From 'Made in China' to 'China Direct': the revolution in global e-commerce
In recent decades, the global perception of "Made in China" has changed dramatically. What was once synonymous with cheap mass production has evolved into a symbol of innovative e-commerce strategies and direct consumer relationships. This development can be divided into three phases: "Made in China", "Sold by China" and "China Direct". Each phase marks a significant step in China's rise as a global economic power.
Hypothesis
The evolution from "Made in China" to "China Direct" represents not only a change in the global retail landscape, but also a fundamental shift in the way consumers around the world interact with products and brands.
The three phases in detail
1 "Made in China" - The beginning of an era
The "Made in China" phase began in the late 1980s and early 1990s. During this time, China established itself as the "workbench of the world". According to World Bank data, China's share of global manufacturing rose from around 3% in 1990 to over 28% in 2018. This phase was characterized by
Mass production of consumer goods
Low labor costs as a competitive advantage
Focus on quantity instead of quality
Low brand value of Chinese products
This era laid the foundation for China's economic rise, but also brought challenges. Criticism of working conditions and product quality led to a negative image of "Made in China". Nevertheless, this phase allowed China to build up its industrial infrastructure and gain valuable experience in the global supply chain. This development paved the way for the next phase.
2 "Sold by China" - The direct route to the consumer
The second phase began with the rise of e-commerce platforms such as Amazon. Chinese sellers used these platforms to sell directly to global consumers. According to a study by Marketplace Pulse, around 40% of the top sellers on Amazon in the US in 2021 were Chinese companies. This shift was fueled by several factors:
Improving product quality
Increasing investment in research and development
Development of global distribution networks
This phase marked the beginning of the global expansion of Chinese brands. Companies such as Lenovo, Huawei and Xiaomi successfully established themselves on international markets. According to a study by McKinsey, the share of Chinese brands in the global smartphone market rose from 7% in 2012 to over 40% in 2020. This development shows the growing acceptance and trust in Chinese products on the global market. At the same time, Chinese companies are investing more in branding and customer service to strengthen their global presence. The "Sold by China" phase marked an important step in the transformation of the Chinese economy from a pure production location to an innovation center with its own strong brands and global reach.
3. "China Direct" - The era of the Chinese e-commerce giants
The current phase is characterized by the rise of Chinese e-commerce platforms such as AliExpress, Shein and Temu. These companies combine aggressive marketing strategies with direct supply chains and on-demand production. According to Similarweb data, Temu is now the second most visited e-commerce website worldwide, just behind Amazon. Basically, this phase can also be generally described as "China Direct-to-Consumer", as Chinese e-commerce companies are increasingly bypassing Western platforms such as Amazon and establishing their own direct channels to global consumers, leading to a reshaping of the global retail landscape.
Key aspects of "China Direct"
Own platforms: Companies like Shein and Temu have developed their own apps and websites that sell directly to global consumers.
Data-driven business model: These platforms use advanced analytics and AI to predict trends and adapt production.
Fast fashion and flexible supply chains: The ability to respond quickly to consumer trends and bring products to market in record time.
Aggressive marketing strategies: Massive investment in digital marketing, particularly in social media and influencer marketing.
Price advantages: By eliminating middlemen, these companies can offer more competitive prices.
The effects
This development has far-reaching consequences:
Changes in consumer behavior
Facts: A study by PwC shows that 41% of global consumers shop online at least once a day or week.
Hypothesis: With the increasing presence of Chinese e-commerce platforms, consumer behavior could continue to shift towards more frequent but smaller purchases, which could lead to an "always-on" shopping mentality.
Disruption of established e-commerce models
Facts: According to Similarweb, Temu has become the second most visited e-commerce website worldwide in less than a year after its launch.
Hypothesis: This rapid development could force traditional e-commerce giants such as Amazon and eBay to rethink their business models.
Disruption of traditional retail models
Facts: According to a study by eMarketer, the global e-commerce share of retail is expected to rise from 19.6% in 2021 to 24.5% in 2025.
Hypothesis: With the further growth of Chinese e-commerce platforms, this share could increase even faster, which could lead to an accelerated closure of physical stores in many countries.
Change in global supply chains
Facts: A McKinsey study shows that 93% of supply chain leaders plan to make their supply chains more flexible, agile and resilient.
Hypothesis: Chinese e-commerce giants could gain a competitive advantage through their integrated supply chains and on-demand production, forcing other companies to adopt similar models.
Potential impact on local economies and jobs
Facts: A study by the Economic Policy Institute estimates that the US lost 3.7 million jobs between 2001 and 2018 due to the trade deficit with China.
Hypothesis: The rise of Chinese e-commerce platforms could lead to further job losses in traditional retail and manufacturing sectors in many countries, while at the same time creating new jobs in areas such as logistics and customer service.
New challenges in terms of product quality and consumer protection
Facts: According to a survey by the American Customer Satisfaction Index (ACSI), customer satisfaction with online purchases in 2021 was 78 out of 100 points, a decrease of 1.3% compared to the previous year.
Hypothesis: With the increase in direct imports from China, consumers could be increasingly confronted with quality problems and more difficult return processes, which could lead to a further decline in customer satisfaction.
Challenges for regulation
Facts: In 2022, the EU passed the Digital Services Act and the Digital Markets Act to better regulate the digital market.
Hypothesis: The rapid rise of Chinese e-commerce platforms could force regulators around the world to develop new laws and regulations to protect consumers and ensure a level playing field.
Conclusion
The development from "Made in China" to "China Direct" marks a significant change in the global e-commerce landscape. Chinese companies are no longer just positioning themselves as producers or sellers on existing platforms, but as a direct interface between global production and global consumption. "China Direct" symbolizes a new era of international trade in which the boundaries between production, distribution and consumer interaction are becoming increasingly blurred.
This development presents both opportunities and challenges for consumers, established e-commerce companies and regulatory authorities worldwide. It remains to be seen how this new model will continue to evolve and shape the global retail landscape. However, one thing is certain: "China Direct" has the potential to fundamentally change the way we shop and consume globally.