Chenghai Toy Foreign Trade Industry: Expanding The Channel Of E-Commerce And Turning To Domestic Trade Relief

The world's largest toy industry belt, the toy industry belt in Chenghai, Shantou, is experiencing a transformation from export to domestic sales.

In 2020, the new crown pneumonia epidemic swept the world. Many countries took measures to prevent and control the country and closed the city. Many overseas customers cancelled orders, and a large number of Chenghai toy foreign trade enterprises were in trouble.

As the "world factory", China is the only country that has all the industrial categories listed in the United Nations Industrial Classification. It has formed a large number of industrial belts with fine division of labor, complete industrial chain and manufacturing level in line with international standards. From Yiwu's daily commodities to Dongguan's small household appliances, from the stocking industry in Datang town of Zhuji to the shoe capital of Chen Dai town in Jinjiang. The distribution of many distinctive industrial belts has gathered a large number of supporting factories in the middle and lower reaches of the industrial chain. According to incomplete statistics from the industry, more than 200 industrial belts have been formed in China, and are the most dynamic base for Chinese manufacturing industry.

However, many industries have developed a good momentum in the first quarter by pressing the pause button. China's first quarter economic data released in April 17th showed that the added value of manufacturing industry decreased by 10.2% compared with the same period last year, and exports decreased by 11.4%. The major industrial belts across the country have been affected to varying degrees, especially the export-oriented industrial belt.

The toy industry belt in Chenghai, Shantou, Guangdong is one of them.

Du Shaodong, director of Shantou Jia Xun electronic toy factory, told the twenty-first Century economic news reporter that the production should be busy with the production of Christmas foreign orders, but this year, affected by the epidemic, a large number of workers had no orders to do since they returned to the factory. The pressure of funds appeared before the year. After organizing the staff to take turns production, the warehouse backlog is still serious. At present, the enterprises have access to Jingxi channel, and the order has been significantly improved since April. With the momentum of 618, orders for the first three days of June are more than the sum of all sales in April. The daily output of the original factory is 5000-10000, and the scale of production has now been restored to 6.

The dilemma of toy capital

Chenghai toys start from family workshop production. The earliest form of material processing is to produce static toys formed once. From the mid 80s to the mid 90s of last century, the production of combined dynamic toys was greatly improved through the introduction of automatic injection molding machines.

The local government has vigorously supported the toy industry, and a number of factories that originally used paper, hardware and wool fabrics have joined the ranks of toy production. Many large local backbone enterprises have also adjusted their business direction and increased their investment in toy manufacturing. Chenghai has gradually formed a specialized production and distribution system of raw material supply, styling design, mold processing, parts manufacturing, assembly molding, packaging and product sales, transportation and other specialized division of labor. The toy products integrate into new technologies and cultural and creative designs such as sound, light, electricity, intelligence and so on, and enter the international market in large numbers.

In 2018, the annual output value of toys in Chenghai amounted to 54 billion 600 million yuan, accounting for half of the total industrial output value of the region, of which more than 75% were exported to more than 140 countries and regions, such as Europe and the United States, Middle East, South America and ASEAN. A number of powerful enterprises, such as sun Ning toy factory and so on, are directly setting up offices in Europe and the United States and developing the international market more effectively.

But in fact, the iteration of the toy industry belt is also quietly proceeding. More than 20 years ago, the toy industry's profits could reach 30%. At present, this ratio is only 15%. Labor costs, the cost of raw materials and the exchange rate are all factors that make the era of countless millionaires ever gone.

The toy industry belt in the early Pearl River Delta was concentrated in Dongguan and other regions, and then gradually transferred to Shantou. With the increase of human cost year by year, Vietnam and other regions began to undertake the transfer, and this epidemic situation accelerated the change of the industrial belt.

Domestic trade exploration

Du Shaodong told reporters on twenty-first Century economic report: "making toys in Shantou becomes a trend. But for the original processing, it can not be said that the profit is high. At present, the gross profit margin of the original processing industry in this industry is maintained at about ten percent, and distributors and distributors have a higher profit margin. In the past period, the foreign trade orders for the Christmas season will account for 35%, but this year it will shrink. "

Coincidentally, billion Chong space is a medium-sized toy enterprise in Chenghai. Before the epidemic, sales reached 50 million yuan in 2019, and exports accounted for 40% to 20 million yuan, mainly exported to Europe, America, Middle East and Southeast Asia.

After the outbreak of foreign epidemic, foreign trade orders dropped sharply. In the 1-3 month of this year, foreign trade accounted for less than 5% of its sales, while foreign trade accounted for 30% last year.

"International logistics has basically stopped, and most foreign customers have cancelled their purchase plans, especially in the US and Europe. The backlog of stockpiles of 5 million yuan has greatly affected the company's cash flow. " Billion Chong space leader Chen Zhuoyue is very helpless. In order to save themselves, many traditional foreign trade enterprises began to seek transformation. At present, the whole toy industry belt in Chenghai is actively exploring the domestic market.

However, there are many differences between domestic and foreign trade modes of operation. For most enterprises, lack of relevant experience and domestic channels has become the biggest obstacle to their transformation.

Du Shaodong told the twenty-first Century economic news reporter that "there was no time to compete in the domestic market. After this year's economic situation brought us into contact with domestic trade channels, we rely on the Internet platform to provide some product strategy guidance and make changes to the products."

"For example, the product manager of Jingxi's products has participated in the product selection guidance of the factory, pointing out that the products priced at 9.9 yuan are more helpful to the whole dynamic marketing channel. In view of the changes in the domestic market demand, we also made an attempt to split the products, and launched Kriri, less than 20 yuan, to split the assembled building blocks into small packages and sell them." Du Shaodong said.

Chenghai district electronic commerce industry association president Yao Jiahong said that the Chenghai electricity supplier Association Joint Beijing Xi, linkage Chenghai district government, launches the omnidirectional, the entire link depth operation cooperation, brings the supply chain management, the logistics solution, the social networking business new marketing pattern to the industrial belt factory and the businessman, not only can help the local enterprise pass the epidemic situation difficult position, but also can further help. The transformation and upgrading of Chenghai enterprises will promote the sustainable development of the supply chain and release the value of Chenghai's toy industry.

Referring to the changes after contact with domestic trade, Du Shaodong said that how to open up domestic sales channels and operate in online stores has become a major concern for enterprises. On the other hand, capital return is the most obvious feeling than that of export sales. In the past, foreign trade needed 45 days' -60 days' return cycle, and now the online sales channel through Jingxi platform will return money within 15 days. Quick return and quick return of funds also solve the problem of short term cash flow in factories.