A resilient supply chain strengthens the e-commerce giants in China

December 14, 2023
Updated 2023/12/14 at 7:06 AM
4 Min Read

GUANGZHOU – Amidst the ceaseless hum of activity, the Guangzhou Guangjia garment company 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.

According to Ju Kechang, SHEIN’s director of supplier management, the company has benefitted 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 added that SHEIN efficiently managed an extensive supply chain by focusing on insights into consumer trends.

“We set the single Stock Keeping Unit at a minimum order quantity of one to two hundred, with reorders placed immediately for popular items, while production is halted if performance falls short of expectations,” said Ju.

TEMU, a U.S.-based online marketplace owned by China’s online retailer giant PDD, takes a similar strategy. According to Chen Lei, chairman of the board of directors and co-chief executive officer of PDD Holdings, 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 shows that TEMU has now developed business in 47 countries, attracting a cumulative total of 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 timeframe.

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. According to Ju, 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 get better prepared for the everchanging 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, according to 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 clothing processing and production, said Chen Shaotong, secretary general of the Guangdong association of garment industry.

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.

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