Moving Online: the Biggest Transformation of China's Exporting Industry

HONG KONG, March 24, 2014 /PRNewswire/ -- Chinese foreign trade volume shrank in 2013 due to a diminished foreign market. For traditional foreign traders, the days are even more difficult. A report from Chinese B2B company OSell follows.

"The landscape has changed. More and more people are transferring their business online," says Wuyu, general manager of a foreign trade company in Beijing. The past year has witnessed a great leap in the development of cross-border e commerce.

"We had to close several branches as the orders have plummeted since 2008, when the worldwide economic recession struck our major markets," says Li, the CEO of Beijing Xiangxin Medical Material Limited. "We suffered a lot the past three years as orders sharply decreased, and we had to dismiss employees and close branches. It is difficult to watch your company collapse as you worked so hard to build it."

Similar situations affect many traditional foreign trade companies. Exporting has been a driving engine for the Chinese economy the last 20 years, but since 2008, things started to change. With the increase of labor costs, appreciation of Chinese currency and a shrinking overseas market, the exporting industry began to go downhill.

Some argue the exporting industry's golden age has passed, but only a few have noticed the seemingly subtle-but-transformative transfer of their business online. The real question here is why people undertake this transformation?

First, a mature B2B platform optimizes supply chain management. Traditional foreign transactions have to go through the following steps: China Supplier->Exporter->Distributor->Wholesaler->Retailer->End Consumer. For Chinese export companies their profit has been repressed, as every steps is a gatekeeper stripping off profit. What a B2B platform does is to skip those middle men, selling products directly to wholesaler/retailers, increasing profits for both sides.

Secondly, online B2B companies offers superior logistic solutions. Transnational delivery has always been a big headache for exporters as they neither understand nor control the logistics systems of their trade partners. OSell solves this problem once and for all as it sets up its local warehouse in Russia. "The products would be dispatched right from Russia instead of China, thus the delivery time is sharply reduced. This is a revolutionary move," says OSell marketing director Wangkun.