Dangerous frontier: the status of China's foreign trade factories in 2024

外贸人

We should be at the most dangerous frontier. We come from factories and have no systematic product upgrading technology. We are in the luggage and clothing category. Let me talk about some problems encountered by the factory from last year to this year.

01
Decrease in orders

The Japanese offline company that used to purchase from us regularly has not placed any orders since the last order was shipped at the end of last year. The reason is that a factory in Yiwu with a lower quotation flew to Japan to connect with them. Vicious competition, basically no money can be made.

As a result, the Japanese got the hang of it after contacting him, and ran to find a Vietnamese factory with a lower price, and passed the Yiwu one. If nothing unexpected happens, it will be difficult for this Japanese company to cooperate with domestic factories in the future, which is a loss of customers.

The factory has a group of offline distributors. During 2018-2020, they would come to the factory every day at this time every year, and take away as many finished products as they can. The product they are waiting for is a niche product developed by us with a patent. There are not many factories in China that are currently making it.

This year, there is no one at all. The purchase volume of the few companies that are still taking goods has also dropped sharply by 80%, and the payment is very untimely.

These customers mainly do online business (Amazon/AliExpress/1688 International/TikTok/Walmart). It’s not that they go to other places to get goods, but the traffic conversion of the platform is indeed very poor, the overall order volume has been halved, the financial pressure is great and the future is not optimistic, so they can’t stock up so much goods, and the payment is not timely.

02
The market has deteriorated

Let’s talk about the market again. In 2021-2022, the price of sea freight by Matsun Express has basically not been lower than 10RMB/KG, and the highest time is in the range of 16-20 RMB/KG. And due to the epidemic + inspection problems, the timeliness is greatly discounted, but the containers ordered by the shipping company every week can basically be filled, and the Matsun ship on Friday is basically sent to the shipping company on Tuesday and Wednesday.

At the beginning of this year, first of all, ZIM stopped operating directly. Normally, if the competing company stops operating, Matsun should increase the price. However, the actual situation is that the delivery of bulk goods this year has basically not exceeded 9RMB/KG, and there is still space for goods until Saturday.

Another point is that most of the orders received by the cooperating logistics companies are scattered orders for cross-border online. The collection rate last year is only 29% so far, which means that nearly 70% of the companies are unable to pay them in time, and they are currently struggling to support.

Our own online cross-border, the official website has inquiry proofing, but in the end, the bulk goods are basically produced in Southeast Asia.

Many BtoC stores, the rankings and data are still strong, but the product that used to sell 300 orders a day in the 10th place in the category now only has a hundred orders a day in the same position, and the sales of the profit models that used to sell well have begun to decline, while some cheaper traffic models have begun to increase in sales, which also indirectly shows that the economic level of some foreign users has declined.

Several foreign offline stores that regularly get goods on our platform have not closed down, but the types of goods they get have decreased a lot, and they have begun to streamline on a few products.

The return of American manufacturing industry does have a certain impact. My friend settled in LA (Los Angeles). At present, some factories have begun to recruit people in the surrounding area. The number of blue-collar workers nearby has obviously increased, and some of our relatively high-quality products have gradually begun to have American competitive manufacturers participate in quoting.

03
The current situation is not optimistic

The current situation of the factory. A few years ago, it insisted on branded operation + cut off many product branches. The boutique + brand route ensured that it has not collapsed until this year.

However, the situation is not optimistic. First, the reduction in distributors' purchases and B2B orders has led to a very tight capital chain for the factory. Secondly, the raw materials are also very tight in terms of funds and are unwilling to give credit period. It is currently struggling to support.

I saw some people say that there is no market for low-end products, while the market for lithium batteries is still very good. I can only say that there are good and bad.

There are also people around me who do this. My aunt is running a lithium battery factory. She only supplies offline to Europe and the United States all year round. In the past two years, she shipped about one 20-foot container a week. Since the middle of last year, she has shipped less than one container a month. Since the beginning of this year, she has shipped some bulk goods, but has not shipped a whole container.

A long-time friend makes smart products. It is neither good nor bad. There is no large-scale growth nor a significant decline. It is relatively stable at present, but the capital chain is also relatively tight. In summary, from the end of 2022 to now, the overall situation is not optimistic. At least from the perspective of our manufacturing foreign trade, the feedback is relatively poor.

Although our factory is not a top one, it is also a well-known factory in the surrounding area. It is so difficult. Some other small factories are even more bleak. Many small factories have already reduced their production lines and laid off employees to reduce costs. I don’t know what the situation will be this year. I can only say that we should keep working hard.