Wholesale Distribution Imports and Exports in China
Wholesale imports and exports have been increasing at a slower rate as compared to the total sales in the industry. Wholesalers are mainly engaged with the domestic market and, as a result, were not significantly impacted by the Trade War compared to other industries. However, wholesale imports are a significant component of the total imports industry in China.
Supply chain flexibility is another trend that has been useful in the wholesale distribution industry in recent past. Wholesales can adjust the use of raw materials, production and shipping to make the process most cost-effective and profitable.
The Pandemic brought in so many unpredictable disruptions in supply and demand due to the global crisis. B2B businesses had a hard time surviving the challenging situation and taught them the importance of diversification, multi-channel selling and alternative source of supply.
Wholesalers, distributors, and importers have been exploring source alternatives from other countries for their business and their customer’s business continuity. Vietnam, for example, may stand to gain the most from products that it already supplies to United States. A study concluded that for every $10 million of Chinese exports that it takes over, it contributes an estimated increase of 4.4% to Vietnam’s GDP alone.
Other countries may benefit from a potential replacement of Chinese exports. These include the Philippines, Cambodia, Taiwan, Singapore, Malaysia, and Thailand. They produce similar goods that China exports to the United States. Only South Korea, Indonesia, and Myanmar may see a muted effect in switching away from Chinese exports.
China manufacturing is extremely diversified, from clothing and footwear to cars and computers. Finding sourcing alternatives might be a challenge. Unlike China, each country has a specific strength in production. Countries that produce similar goods to China will see the most investment inflows. Taiwan is a prime candidate to replace Chinese exports due to its proximity. And it is one of the largest investors and contract manufacturers in China itself. Other likely recipients may include Thailand, Malaysia, Vietnam, and the Philippines.
If a drop in Chinese exports happens, it will affect Taiwan and Malaysia the most since they are major suppliers of parts for electronic and optical equipment, and electrical machinery. Less affected would be Singapore, South Korea, and Thailand. Cambodia, Indonesia, and Vietnam may see a negligible effect because of their low participation in the Chinese production chain.
As a chain reaction, wholesalers, distributors, and exporters in these countries are likely to see a slowdown in orders as well because Chinese manufacturers would scale back on their exports. But arguably any short-term drop in business is likely to be offset by a pick-up in orders as Chinese manufacturers relocate to these very same countries.
However, with shifts in sourcing and digitalization, Wholesalers in China are increasingly implementing new inventory management technologies that allow them to make data-driven business decisions and handle business operations centrally. Having a flexible supply chain and make B2B selling experience similar to B2C customer experience is essential to their ongoing survival.
Wholesale distribution companies are calling on advanced technology and automation and artificial intelligence to make their business processes more efficient. Automation and tracking innovation allows wholesalers to more effectively manage operations and make informed decisions about shipping, staffing, and warehousing. China’s proactive support and investments initiations from the government have resulted in increased growth in AI and machine learning to give B2B wholesalers the ability to easily manage and analyze data to handle planning and reduce operational costs with connected devices. This is helping streamline the automation in sales, billing, finance and other operational and resource intensive tasks.
Global trade has been on the rise for decades. With investments in technologies and solutions this trend has only increased. In order to be successful, global wholesalers in China need to focus on digitalization of their buying and supply chain workflows, ensure their online marketplaces are transforming cross-border trade, implement integrated cross-channel marketing strategies, and streamline their cross-border payment technologies. Wholesalers will need to adapt in order to stay competitive as customers continue to make purchases internationally.
Big enterprises like Alibaba.com are at the forefront of the global growth of wholesale distribution. Making it possible to connect buyers and sellers across the globe complying with International trade regulations. Wholesale distributors need to take a page from their book in order to expand their businesses globally.
Data-driven decisions of how much inventory to hold, when to buy and what to buy, from who to buy and who to sell to has been increasingly gaining traction. The Chinese governments digitalisation support and drive has enabled wholesalers to access and rely on a large pool of data available. Distributors can now make conscious and strategic decisions for their marketing, sales, and operational strategies, which in the long run will leave very little room for guesswork.
Transformation and digitalization were critical during the Pandemic. Many wholesalers took this opportunity to exploit the Industry’s changing trends and customer expectations to invest and expand their business via ecommerce, inventory management, supply chain flexibility and efficiency, thereby securing their future in the global trade markets.