A clothing factory that rejects OEM production for big brands is now expanding overseas through Alibaba.

Author | Cao Anxun

Editor | Liu Baodan

Cross-border e-commerce is booming, providing numerous domestic companies with new channels for overseas expansion.

On August 20th, Qiu Zongbing, the General Manager of Alibaba International Station in South China, stated at the 2023 China Cross-border E-commerce Trade Fair (Autumn) that domestic competition is fierce, but overseas demand is experiencing explosive growth. For large and small merchants, once e-commerce operations are established, logistics and capital can flow overseas, making it the best time to expand internationally.

Jining Aimei Clothing Co., Ltd., a merchant on Alibaba International Station headquartered in Shandong, is one of them.

"This year, the order volume on Alibaba International Station has significantly increased, with new orders coming in every day and steadily rising," said Aimei (pseudonym), the founder and chairman of Aimei Clothing.

Aimei Clothing is primarily engaged in the manufacturing of down jackets and medical supplies, with an average annual net profit of around 100 million yuan in recent years, mainly from exports before the pandemic. Since 2020, the sales channels have changed, with 80% of the products now sold domestically and the remaining 20% exported to more than ten countries in Europe and America.

Aimei Clothing has also explored new profit models. On the one hand, it actively rejects some low-profit domestic and foreign OEM orders from well-known brands, adjusting production capacity planning. On the other hand, it vigorously develops cross-border e-commerce to increase profits.

In this process, Alibaba International Station has become the main "gateway" for Aimei Clothing to expand internationally.

Innovative Small Orders, Quick Response

Going back to early 2020, Aimei Clothing entered Alibaba International Station after being introduced by a cousin who worked at Alibaba and conducting its own research on the international market.

After more than three years of development, the order volume from Alibaba International Station has achieved a breakthrough this year, with a 20% year-on-year growth.

To this end, Aimei Clothing established a cross-border e-commerce and outsourcing department, with each member responsible for order taking, operations, live streaming, etc. One employee engaged in cross-border e-commerce at Aimei Clothing said that their sales revenue has reached around 200,000 yuan in the past month, three to four times higher than the previous off-season.

In Aimei's view, expanding internationally on Alibaba International Station represents the second profit curve for Aimei Clothing. Through the orders received on Alibaba International Station, Aimei has explored a flexible customization business model known as "small orders, quick response."

Compared to the large orders of 1-2 million pieces that Aimei Clothing used to manufacture, orders of several hundred or thousand pieces are considered small orders. "Quick response" means that Aimei Clothing aims to complete these orders at a faster pace. "For down jackets with less than 1,000 pieces and fabric ready, we can complete the order within a week."

Although small orders, quick response orders have fewer items compared to traditional orders, they have a higher selling price, resulting in higher profit margins and faster payment collection than traditional OEM orders. Aimei stated that the payment cycle for traditional orders is half a month after delivery, while small orders, quick response orders require a 50% deposit upfront. Customers confirm the goods through live streaming and then transfer the remaining payment, after which Aimei Clothing ships the products.

"We need to embrace this trend because the new generation has grown up. Their demands are personalized, and they don't want to wear the same clothes as everyone else. These niche orders represent the future development trend," Aimei said. In this mode, Alibaba International plays an important role in transactions with its intelligent tools, video-based new technologies, and other digital foreign trade services.

Before shipping, Amy Fashion uses a set of live streaming tools and buyer videos provided by Alibaba. At the same time, buyers can also use Alibaba's VR showroom and other digital products to see Amy Fashion's factories and samples, ensuring the quality of the goods.

With the empowerment of Alibaba International, Amy Fashion has received orders ranging from initial samples to substantial quantities such as 5,000 pieces worth millions. Amy Fashion stated that this year, Alibaba International's business goal is to account for 10%-20% of total revenue.

Adapting to the E-commerce Ecosystem

As a traditional clothing manufacturer, Amy Fashion is truly engaging in international trade through e-commerce, which is not easy for Amy and her team.

Talented e-commerce professionals are the key to the success of e-commerce. Located in Jining Mountain Village, in order to better cultivate e-commerce talents, Amy took the lead in establishing the Jiuding Mountain Technical School. In addition to providing free in-depth training on e-commerce and sales knowledge to villagers, the school also offers majors in international trade, e-commerce, and fashion to cultivate professional talents.

According to Amy, the school is divided into three phases of construction, with the second phase expected to be completed this year, with a total investment of 200 million yuan for all three phases. After the completion of the Jiuding Mountain Rural Revitalization College in Jiaxiang County, there will be two professional training classrooms capable of accommodating 500 people, 10 professional live broadcasting and recording rooms, and one 3D live broadcasting room. It has also established deep cooperative relationships with Alibaba International, AliExpress, and Lazada, the three major cross-border e-commerce platforms, to jointly train practical talents in cross-border e-commerce.

"Establishing a school in a remote mountainous area is not easy, and the local government in Zhifang Town has helped solve many problems," Amy said. The company currently has about 1,000 employees, 99% of whom are local rural women.

Through international e-commerce transactions, Amy is constantly adapting to the new era.

Although it is very low-key in the domestic consumer market, as one of the earliest domestic manufacturers of down jackets, Amy has already made a name for itself in the field of OEM down jackets with a nearly 100% qualified rate.

A well-known international fast-moving consumer goods brand is a stable major customer of Amy Fashion. Amy Fashion manufactures down jackets worth about 100 million yuan for them every year, and the factory is currently producing the new down jackets for 2023.

In addition, many domestic and foreign well-known brands are interested in outsourcing to Amy Fashion. A domestic well-known down jacket brand has been outsourcing to Amy Fashion for ten years, but due to their large order volume and Amy Fashion's limited production capacity, they have not been able to cooperate. This has caused some anxiety for the company. Last year, when Amy held a production capacity meeting, the person in charge of this company even came in and asked Amy for two production lines.

Starting this year, Amy Fashion has proactively refused to accept orders for down jackets from a certain international luxury brand. This luxury brand was one of Amy's earliest clients for OEM down jackets, but in recent years, the order volume has declined. "They used to outsource 80-90,000 pieces of a down jacket, but now it has become several thousand pieces. Due to production capacity considerations, we proactively declined," Amy explained. In order to balance production capacity and profit, Emi hopes to maintain a profit model that focuses on contract manufacturing while developing self-owned brands and cross-border e-commerce as a supplement.

The collaboration between Alibaba International and Emi Fashion is a microcosm. In recent years, with adjustments to domestic epidemic prevention policies, improvements in domestic and international logistics transportation, and the application of digital technology, cross-border live streaming, online negotiations, and virtual exhibitions are reshaping the form of global trade.

On Alibaba International, there are over 200,000 merchants like Emi Fashion actively expanding overseas, riding the wave of digital foreign trade and cross-border e-commerce.

According to Alibaba International's semi-annual report on digital foreign trade, overseas online demand on Alibaba International increased by 33% in the first half of the year. 91% of the online traffic in overseas markets has rapidly increased, with not only emerging markets such as Southeast Asia continuing to grow rapidly, but also traditional foreign trade markets like Europe and America returning to a growth trajectory. Qiu Zongbing stated that the overall trend of cross-border e-commerce is continuing to improve.

Market research company Statista predicts that the global cross-border e-commerce market will reach a scale of $4.86 trillion by 2023, and China will still be the largest country for cross-border e-commerce transactions in the world. According to data from the General Administration of Customs of China, China's cross-border e-commerce import and export volume reached 23.2 trillion RMB (approximately $358 billion) in 2022, and it is expected to continue growing in 2023.

As the curtain rises on the trillion-dollar global market, after experiencing the era of wild growth in cross-border e-commerce, the market has entered a new stage of development, testing the comprehensive capabilities of enterprises in marketing, operations, and digitization. A wave that promotes the transformation and upgrading of traditional industries may also surge forth.