Exporters find new home in domestic market

Chen Han, 26, operates a toy factory in Shantou, Guangdong province. The factory, founded by his parents more than 10 years ago, receives trade orders from abroad and used to supply various types of toys for brands and dealers in the United States.

However, the US government's recent move to increase tariffs on imports from China and other trade partners has raised export costs for the Chinese toy manufacturer and prompted it to seek out new channels and markets to boost sales.

Chen, general manager of Shantou Qilong Toys Co Ltd, said his company's production was relatively stable in March, but the number of orders declined in April. "Some of our US clients have canceled orders due to the increased tariffs," he said.

Currently, orders from the US account for about 30 percent of the company's total, and that from Southeast Asia and European countries make up for 40 percent, while the domestic market takes up about 30 percent.

The toymaker is expanding sales channels to reach more domestic consumers and alleviate inventory pressures by leveraging e-commerce platforms such as Alibaba Group's business-to-business trading website 1688.

The site provides Chen with useful guidance and suggestions, including store operations, pricing and marketing strategies.

"We are actively expanding our presence in some emerging markets, such as South America and the Association of Southeast Asian Nations, to diversify our business layout globally, reduce overreliance on a single market and hedge against external shocks," Chen said.

He noted that artificial intelligence will significantly bolster technological innovation, product iteration and industrial upgrades in the homegrown toy sector. "Looking ahead, we will design more customized products containing innovative digital technologies in accordance with the preference of local consumers."

Chen is among millions of young Chinese entrepreneurs who are capitalizing on domestic online marketplaces to expand sales channels, and marching into more diversified overseas markets to secure new orders and rev up sales amid a complicated external environment.

Major Chinese e-commerce platforms have ramped up efforts to help the country's exporters sell their products at home, expand domestic demand and relieve export pressures, as part of a broader push to mitigate the effect of US tariff increases.

Experts said the supportive measures will help export-oriented companies open up the domestic market, strengthen domestic circulation and boost consumption, while further unleashing the vitality and potential of China's ultra-large consumer market.

Alibaba Group's online marketplaces Taobao and Tmall have announced it will provide assistance to at least 10,000 Chinese companies involved in foreign trade and promote domestic sales of 100,000 foreign trade goods, helping exporters shift their focus to the domestic market.

Detailed measures include simplified registration, commission incentives, localized sales guidance, data traffic support and direct procurement services.

Taobao and Tmall have cooperated with more than 20 local authorities nationwide to carry out special activities, including investment promotion and training sessions for export-oriented companies. At present, more than 20,000 exporters have completed the process — covering entry, product listing, and operation and sales on the platforms.

1688 has rolled out a series of relief measures for enterprises facing obstacles in export, such as commission fee reductions, as well as loans and subsidies, while offering merchants and buyers free access to AI-powered digital tools.

Guangdong province-based company Zhuhai Kingdom Electrical Appliance Co Ltd has for long been exporting products such as hair steamers, facial steamers and beauty instruments, and is popular among European and US consumers.

Ma Hong, general manager of the company, said sales from overseas markets account for 60 percent of its total, among which the proportion of the US exceeds 50 percent. "We are facing severe challenges due to the impact of US tariff policies, as nearly 100,000 units of products have been overstocked."

After learning about the demand, Chinese e-commerce giant JD sent a purchasing and sales team focused on personal care appliances to the company.

"Within just half a day, they helped us select over 10,000 products that could be immediately sold on the platforms," Ma said, adding that the team will assist the company in selling the first batch of products as soon as possible by adding Chinese instruction manuals.

The move is part of JD's recent commitment to purchase 200 billion yuan ($27.6 billion) worth of goods from exporters over the next year to help them sell products domestically. It has sent professional procurement teams to foreign trade companies and directly purchased their high-quality products.

JD announced plans to establish a special area on its online marketplaces to sell select goods and provide data traffic and omnichannel marketing support for exporters, while providing training, increasing subsidies and offering other resources and support for exporters to quickly boost domestic sales.

The company said foreign trade enterprises that have been expanding their footprint overseas for several years boast strong production capabilities and high-quality products. However, in the process of exploring the domestic market, they may encounter challenges like a shortage of operational experience.

Meanwhile, Chinese online retailer Vipshop has established a "green channel" for enterprises facing obstacles in exporting clothing and has offered all-around support, including quicker review and entry services, specialized online sales zones and more traffic aid for high-quality products to help apparel merchants expand domestic sales channels.

It provides digital tools related to product selection and marketing decisions, and customized sales plans during major e-commerce promotional events such as "618" and "Double 11", while simplifying the management rules for exporters.

Online discounter PDD Holdings has launched plans to invest 100 billion yuan over the next three years, including stepping up subsidy support for small and medium-sized enterprises engaged in cross-border e-commerce to stabilize their production and help them cope with external challenges in overseas expansion.

Zhou Zhiyu runs a company producing various types of kitchenware in Yongkang, Zhejiang province, with exports accounting for about 50 percent of its total sales. Zhou said he is planning to shift the company's business focus to Europe and Southeast Asia.

Zhou said he is also expanding the domestic market, especially in building its self-owned brand. The company has registered with Pinduoduo, and established an e-commerce team under the guidance of the platform to develop products tailor-made for domestic consumers.

At present, sales from Pinduoduo make up for about 50 percent of the company's online sales, Zhou said, adding that the company will lift the proportion of domestic sales in the future.

Zhuang Shuai, founder of Bailian Consulting and an expert in e-commerce and retail, said the US tariff hikes have forced Chinese exporters to realign their strategies and explore the domestic market. This is a response to the "dual-circulation" development pattern, which takes the domestic market as the mainstay while allowing domestic and international markets to reinforce each other.

"In the short term, these supportive measures will help foreign trade companies tide over difficulties, while in the long run, they will be conducive to cultivating a new consumption ecosystem as the deep integration of foreign trade enterprises with the domestic consumption market may nurture more homegrown brands with international competitiveness."

Zhuang said foreign trade companies, which boast advanced manufacturing capabilities that have long served the US markets, can fill the supply gap of the domestic medium and high-end consumption market, thus pushing Chinese-made products to move toward the higher end of the value chain.

Liu Junbin, a special researcher at the Internet Economy Institute, a domestic consultancy, said the intensified efforts to support foreign trade enterprises will strongly boost China's consumption market and provide domestic consumers with a more diverse range of high-quality products to meet their expanding needs in pursuit of a better life.

Liu said these exporters are more familiar with overseas markets, and need to learn about demands from the domestic market, including e-commerce and supermarket sales channels, and adjust their production models in a timely manner.

Chinese logistics companies have also taken steps to help exporters mitigate the impact of US tariff policies. Cainiao Group has announced the launch of a cross-border "green channel" to help the country's exporters expand their footprint abroad.

Leveraging its network of over 40 overseas warehouses in Europe, the US, Southeast Asia and Australia, Cainiao said it aims to not only assist traders in diversifying their business operations globally, but also in building flexible and agile supply chain models by utilizing its warehouses in Vietnam and Mexico.

The construction of overseas warehouses will effectively avoid cost increases caused by tariff fluctuations through advanced stockpiling and localized operations, and help Chinese merchants better adapt to local markets, said Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation.

Through intelligent inventory management and data analysis, merchants can flexibly adjust sales strategies, respond quickly to market changes and cushion the impact of policy changes in any particular market, Hong added.