Yiwu Small Commodity Wholesale Market was once a world economic miracle

But the world situation is undergoing profound changes

Against the backdrop of the full rise of the Internet, an epidemic

The malpractice that has been lurking in his body for a long time is revealed

At 8 p.m. on July 13th, in Yiwu Beixiazhu Village, anchor Miao Miao made the final preparations before the live broadcast. Photography/China News Weekly reporter Du Wei

Difficulties in the transformation of Yiwu's small commodity market

  China News Weekly reporter/Du Wei

  Published in the 958th issue of China News Weekly on August 3, 2020

  This season in previous years was the busiest time for Chen Ailing. Sometimes she could receive six or seven orders a day. However, on the morning of July 10 this year, neither foreign businessmen came to shop for purchases nor received orders from abroad. Chen Ailing smiled helplessly and said, "It was impossible for me to chat with you here at this time."

  56-year-old Chen Ailing has been running a shop with color bars as its main product in Yiwu International Trade City for 22 years. Among the color bars used to decorate Christmas around the world, on average, at least eight out of ten are exported from Yiwu. But in the past few months, her business has been bleak.

  Chen Ailing's current situation is a typical representative of the 75,000 shops in Yiwu International Trade City. The legendary "Yiwu Small Commodity Wholesale Market" actually includes several physical markets. The largest and most famous one is Yiwu International Trade City, which consists of 5 buildings and is the size of 18 "Bird's Nest" National Stadium. There are more than 2 million small commodities sold here to more than 210 countries around the world. Before the new crown epidemic, the daily passenger flow exceeded 200,000, making it the world's largest small commodity wholesale market.

  Since the outbreak of the global new crown epidemic, the business of the International Trade City, where foreign trade accounts for 70% of the total transaction volume, has been hit hard. Many merchants in the mall told China News Weekly that business has dropped by at least half this year, with more than 70%. In the past 20 years, Yiwu Small Commodity Wholesale Market has become a “world supermarket” by virtue of foreign trade. However, in the era of profound changes in the world situation and the full rise of the Internet, this flower bred by the traditional offline transaction model is experiencing a The field was severe in winter.

From outside to inside

  Foreign trade once helped Yiwu's small commodity wholesale market to flourish, but now it has become the culprit of a cliff-like decline in business. Chen Tiejun, Chief of Export Section of Yiwu Municipal Bureau of Commerce, told China News Weekly that in the past few months, Yiwu’s export volume basically showed a “W-shape”, that is, affected by the domestic epidemic in February, the export volume reached the bottom. However, with the outbreak of the international epidemic in late March, the export volume fell again, and orders began to gradually recover from May.

  The management agency of Yiwu International Trade City is Zhejiang China Commodity City Group Co., Ltd. (Yiwu Mall Group for short). Zhang Yuhu, director of market development of the group, said somewhat self-deprecatingly that this epidemic is mainly played in the first half of the game in China and the second half of the game abroad, but Yiwu merchants We played all over the court.

  According to Chen Tiejun, in previous years, the number of permanent merchants in Yiwu was 15,000, and more than 500,000 foreign businessmen visited the Yiwu market each year. In March this year, Yiwu invited 10,000 foreign businessmen back, but only more than 4,000 returned due to immigration restrictions. According to statistics from the Exit-Entry Administration Bureau of Yiwu Public Security Bureau, from January to April, 36066 foreigners registered in Yiwu, a year-on-year decrease of 79.3%, while the number of foreign merchants in Yiwu dropped to more than 7,200, a decrease of about half.

  In the past few months, Chen Ailing's expectations for foreign businessmen can be described as eager to see. Regardless of the number of foreign merchants, or the return of orders through WeChat, telephone, etc., Chen Ailing's business has fallen sharply compared with the same period in previous years, "not even the previous 1/3." In April of this year, Chen Ailing received only 11 orders, mostly small orders of several thousand yuan. In April last year, she had as many as 40 orders.

  Even after receiving the order, Chen Ailing was still struggling. The epidemic situation abroad is unstable. What should I do if the goods are made and the payment is not received? But if it is not produced now, it will not be delivered by then. In March of this year, Chen Ailing received three foreign trade orders totaling more than 70,000 yuan, which were originally scheduled to be delivered that month. But later, the foreign merchant informed that the delivery was delayed, and the goods are still piled up in the warehouse.

  During the epidemic, the demand for not all consumer goods declined, and the export of epidemic prevention materials increased significantly. Chen Tiejun said that from late March to June, the export of epidemic prevention materials from Yiwu reached 6.8 billion yuan. Although this accounted for a small proportion of the 130 billion yuan in exports of Yiwu in the first half of the year, but Many companies that were not originally engaged in the industry of anti-epidemic materials such as masks have undergone emergency transformation. In the past few months, the export of anti-epidemic materials by some companies accounted for 1/3 of their total exports.

At noon on July 11, Chen Ailing was in her own shop that wholesale Christmas and festive supplies. Photography/China News Weekly reporter Du Wei

  In the store of Hongmai Household Products Co., Ltd. on the fifth floor of District 4, International Trade City, General Manager Lan Longyin showed reporters a video of a high-speed machine that produces 650 flat masks in one minute. His company was originally specialized in household products such as U-shaped pillows and pillows. The epidemic has shrunk the domestic market for non-essential consumer goods that his company focuses on, and its foreign trade business has also fallen by 50%. Since March of this year, he and a few friends spent several million yuan on the purchase of machines and began to produce disposable flat masks. They produced 20 million yuan in two months and exported them to South Korea, Malaysia and other Southeast Asian countries, earning hundreds of dollars. Million. He then transferred the money he earned to the production of N95 masks.

  Lanlongyin called the production of masks "a race against time". He said that in Yiwu, there are at least a few hundred manufacturers like him who have switched to producing masks, but many of them are late, and 90% lose money. In this regard, Zhang Yuhu also believes that only some people can do a good job in exporting epidemic prevention materials, and this transformation is not universal.

  Zhang Yuhu is more optimistic about the transition from foreign trade to domestic trade, that is, "regaining domestic trade share." He said that merchants in the mall have long been accustomed to the relatively easy forms of foreign trade transactions such as receiving orders, shipping and receiving payments, and are reluctant to engage in domestic trade, because domestic trade needs to stock up on stock and involves the issue of returns and exchanges. Chen Tiejun also pointed out that it is necessary to advance funds to prepare the spot. Domestic sales also need to explore channels such as supermarkets and e-commerce, and consumer goods are not a blank blue ocean market in China, and competition will be fierce.

  In order to tap the domestic market, since March this year, the Yiwu Municipal Government and the Mall Group have dispatched 20 investment promotion teams across the country to attract domestic buyers. They also launched the "Market Miles" event in key cities and secondary markets across the country, and held matchmaking meetings. And new product launches.

  Zhejiang Xingbao Umbrella Industry Co., Ltd. is an umbrella manufacturer and sales company in the International Trade City. In the past, its products were mainly sold to Portugal, Spain, France and other countries. Because of the epidemic, it began to expand the domestic market this year. Chairman Zhang Jiying told China News Weekly that the requirements for foreign trade and domestic products are completely different. Customers from countries like Italy, Spain, and other countries like products with a darker background color. If there are flower-shaped patterns, they prefer bright and unrestrained patterns, but domestic customers find it difficult to accept this and prefer small, fresh and simple ones. design.

  According to Zhao Ping, director of the International Trade Research Department of the China Council for the Promotion of International Trade, the epidemic will cause a continuous decline in external demand for a certain period of time in the future. Therefore, the Yiwu market should focus more on the development of the domestic market and achieve both international and domestic Market balance.

  In a survey conducted by Zhao Chunlan, a teacher at Zhejiang International Studies University, she learned that the reason why many export-oriented companies are reluctant to accept domestic orders is that domestic market prices are difficult for production companies to obtain their due profits. For example, the production cost of a hat may be 40-50 yuan, and it can be sold abroad for one or two hundred yuan. However, because many people in China do not have the habit of wearing a hat, the production and processing price given by the brand manufacturer to the manufacturer is only 10 yuan to At 20 yuan, many domestic consumers are unwilling to pay a higher price for hats.

  Chen Zongsheng, a professor at the School of Economics of Nankai University, believes that Yiwu small commodities still have to maintain their low-price advantage during the period of shifting domestic demand. With the improvement of product quality and domestic consumption levels, the value of small commodities can be further demonstrated.

The bumpy road to test water, e-commerce and live broadcast

  In 2014, Chen Ailing found that the store business was not as good as before, and the annual transaction volume dropped from 10 million yuan at its peak to 8 million yuan. She attributed the decline in business to the impact of e-commerce. Because she is consciously older, she has not opened an online shop. "The Internet age has made the market more transparent. Young people born in the 1990s can directly connect with buyers on the cross-border e-commerce platform, and then find factories or process them by themselves. Some small-volume purchases can also be solved on the e-commerce platform, and the offline price advantage is not obvious, leading to a partial diversion."

  Fan Wenwu, deputy director of the Yiwu Market Development Committee, told China News Weekly that the e-commerce in Yiwu as a whole started not too late. The development of cross-border e-commerce in the city is also the first in the country, second only to Shenzhen. But the problem is that Yiwu's e-commerce group and the small commodity market are not very close to the owners. "The main body of e-commerce is still outside the small commodity market."

  In the observation of Jia Shaohua, the former deputy dean of Yiwu Vocational and Technical College of Industry and Commerce, around 2009, with the vigorous development of e-commerce, merchants in the International Trade City began to feel a sense of crisis. This crisis is felt to have become more intense after 2013, and some merchants have begun to try online and offline operations at the same time. Commodity procurement transactions have shifted from the era of “searching with legs” to the era of “searching with hands”.

  Around 2014, Li Xiaoli, the owner of a banner shop in the mall, followed the trend of development and tried cross-border e-commerce. Now about 40% of her foreign trade business comes from online. But she still can't avoid the influence of e-commerce. Fifteen years ago, the rent for one of her booths was as high as 900,000 yuan per year. But last year, due to rising operating costs and reduced offline passenger flow, she had to sell one of her two stalls, and the shop rent has fallen by half to only 450,000 yuan.

  Facing the wave of e-commerce, in 2012, the Mall Group also launched the Yiwu Shopping website. However, many merchants and industry insiders have analyzed that Yiwugou website is to a large extent only a store display platform and does not undertake transaction functions. Most buyers still choose to complete transactions in offline stores. Zhou Huaishan, executive director of Yishang Think Tank, told China News Weekly that the Yiwugou website looks more like a company homepage of the Mall Group, which limits its business footprint and is not very practical.

  Not many merchants in the mall have entered Alibaba International Station. Alibaba International Business Unit Yiwu Regional Manager Zhang Jinyin said that since the establishment of the company, up to now, Alibaba International Station has absorbed 7,000 to 8,000 Yiwu customers, but it is estimated that only 20 Trade City users stationed in the International Station. %.

  For various reasons, the "Internet" road of the Trade City is not smooth, which also restricts its further development. According to the statistics of Yiwu City Statistics Bureau, from 2011 to 2016, the transaction volume of International Trade City increased from 45.606 billion yuan to 110.05 billion yuan, but the proportion of transaction volume in Yiwu's total transaction volume fell from 43% to 35%. This means that under the decentralization of e-commerce, the city’s ability to gather resources in the city is weakening, and its attractiveness is diminishing. From 2014 to 2018, although the market transaction volume of International Trade City increased year by year, the growth rate also decreased year by year, from 25.5% in 2014 to 10.8%.

  The epidemic has forced Trade City to accelerate itself to keep up with the times. Zhang Yuhu said, based on the limitations of Yiwu Shopping, starting from March this year, the mall group is building a full-link, full-product and full-digital platform-Chinagoods. It is hoped that with Chinagoods, the Mall Group will realize online transactions for all merchants. A major function of Chinagoods is to open up the back-end links of trade. In the past, after the purchaser placed an order, commodity transportation and customs declaration were completed by foreign trade and logistics companies. Now, this series of follow-up links must be integrated to form a one-stop full-chain service.

  On June 19, 2019, Yiwu Municipal People’s Government and Alibaba Group signed an eWTP (World Electronic Trade Platform) strategic cooperation agreement in Yiwu, which means that the world’s largest online market economy and the world’s largest offline market economy Join hands.

  Ali is also helping Yiwu customers to transform from offline to online. In the second quarter of this year, nearly 1,000 new Yiwu customers settled in Ali International Station, of which about 30% were merchants in the International Trade City. Zhang Jinyin said that these traditional model merchants have two main problems: language barriers and foreign trade capabilities; secondly, they are not familiar with the operation of cross-border e-commerce platforms. Zhang Jinyin pinned the hope of transformation on their children who grew up in the Internet age.

  Will Yiwu Small Commodity Wholesale Market be completely replaced by e-commerce one day? Zhang Yuhu does not think so. He said that in the next stage, offline stores in the International Trade City will still be necessary. First, seeing the goods is believing, foreign businessmen will still go to Yiwu two or three times a year, and offline will also be a bridge to maintain relationships. Fan Wenwu, deputy director of the Yiwu Market Development Committee, said that from the government's point of view, it is more desirable to see the integration of online and offline in the future.

  But in Chen Zongsheng's view, with the further development of the small commodity market online, the offline transaction share will further decrease, which is the general trend. Zhang Kuo, general manager of Alibaba International Station, said in an interview that in the future, offline stores will not assume a transaction function, but a display function, placing the physical object in a scene for buyers to understand. In fact, using existing technology to build a virtual exhibition room means that the physical exhibition hall may not exist. Through online, the information of buyers and sellers and previous transactions can also be found, which can also solve the problem of trust costs.

  While Yiwu's small commodity market is still catching up with e-commerce, the rise of live streaming has made it even more at a loss. Less than 3 kilometers away from Yiwu International Trade City, there is the "Xiazhu Social E-commerce Town in Jiangbei" known as the "No.

  Fan Wenwu said that at present, Yiwu City is building a global live broadcast center. As of the end of 2019, there were more than 3,000 Internet celebrities of various types and more than 40 social e-commerce service organizations in the city. This year, Yiwu's live broadcast of goods promoted the physical market and e-commerce enterprises to increase sales of more than 20 billion yuan, accounting for nearly one-tenth of the city's e-commerce transaction volume that year.

  In the face of the menacing live broadcast wave of goods, Yiwu Mall Group is not indifferent. After the Spring Festival last year, in order to encourage merchants to broadcast live, the Mall Group established more than two hundred free live broadcast rooms in the market. The business school teachers under the Mall also compiled teaching materials to carry out live broadcast training for merchants. However, during the interview in the International Trade City for several days, the reporter did not see many merchants live.

  But not all products are suitable for live broadcasting. Zhang Yuhu said that large-scale machinery and equipment, plastic particles, zippers, etc. are difficult to present in the live broadcast. Zhao Chunlan said that the greater limitation of live broadcast is the limited and unsustainable volume of goods. She gave, for example, a small merchant selling towels in the International Trade City, looking for an online celebrity to carry goods live, and can only bring a few hundred small orders at a time. When an online celebrity carries goods, they often bring one item this time and they will be replaced next time. The top internet celebrities have their own supply channels, and few benefits will benefit ordinary small businesses. In the second half of last year, Lan Longyin looked for an online celebrity to bring goods, but only brought a few hundred thousand yuan worth of orders.

  Chen Zongsheng said that live broadcast is also facing problems such as low unit price of live broadcast products, narrow profit margins, and brand quality that needs to be improved. Fan Wenwu believes that, after all, live broadcast is only a marketing method realized through technology. Yiwu trades in kind, and products are fundamental.

  In Zhang Jinyin's view, a major advantage of Yiwu's development of e-commerce lies in its supply chain and logistics system. From January to May this year, Yiwu's express delivery business volume ranked first in the province, and the nation's cities ranked second. For example, Zhang Jinyin said that within 5 kilometers of Yiwu, product delivery, customs declaration, quarantine and quarantine can be completed, and logistics has a great price advantage. Taking domestic trade as an example, Shentong Express starts at about 3 to 4 yuan for bulk shipments in other parts of the country, but it can be done in Yiwu for 8 yuan. Moreover, in a small commodity gathering place like Yiwu, it is good for product design, research and development and promotion.

  Fan Wenwu said that in the field of cross-border e-commerce, the gap between Yiwu, Shenzhen, Hangzhou and other places lies in talents, and there is also a lack of large e-commerce entities. The two are mutually causal. Yiwu City's personnel engaged in pure e-commerce operations have a college degree or above, but there are many returnees in Shenzhen and Hangzhou with doctoral degrees. Yiwu has the majority of small and medium-sized e-commerce companies, but the head body is relatively lacking.

  Colleges and universities are the reserves of high-end talents. As a county-level city, Yiwu's university resources are relatively scarce. In the past, the only higher vocational college that was closely linked with Yiwu City was the Yiwu Vocational College of Industry and Commerce. In Jinhua, its prefecture-level city, there are only a few universities represented by Zhejiang Normal University. Only in the last two years, universities such as the University of Chinese Academy of Sciences and Fudan University have successively established colleges in Yiwu.

  In 2000, the Alibaba website had just been founded, and it was still an unknown small company, and Yiwu's small commodity market has become famous all over the world. As of the close on July 27, the Shanghai market value of Yiwu Mall was 35.93 billion yuan. On the same day, the value of Alibaba's US stock market exceeded US$670 billion. On the way to catch up with the times, this once-traveler still has a long way to go.

  China News Weekly, Issue 28, 2020

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