CNBC's The China Connection newsletter: Chinese exporters increasingly need to build brands to survive

"Do you request a U.S. warehouse?"

"Do you request a Mexico warehouse?" "Shipping to Europe?"

Salespeople, speaking successful Mandarin Chinese, weren't shy astir pushing their logistics services erstwhile I attended the 10th Shenzhen International Cross-Border E-Commerce Expo this week. One logistics institution adjacent hired foreign-looking models successful glittery metallic dresses to parade astir the venue.

It's 1 of the biggest events of the twelvemonth for companies selling from China to the U.S. and different countries via the internet. In the midst of a tepid truce successful the U.S.-China tariff war, galore companies appeared anxious to participate the U.S. market.

But the crippled to past has changed.

"The past 30 years person helped Chinese companies to go precise mature successful proviso concatenation integration," Tina Hsu, spouse astatine startup AIGC Empower, told maine successful Mandarin astatine the expo. "Today, if determination is simply a instrumentality that tin assistance [businesses] archer a communicative better, resonate with users … they could spell overseas with the individuality of a marque to run successful a healthier mode that's longer word and with higher profits."

AIGC Empower claims it has those tools. At a associated motorboat with Amazon and Wayfair successful Zhuhai, China, past month, Hsu said AIGC introduced 2 generative AI-powered products: a strategy for rapidly researching section markets to recognize user needs, and a instrumentality for producing images for merchandise advertisement. The work starts astatine 10,000 yuan ($1,390) per merchandise per twelvemonth — and has already received astir 100 orders, Hsu said.

"To beryllium honest, it's not each lawsuit present who tin admit the value" of our merchandise and the request for branding, she said, noting it's Chinese entrepreneurs who studied overseas that recognize it best. But she warned that without inherent differentiation, Chinese companies volition find it hard to past overseas successful the adjacent 30 years.

While a fewer companies with Chinese roots specified arsenic Temu and Shein person grabbed the astir attraction erstwhile it comes to cross-border e-commerce, respective smaller Chinese businesses person besides been tapping the net to merchantability straight to overseas consumers, arsenic contention astatine location has intensified.

"The U.S. user marketplace is inactive the world's largest, and the destination for astir cross-border e-commerce sellers," said Li Xiaoming, organisation manager astatine Miao Shou, which sells bundle that allows merchants to analyse information from aggregate e-commerce platforms successful 1 place. That's according to a CNBC translation of his Mandarin-language remarks.

Although companies person turned to different countries, they're inactive holding onto immoderate resources for deploying into the U.S. marketplace — if conditions amended successful the adjacent fewer months, helium said.

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

Miao Shou claimed that it had a full of 800,000 customers as of June, with astir 200,000 companies joining the platform in the past six months. Li said the institution aims to treble clients' income transaction measurement connected its level this year.

To basal retired successful specified a competitory environment, these companies request amended branding and marketing, particularly successful the existent commercialized climate.

"We judge tariffs this clip people a process of implicit marketplace reshuffling," pushing retired companies that antecedently lone relied connected price, not merchandise quality, to compete, Bear Huo, China wide manager astatine fintech startup FundPark, said successful Mandarin, translated by CNBC.

With $750 cardinal successful financing from Goldman Sachs and HSBC, FundPark lends wealth to smaller Chinese businesses selling their wares overseas. Huo, who utilized to enactment astatine Alibaba, said that the startup has go an authoritative indebtedness supplier for definite Chinese sellers connected Walmart, and aims to scope a akin concern with sellers connected Amazon aboriginal this year.

Huo said FundPark is lending much to businesses for advertizing arsenic clients person ramped up their selling walk to up to 20% of the merchandise transaction worth — a leap from 3% to 5% successful 2023.

While advertisement spending tin pb to short-term spurts successful sales, gathering a marque is simply a longer-term process, and a acold much challenging task. Even advertizing fable John Hegarty has described the difficulties of getting companies to marque bold, transformational moves successful bid to basal retired successful the market. But if Chinese exporters are to vie globally, they request to absorption connected the hard task of gathering a brand.

It's akin to what's playing retired successful China's cut-throat electric-car industry. Companies person been slashing prices and offering much high-tech features, but to basal retired implicit the longer-term, they request to make brands that resonate with consumers.

Some Chinese companies judge they already person what it takes to physique a brand, but deficiency the ineligible resources to support themselves — particularly arsenic marketplace incumbents motorboat targeted lawsuits that tin unit a Chinese seller to spell retired of business.

It's go specified a pressing situation that a radical of Chinese merchants person backed a caller level that uses a low-cost security operation for litigation services that tin different beryllium rather expensive, according to Jack Zhang, secretary-general astatine the Shenzhen Cross-Border E-Commerce Association's ineligible security division. He's starring the task with a squad of astir 30 people.

His program is to radical lawsuits into the thousands oregon tens of thousands, thereby negotiating a little complaint with instrumentality firms successful the U.S. oregon different market. It's acold from an operating service, and Zhang hopes helium tin scope the 1,000-case threshold astir this clip adjacent year.

Several companies astatine the expo besides advertised services from compliance to concern registration — getting a U.S. trademark volition outgo the equivalent of $485, present disposable astatine a $150 discount, 1 flyer said. But arsenic galore of the vendors appeared to mimic each other's style, lone attempting to undercut others connected price, it's wide the conception of a marque has yet to instrumentality off.

China's retail income sharply bushed expectations successful May. Sales recorded their largest leap since December 2023, boosted by authorities subsidies and surging online buying arsenic a major e-commerce income lawsuit started early. Industrial output and fixed-asset concern some saw maturation soften from the anterior period and missed expectations.

U.S.-China renewed commercialized truce near military-grade rare-earth contented unresolved. That's according to a Reuters report, citing 2 radical briefed connected the London bilateral meeting. Beijing has yet to loosen its grip connected exports of immoderate specialized rare-earth magnets, portion U.S. maintains curbs connected exporting cutting-edge AI chips to China.

China resumed Boeing's pitchy deliveries. Boeing delivered a caller 787-9 aircraft to China's Juneyao Airlines connected Saturday, months aft Beijing had suspended the U.S. aerospace giant's deliveries amid tit-for-tat retaliation against Washington. That transportation comes aft China agreed connected dialing backmost immoderate punitive measures against the U.S. with much commercialized negotiations underway.

— Anniek Bao

Chinese and Hong Kong stocks fell aboriginal Wednesday amid mixed trading successful the region, arsenic escalating tensions betwixt Israel and Iran measurement connected capitalist sentiment.

Mainland China's CSI 300 was down 0.18%, portion Hong Kong's Hang Seng Index — which includes large Chinese companies — had mislaid 1.7% arsenic of 2:00 p.m. section time.

The show of the Shanghai Composite implicit the past year.

June 18-19: Lujiazui Financial Forum successful Shanghai

June 19: Deadline for ByteDance to merchantability disconnected TikTok U.S., likely to beryllium extended

June 24-26: World Economic Forum's "Summer Davos" successful Tianjin; AIIB Annual Meeting successful Beijing