2022, four Key Words of Foreign Trade Breakthrough

In the blink of an eye 2022 has more than half, this year is not easy for many foreign trade people, in general, we will encounter more difficulties than in previous years.

According to data released by the General Administration of Customs, in the first eight months of this year, China's export was 15.48 trillion yuan, an increase of 14.2%. 

Notably, from May to July, the country's monthly export growth rate was higher than 15% for three consecutive months, which is still under the high base of 2021's export growth. It is not easy for China's foreign traders to deliver such a good export record when they have experienced many short-term impacts of the pandemic.

Four main influencing factors

The international trade environment we are facing is indeed complicated and severe. At present, there are four main factors affecting the development of foreign trade enterprises：

*The external environment is tightening;

* Instability in global supply chains;

*Volatility in global energy and raw material prices;

*The rise of manufacturing in Southeast Asia.

First of all, the strong dollar caused a currency storm, and non-dollar currencies fell in the year, resulting in high import costs; Consumer price indices (CPI) in major export destinations such as the US and Europe have reached historic highs. The overseas market is shrouded by the cloud of economic recession, consumer confidence is falling, and the number of purchase orders for some B-end buyers is falling. 

Secondly, since the global pandemic, all ports in the global production chain have been closely linked. Its vulnerability during the epidemic has made some countries pay more attention to supply chain security, and even advocate industrial return and supply chain migration to explore diversified production bases and improve production autonomy.

The impact of supply chain restructuring is reflected in China's cross-border export business, which is manifested in the change of purchasing demand of some B-end customers: part of bulk purchasing is shifted from China to Southeast Asian countries, or the purchase of finished products is converted to the purchase of raw materials and components.

Third, the global energy shortage leads to higher production costs, which is squeezing the profit margins of our export enterprises.

This year's black swan event, the conflict between Russia and Ukraine, has led to varying degrees of price shocks for its main supply of commodities, which has triggered worries about energy and food security around the world, and a new global energy pattern is gradually taking shape.

The rising prices of raw materials such as energy, agricultural products and non-ferrous metals will inevitably increase the costs of middle and downstream industries in manufacturing.

Such as cars, clothing, household appliances, electrical instruments and so on. 

Finally, the manufacturing industry of Southeast Asian countries mainly made up by Vietnam and Indonesia, is having certain impact on Chinese production manufacturing industry. Review this year in China and southeast Asia exports of American products amount of change, we can find that, mainly in southeast Asia and other countries some low value-added products to replace the high cost of similar products in China, such as light industrial products, such as the HS classification. 61 knitting or detained woven clothing and clothing accessories, lamps and lanterns of chapter 94 furniture bedding, etc.), agricultural products (such as the HS classification Rubber and Products, Chapter 40). 

In such a complex economic environment this year, I suggest that export enterprises adopt the "upward, downward" approach. The strategy and tactics of "precision farming and promotion of transformation" are: to transform to the upstream for industrial upgrading, or to expand the sinking market down, refine the operation of existing resources, and improve the transformation of resources. 

Strategic choice: Turn up or sink

The so-called "upturn" refers to the transformation and expansion of the upstream industry, from a single production link to the two ends of the value chain, to add additional value to production.

For example, with corrugated boxes as the main products of the enterprise Dashengda, in the industrial transformation to choose "manufacturing + service" as the breakthrough point, extended the industrial chain to the upstream design services and digital control services, successfully completed the industrial upgrading, successfully entered the supply chain system of SF Express Group.

But for the majority of micro, small and medium-sized enterprises, "up" is not easy. At this time, there is another way to break through, that is, to "sink", to touch the overseas more terminal market and customer groups.

I know, some enterprises hear the word "sinking market" will have resistance, think to do the sinking market is the consumption downgrade, will it be too low? In fact, the market decline is a product of regional and class differentiation. It is a natural stage after consumption upgrading, dividend fading, and industrial restructuring. It is not a consumption downgrade.

So for traditional foreign trade enterprises, how to do the sinking?

For example, one of our customers is an auto parts company, which used to be a typical OEM, specializing in OEM for overseas brands. There has been no own brand, interest rate is also relatively low. In recent years. The owner of the business, unwilling to cede his thick profits to layers upon layers of overseas distribution routes and retailers, approached us. We hope to build our own brand and reach overseas consumers.

Lead the focus from the enterprise's industry environment, free analysis, product positioning and other aspects for customers to develop an independent station marketing plan, planning a complete independent station to build and deep operation work. After the launch of its independent site, I arranged keywords, made content operation and user experience optimization more friendly to Google, and operated overseas social media to attract fans. Besides, I also made detailed advertising strategy.

We set up the overseas marketing system from all dimensions, adhere to save costs for customers, improve the conversion rate. After several months of operation, the independent station of this enterprise can still get orders without advertising investment. After advertising investment, the investment conversion ratio is also gradually improved, and everything is developing in a good direction.

Of course, this is also inseparable from the customer's patience and cooperation. The boss respects professionalism and is always very rational.

Let our cooperation hall run smoothly and efficiently.  In fact, it is a road with high potential for the OTC brand of independent station to go abroad, and also a road that needs long-term persistence and accumulation. I believe that the efforts made by both of us now will pave a smooth road for the future development and growth of this enterprise.