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Taking matters into their own hands, Chinese entrepreneurs are tapping overseas markets more than they ever did in the past. They are keen to draw in new consumers, especially the resilient Americans who shop like billionaires. They are also running away from a crowded home base, where a race-to-the bottom mentality still dominates.
These modern seafarers are being rewarded with resounding success. Shein, the online fast fashion platform whose supply chain is largely rooted in the southern Guangdong province, has filed to go public in the US in what could be one of the world’s biggest IPOs. Backed by the likes of UAE’s sovereign wealth fund Mubadala, it was valued at around $US66 billion ($99.2 billion) in May.
Chinese e-commerce platforms Shein and Temu are inundating the US.Credit: Bloomberg
Here is another disruptor in cross-border e-commerce: Since its debut in September 2022, Temu, the overseas arm of PDD Holdings, has accrued around 120 million monthly active users, with 43 per cent from the US. Temu is reportedly on track to sell $US14 billion in gross merchandise value this year and is targeting $US30 billion for 2024.
Consumer brands are making inroads too. Guangzhou-based Miniso Group Holding, a 10-year-old lifestyle retailer that sells cheap but trendy household goods, already has over 2000 shops abroad. In May, it opened a flagship store in New York’s Times Square. With overseas markets contributing to about one-third of its total revenue, Miniso just had its best quarter and its stock is up 132 per cent year-to-date.
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Even better days are ahead. As Americans continue to shoulder the cost-of-living squeeze, they might just embrace “consumption downgrade,” a popular trend among China’s “lie-flat” youth who happily trade away premium products for value-oriented ones to conserve cash.
Already, during this Black Friday sales season, we have seen a glimpse of that sentiment shift. US consumers have gotten more meticulous, putting in time and effort to compare prices online and shopping strategically, according to Adobe Analytics.
China thinks they can tap into that mood change. They have gained a lot of experience from marketing the value-for-money concept at home. As of 2022, over 95 per cent of products sold by Miniso, from cosmetics to home décor heavily influenced by Japanese design, were priced under $US7. Meanwhile, a best-selling item at Temu is a $US13 portable car vacuum. What’s there not to like, if you are practically-minded?
Over time, Chinese entrepreneurs have also learned how difficult it is to do business in China. Every few years or so, disruptors pop out to confront natural monopolies, and Alibaba Group. knows the pain better than anyone. It was first challenged by newcomer PDD, founded in 2015, and then by social media app Douyin, TikTok’s sister company in the mainland and also owned by ByteDance, the world’s most valuable unicorn.
