Cross-border clothing trade, the next stop is Africa with a trillion scale

Kuwuyou is a company that  has reported on many times. In the past, it mainly entered the market from the procurement and transaction of clothing inventory, and provided matching and trading platform services, thereby helping the clothing industry to improve its supply chain management capabilities.

In 2021, Kuwuyou discovered the opportunities in the African market, established the China-Africa Cross-border Business Department, and launched cross-border overseas business for the African market. Launched its own brand Barry Lion and our channel brand KU SHOP.

Why choose to go overseas? Why choose Africa? Why choose tailgating? The following is the sharing of Kuyou Co-founder & COO Luo Guanzhou:

As we all know, the predecessor of the word cross-border going overseas is the foreign trade business behavior that we are familiar with, which is commonly known as "foreign trade". In the decades of reform and opening up, among the three major carriages driving China's GDP growth, "foreign trade" has always been the most stable growth and the most helpful to the country's manufacturing, labor, and industrialization. Where I grew up, Guangzhou has a history of two thousand years of foreign trade. In the modern Canton Fair, it has brought many opportunities to countless industries and manufacturing industries in China.

In the past 20 years, there have been such a special group of foreigners in Guangzhou. They are foreigners from the distant African continent. In Sanyuanli, a traditional black gathering place in Guangzhou, you will feel as if you have traveled abroad, because there are many faces of foreigners.

So for the least developed region in the world, why are Africans so keen to come to China and do business in Guangzhou, China? The fundamental point lies in two points. Guangzhou is backed by the Pearl River Delta supply chain and has the most mature supply chain system in China and even the world. They can wholesale and find a variety of commodities. The second and most important point is to make money.

In Marx's Das Kapital it was said that all commercial activities are essentially a relationship of production. The production relationship is the sum of the four links of production, exchange, distribution and consumption. Guangzhou is a place that can satisfy the two relations of production and exchange for Africans, he only needs to redistribute goods to their continent for consumption. This constitutes a stable and efficient production relationship.

Then return to our hot word "cross-border-going to sea" in the past ten years. From the platform of Lanting Jishi Era to brands like Liangyin (Transsion and Xiyin), all companies going overseas are doing one thing, which is to sell Chinese supply chains to foreign customers through their own methods. We often discuss a word called "business model". In fact, there are only two types of business models, selling your own goods (own production or own brand) and selling other people's goods (platform).

Therefore, the underlying logic of cross-border e-commerce going overseas is still foreign trade. I often hear many people who do cross-border business say that what I do is not foreign trade. The definition of foreign trade and domestic sales must first be clarified. If you sell the goods produced in China to Europe and the United States, Southeast Asia, and Africa, then you are doing foreign trade. If you sell goods produced in the United States to Americans, then you are really not doing foreign trade, you are doing domestic sales for Americans. Are you doing this business the same as foreign trade? It needs customs declaration, customs clearance, ship booking, customer search, payment settlement, FB delivery, and the underlying logic is the same. So don't care too much about what other people think about the word foreign trade. It is not a bad synonym. External ability is the underlying logic and essence of your business. Digitization, informatization, and branding are a tool and empowerment for you to do this business.

Going back to Africa, why do I say that going to Africa by sea is a good opportunity? For this market, we have done a long period of research in Kuwuyou. With a total population of more than 1.3 billion people, 75% of the population in Africa is under the age of 35, and 80% of the people under the age of 35 are only 20 years old on average. According to the statistics of Silicon Valley, an international Internet magazine, American Internet companies such as Facebook, Google and INS have more than 530 million users in Africa. There are currently more than 200 million smartphone users in Africa, with an increase of 35% in 2021. At present, the largest mobile phone brand in Africa is Transsion, a Chinese brand in Shenzhen, accounting for more than 50% of the market share. In 2021, the total bilateral trade between China and Africa will reach US$254.3 billion, a year-on-year increase of 35.3%. According to a report released by the Swiss-African Business Circle Association in February, China has been Africa's biggest beneficiary in the past 10 years. Up to now, more than 2,000 Chinese companies are operating in Africa in various fields including finance, infrastructure, power generation, textiles, and household appliances. According to the British "Guardian" report, the cumulative annual growth of China's business in Africa is about 10%. From 2003 to 2020, the manufacturing industry accounted for the largest proportion of Chinese enterprises in Africa. Chinese manufacturing provides a new entry point for global industrialization, and has the opportunity to integrate Chinese manufacturing into the global value chain and become Chinese quality.

At present, most of the popular destinations to go overseas are in Europe, America and Southeast Asia. Europe and the United States are due to relatively complete informatization and infrastructure, while Southeast Asia is more similar to China's national conditions. But Africa is the next trillion-dollar blue ocean market. First of all, in terms of population structure, a younger population means acceptance of new things and high plasticity. Second, the process of Internet information popularization has been basically completed. The number of users of FB and Google ins has reached a ratio of nearly 1:2, so the basic equipment for online promotion and future informatization is equipped. The third is to stabilize relations with China. All companies doing cross-border overseas operations are essentially doing business in the globalization of commodities, so in addition to market size, population structure, commodity structure and other factors, the political and business environment is also a very important point.

Among Chinese cross-border enterprises going overseas, Liangyin should be the most successful case at present, Transsion and Xiyin. We can see that Xiyin is more like a technology brand company wearing clothing and foreign trade, using digital tools from production to the end. So why is it possible to break through the siege in the very red sea clothing market? The empowerment of digital tools has formed a very large moat in this process. Many people also say that they are also very powerful in investment and play traffic is also very powerful. Among Chinese start-up companies, there is never a shortage of masters who play with traffic, and there is no shortage of companies that play with traffic. And what can really constitute a moat, in my opinion, are three types: channels, technology, and brands. Any successful enterprise can not do without one, the two are powerful, and in my opinion, there is only one Chinese cross-border enterprise that occupies the three, Transsion.

Transsion's play in Africa is a method that integrates the success of Chinese companies. First of all, it believes that the channel is king, and it has thousands of distribution channel outlets throughout Africa under the condition that the offline cost (calculated by ROI) in Africa is relatively cheap. Second, its product localization design is full, and it has the highest investment in scientific research and technology among non-startup companies. Whether it is eight speakers for Africans who love to dance, high battery life or camera software for African skin beauty, it maximizes localized research and development. So for every two Africans, one is using TRANSSION products. On the other hand, Transsion has established the largest online music platform BOOM PLAY and other entertainment media platforms in Africa. Each of its terminals will be an important entrance for Chinese companies to go overseas to Africa in the future.