags for a trip to the United States this month, not just for sightseeing but to inaugurate his Los Angeles office and network with potential business collaborators across seven different states.
This isn’t his maiden voyage to the US in the current year, as China has recently reopened its borders to the world. Unfazed by the brewing China-US tensions, Liu has his eyes set on the American market, with ambitions to make it his primary source of production orders.
Entrepreneurial Resilience in the Face of Economic Uncertainties
Liu’s story is emblematic of the resilience displayed by Chinese exporters in these tumultuous times.
The global economic recovery has been marred by hiccups, and external markets are showing signs of vulnerability, coupled with geopolitical complexities. However, entrepreneurs like Liu are refusing to stay passive spectators.
Instead, they are adapting nimbly to the changing dynamics of global supply chains by expanding their production operations across borders.
Liu articulates his philosophy succinctly, saying, “If clients aren’t placing orders in China, let’s follow them to where they are.”
Diversification in the Pursuit of New Markets
Earlier this year, Liu established a warehouse in Los Angeles, a strategic move that lays the foundation for a novel production process.
He plans to source shirts from factories in Southeast Asia, complete the design and printing in the US, and then sell them through local e-commerce platforms. These platforms are also making significant investments in localization efforts.
This strategy has already begun yielding results, with the US market contributing to 60% of Liu’s sales target for the first three quarters of the year.
Liu reflects on this achievement, noting that “Our annual export sales exceeded 100 million yuan (US$13.69 million) last year, and we anticipate doubling our export orders this year, with the US market expected to account for 25% of our expansion.”
Challenging Times for China’s Exports
August witnessed China’s exports declining by 8.8% compared to the previous year, although this marked an improvement from July’s staggering 14.5% drop.
Shipments to the United States, in particular, have been on a 13-month consecutive decline, with an additional 9.53% fall in August.
Despite the slight rebound in economic activities during August, concerns about China’s long-term slowdown continue to loom over the global market.
Reducing Reliance on External Markets
Recognizing the perils of over-reliance on external demand, economists and experts are advocating for a strategic shift.
Liu Yuanchun, the President of the Shanghai University of Finance and Economics, emphasizes the need to reduce dependency on external demand.
He posits that China’s economic prowess should not be tethered solely to external markets. Instead, he underscores the significance of China’s domestic market potential and entrepreneurs’ capacity to adapt to evolving circumstances.
Signs of Recovery and Innovation
Positive signs have also emerged amidst these challenges. Peng Biao, a supply-chain specialist based in Shanghai, recently attended a textile-equipment exhibition in the city. He observed a notable increase in foreign participants, predominantly hailing from Southeast Asia and the Middle East.
Many of these individuals had been trained and recruited by Chinese companies to explore overseas markets. Furthermore, discussions revolved around expanding research and harnessing the power of AI and big data to attract new orders.
These developments underscore the spirit of innovation and adaptability exhibited by Chinese entrepreneurs.
Embracing Global Expansion Strategies
Economists have called upon Chinese enterprises to embark on bold forays into the global market.
Zhuo Xian, a senior fellow at the Development Research Centre of the State Council, highlights that some industries and enterprises are already taking the leap towards internationalization.
These moves are not akin to a kite with broken strings but are deeply entwined with China’s domestic industrial ecosystem.
Pivoting to Internationalization
Musk Lu, the founder of Kanou Group based in Dongguan, has witnessed a nearly 40% decline in orders for the precision machining segment of his business compared to the previous year. To adapt, he’s embracing a strategy geared towards internationalization.
Kanou Group, traditionally involved in producing precision mechanical parts and high-end touchscreen glass for foreign clients in industries like automotive, semiconductor, medical, and industrial CNC, is now exploring opportunities in electric vehicles and medical robotics.
Lu has set up an office in Singapore and is in the process of building a plant in Vietnam to be closer to his clients. He envisions an investment strategy that anticipates shifts in customer demand, positioning the company to respond swiftly and secure new orders.
“Our next step should be India,” says Lu, adding that they’ve recently brought on board a Japanese colleague who will spearhead their efforts in the Indian market next year.
Rather than expanding production capacity domestically, Lu’s focus is on establishing overseas branches, with the goal of becoming a local brand in each new market, making Kanou Group truly international.
Easing Access to Visas
To facilitate their overseas endeavors, many Chinese entrepreneurs are calling for easier access to visas.
Leo Tan, an export trader based in Shenzhen, highlights the current challenges in obtaining business visas. The process takes 15 days in Southeast Asia, three months in Singapore and Australia, three to five months in the UK, and six months in Europe, and proves to be even more daunting in the United States, Canada, and India.
Navigating Changing Priorities of Foreign Buyers
However, not all entrepreneurs are finding it smooth sailing as they navigate the shifting sands of the export market.
Some foreign buyers are now operating under a new Key Performance Indicator (KPI) – gradually reducing the purchase of “Made-in-China” products by a certain percentage.
This poses a challenge for Chinese exporters who are striving to regain their previous levels of trade.
Chinese entrepreneurs like Kent Liu and Musk Lu are boldly venturing into international markets, adapting to changing dynamics and seeking new opportunities amidst global shifts.
While challenges persist, their resilience, innovation, and commitment to evolving strategies exemplify China’s entrepreneurial spirit in the face of changing global landscapes.