Robust supply chain aids e-commerce firms

GUANGZHOU — Amid a ceaseless hum of activity, Guangzhou Guangjia Garment Co creates a daily output of over 20,000 garments at its bustling warehouse.

As a major supplier for Shein, one of China's largest e-commerce platforms, the company has now trimmed its delivery timeline to three days for finished products.

This swift adaptation not only reduces inventory, but also amplifies the company's capability in navigating the dynamic terrain of market shifts, said Wang Yonglun, general manager of the company.

Ju Kechang, Shein's director of supplier management, said the company has benefited from its unique business strategy, which relies on reducing purchase quantities, shortening the production cycle and swiftly introducing products to test market responses.

The rapid change in fashion trends calls for a faster response of the supply chain, said Ju.

He said Shein efficiently manages an extensive supply chain by focusing on insights into consumer trends.

"We set the single stock-keeping unit at a minimum order quantity of 1 to 2 hundred, with reorders placed immediately for popular items, while production is halted if performance falls short of expectations," Ju said.

Temu, a US-based online marketplace owned by China's online retailing giant PDD, has a similar strategy.

Chen Lei, chairman of the board of directors and co-chief executive officer of PDD Holdings, said one significant core advantage of Temu lies in the accumulation of its supply chain expertise.

The robust supply chain capability enables the garment manufacturing industry in Guangzhou to exhibit the characteristics of being small in quantity, quick and cost-effective, said Chen.

Data show that Temu has now developed businesses in 47 countries, attracting a cumulative 120 million overseas consumers to download the app, with an average of 1.6 million packages dispatched every day in the first three quarters of 2023, the first year since its founding.

Chen added that once garments gain popularity on the platform, factories can promptly ramp up production for restocking, efficiently transforming demand into products within a short time frame.

Guangzhou boasts a well-established supply chain system that has fostered multiple industry clusters, including textiles and garments, leather goods, cosmetics, and daily chemical products, said Liu Hang, business director of Temu.

The supply chain is also undergoing a transformative upgrade as e-commerce platforms, including Shein and Temu, gain more success in the overseas market.

Ju said Shein has been providing intelligent production and digital management systems to partners.

The goal is to achieve standardized production and modernized management, and therefore increase the flexibility of the entire supply and industrial chain to be better prepared for the ever-changing market, said Ju.

Shein is now expanding and constructing an intelligent supply chain system in Guangdong province, aiming to establish a smart supply chain system centered in China, said the company.

With its supply chain established, PDD is exploring business opportunities in Europe, South America, the Middle East and Africa.

Guangzhou is one of China's largest textile and apparel trading centers and a significant hub for textile processing and production, said Chen Shaotong, secretary-general of the Guangdong garment industry association.

As an increasing number of medium to large-scale companies transform and pay more attention to digitalization, branding, and green development, more world-renowned brands are expected to originate from China, said Chen.

Xinhua