Jianggan and Kaifei return to discuss how Chinese companies adapt their domestic playbooks for overseas markets, using Shein as a case study to explain why its ultra-low prices and agile supply chain work—and what global partners and competitors can learn.
Key Topics:
00:40 – Kaifei is in Singapore for our MWX immersion
01:16 – Chinese firms testing the “China playbook” overseas
02:51 – How SHEIN is reframing the global e-commerce competition with “Selection, Speed, Quality, and Savings”
03:55 – The inventory risk of non-standard apparel and how SHEIN’s small batch fast re-order mitigates this risk
07:23 – Traditional OEM apparel pains: Middle East retailer drowning in dead stock
11:10 – How SHEIN solves dead stock with Data optimization and factory-task matching
Featured Materials:
Who is Shein?
Momentum Academy: Off the Record – Behind SHEIN’s Success and Global cross-border trends
Also available on Spotify
[AI-generated transcript]Jianggan 00:00
The warehouse is very large, and then there is a password to avoid it. It is all inventory. He said that this is all unsold in the past year, and this needs to be dealt with now, but he doesn’t know how to deal with it.Yes, then I’ll look at it. I think it’s just a lot of information flow investigation.Yes, hello, everyone welcome to the Impulso Podcast today we have our good friend Kaifei in Singapore and some of you who have been following us for a while might have had a listen to or watched his previous episode where we discussed about the growth logic of Temo when we were back in Hangzhou that was earlier this year.It was earlier this year.
Jianggan 00:40
Yes, and these few days Kathy is actually done in Singapore with us because momentum works we have held our first mwx momentum works except for immersion where we have a corporate executives leaders founders as well as investors here to discuss the topics of Chinese companies coming overseas and as a southeast station company as a global company how should you deal with them?
Jianggan 01:06
how should you work with them？how should you compete against them？the following discussion im going to have with cafe will be in Chinese and were going to put subtitles and i hope you enjoy it。
Jianggan 01:16
Thank you, but I think there is an interesting point here. When these Chinese companies go global, they are actually looking at this Chinese Playbook, right?Well, with so many successful experiences in China, which of these toolkits are applicable overseas?Hmm, which ones are not applicable?And in this process, it’s actually a process of adaptation, right?Hmm, because, um, this is something I heard from a CEO of a Chinese company overseas before. He said that you always like to drive a Ferrari on a muddy road. Hmm, this thing will make yourself very muddy.
Jianggan 01:47
Yes, well, these overseas partners are also doing this thing. Well, they also want their business to be competitive. Well, many of them are also cooperating with Chinese companies. Well, some are competing with Chinese companies, and some also have upstream and downstream relationships with Chinese companies, whether they are suppliers or customers.So everyone is also watching, that is, they want to know what the playbook looks like on the Chinese side, um, and then on the Chinese side, um, how to cooperate with Chinese companies?So a lot of problems lie at this moment, in this aspect, and today we can discuss some of them. Maybe some of them are relatively easy to discuss in a pot cast or video situation, and then expand a bit. Okay, well, the first question that many people ask is, like we deconstructed it last time, it’s TMU, right?Hmm, how did TMU make its pricing system so cheap?Well, that’s what many people ask, how is Xinyi done?Because these days, to be honest, it’s new and there are a lot of exposures in the news media. It represents the clothing industry, well, it’s also a place that has historically been prone to inventory backlog.
KaiFei 02:51
Yes, I think so. But in this Mo Teng event, we recapped that e-commerce revolves around being fast, cost-effective, which is one of the perspectives.I think from this perspective, the price mentioned earlier is one of the dimensions.Well, I think besides the price, there are also other factors that attract it, such as paying more taxes. We can see that it has a better clothing supply chain than before and its competitors in this wave. For example, sellers on Amazon may have their own independent websites for women’s clothing.Early on, we saw things like Anxiety Checker, like, um, that light inbox actually had it, like the market, right?Nanjing Market.Well, these companies have actually made some attempts in women’s clothing, but we see the culmination. From the perspective of today’s results, novelty is the best.Then only in China, no women’s clothing giant can sell so many pieces and such a large scale, maybe because China’s textile manufacturing industry is so strong.Finally, we found that there were no particularly large ones in China, but giants like Xinxin emerged overseas. I think they are fast, cost-effective, and so on.
Jianggan 03:54
They all seem to have it.
KaiFei 03:55
Yes, let me talk about saving first. I think saving is a very important point. If you understand the adaptation mode, I will briefly introduce it, which is the small single fast response mode.Then he, um, you look at its new arrivals, um, you look at its entire shelf life, um, it should be about the same every month or every quarter, and the average may be different in different seasons, but the shelf life is 25%, and the decrease is 25%. I feel that it is constantly replacing, and the number of SPUs should be in the millions. If you ask someone who has done women’s clothing in China or overseas, well, he is in the millions. This women’s clothing, especially women’s clothing in the clothing, is very challenging.
KaiFei 04:38
This challenge comes from your size, whether your clothes are non-standard or not.Well, if your size doesn’t fit you well, you might not wear this piece of clothing.Well, or to put it another way, you will bring a lot of inventory to it, so the quick return of small orders means that your inventory depth is shallow, and then your speed.The meaning of quick return is that you have shallow inventory, but you have sold almost as fast as you can, and you can immediately follow up with orders. For small orders, quick return is against the factory.Well, at that point, if you give me a big order, then I am more stable or what?Actually, this matter is actually the opposite of our conventional thinking with the factory. He may not be able to save it, but how can he reduce it to the most controllable level against the logic of the original large order?Well, first of all, he slowly produced every product and every factory, slowly eating up his production capacity, and then in the long run, he filled up the production capacity. He wanted the first 100% production capacity, so it can be more tied to the factory.
KaiFei 05:38
First, you have small orders and large orders. Then I have large orders and small orders. I will definitely choose large orders for stability and long-term.This is the first point, which I think is very important, which is to finish the production capacity.Well, so he’s tied to the factory.The second one, um, Xiaodan, although it’s Xiaodan, he may just change the collar shape, um, change the cuffs, um, and the material is the same. At this time, there are some slight changes in his craftsmanship, um, it hasn’t changed much, so it may be a color change or something. At this time, it’s a bit like a large-scale order. Well, actually, there are some slight changes, and the factory must still be… um.
KaiFei 06:10
In large and small orders, it is definitely biased towards large orders, because large orders, from the perspective of your production line, include sewing and cutting, and if you have a large order, it is highly reusable. If a person does the same thing repeatedly, there will still be changes in small orders. At this time, the labor cost and other aspects will actually increase.If you want to pursue God again, what will you do?Well, then when you eat it at 100% capacity, you can, for example, the changes in its, um, collar cuffs, um, it doesn’t matter, um, the color changes are probably the simplest.Well, that means the materials or most of the techniques are the same, just like changing the fabric.Then the second one is, for example, the small change of the diamond cuff. In fact, it doesn’t exist, but there may be some additions in some steps. Therefore, we say that only a part of the entire workflow is transformed. Well, the transformation of the original fabric is the simplest, but there may also be several parts in the process. So I think this is a way to balance from the size list. What do you think?Control the small order to only account for the cost, don’t increase it too much.Then the second one is the issue we just talked about, the issue of inventory. Inventory is your profit, so why is the clothing customization rate still relatively high?For example, there are some fast-moving consumer goods that do not have such a high subscription rate, or…
Jianggan 07:23
I’m here.Well, I remember in 2017, when I was in the Middle East, and the consultant who accompanied these customers went to take a look at the inventory of a large local retailer.Well, then we are in a large warehouse on the border between the UAE and Saudi Arabia. The B code is full of inventory. He said it was all unsold in the past year and needs to be dealt with now, but he doesn’t know how to deal with it.Yes, then I think it’s much better to investigate the information flow. Yes.
KaiFei 07:53
Hmm, so, um, yes, I think Jiang Qian is the most troublesome point for most clothing bosses. If my profit is a bit thin, um, there will be a lot of inventory at the end of the year, and I won’t be able to pay my salary.Well, so inventory is an absolute problem in this matter.The good thing about the quick return of the small order is that if I can’t do it after the small order, I will start over.Well, that’s right, anyway, these goods are scarce, right?After the goods run out, I will kick some off, it’s not a big problem.Well, anyway, when your traffic increases, you can also sell your inventory online, for example.Yes, so this is the first point I think.Well, I mean, actually we feel that the small single fast reaction seems to be going against that, but there are some opposing factors, but it actually has no cost.Hmm, the improvement is particularly impressive. The way he just mentioned is that this is the first one, and there is also a disadvantage, but there must be an advantage. What are its advantages?Well, I think after attracting, we should focus on information, data, and technology.Well, the application in the clothing industry is called agile supply chain.
KaiFei 08:54
Finally, well, he made certain money along the entire industry chain.Well, I’ll explain how to understand this matter a little bit. We say that in China, it may be a million-level, tens of millions-level factory, which is an original fabric merchant, and it may be attracted by the original life of 100,000-level two mulberry, that is, to turn this factory, for example, 1 million, into only 100,000, its original fabric merchant has 100,000, I only cooperate with 10,000, um, and then how to make this money?The original fabric merchant, I told the original fabric merchant that I have 100,000 factory to cooperate with me. If you cooperate with me now, you have to supply them with the goods, but you have to ensure a few things. The first is that your quality must be good, um, and then the second is that your price should be convenient, because I didn’t do boxing management with um t before. We also talked about it in the video, such as the logic of low price.Well, then it can negotiate a price with the logistics provider, and it can also negotiate a price with the original fabric supplier, so how can the quality be controlled well?Well, this is a very important point in my opinion. It not only controls the quality, but also controls the price.Because of large-scale procurement, and then large-scale procurement, why did his factory listen to him?As I said earlier.
KaiFei 10:00
100% production capacity has been given to me. If you don’t follow me or listen to me today and go to purchase fabric from this merchant, I may not bring this to you. I think in our workshop because of Jianggan, many Jianggan visited several suppliers who are more adaptable. I found some interesting cases that Jianggan shared in this course, including his system. Yes, in the system, he needs to specify three pages for you: a, b, and c. Yes, you can share a little bit, which is also correct. It was visited last time.
Jianggan 10:29
I think what’s interesting about this is that…First of all, I think the most shocking thing is that we actually visited some of the suppliers of the newcomers, and this was not arranged by the newcomers, but by ourselves.First of all, we went to a factory and found that it was equipped with air conditioning. Well, during this event, some people also asked about it. Actually, everything we read in the media and overseas media is about sweatshops in West India. Well, that’s not the case for me. I went to his warehouse and factory, and at least those I saw were all equipped with air conditioning.Well, in that summer weather in Guangdong, there was a big difference between having and not having air conditioning.
Jianggan 11:10
Well, this is the first point. As for the second point, is my hometown actually in Jiangsu?Jiangsu actually has some clothing, but not anymore.Then I remember in 2017, when I was in the Middle East, I did something similar to what I did in a delivery store.Yes, it’s about things within the ecosystem.At that time, I remember my uncle and a friend from my hometown who owned a clothing factory.Well, of course it was already difficult to do at that time, because the cost in the Jiangsu area was already very high.Well, then he’s like, well, they mainly do the kind of belts like Walmart, which is 50,000, 100,000 or more at a time.
Jianggan 11:44
Well, but the common problem is that firstly, the cost will be compressed, that is, the price will be compressed. Secondly, the brand has a payment period, so are you the one who does the OEM?OEM will have a payment period, and sometimes it will cancel orders. So, actually, your upstream is the raw material supply, and you have to handle it yourself. So, there are often cash flow issues. This is quite interesting. When we look at the factories of Xinye, none of them are particularly large. They told me that their purchasing voices would tell them what kind of products they can purchase.Well, of course you can also pick it yourself, but technically you often find that the one he gives you is better, so you often choose to pick it by default, right?Recently, I also heard about a factory in Bangladesh. When he participated in an event in Europe, someone asked about the attraction and he said, Well, as far as I know, Shiyin’s payment terms for this supplier are very good.Well, then let’s just talk about his stock size. Actually, he has no cooperation with the business.Well, then he said that what we are most worried about now is the brand, is that what I just mentioned?Just the brand gives us an order, and then we go to purchase the raw materials ourselves. Hmm, during this process, suddenly the brand wants to cancel the order, or delay the payment period, which makes our cash flow very uncomfortable.Well, so actually Xin has thought of the pain points of these factories in the upstream supply chain through this way, and then solved them all.
KaiFei 13:09
Yes, um, and I think from the perspective of adding Jiang Qian, it includes the issue of your organs. Also, because of our informationization and data, it can actually know which factory is the fastest and most economical in the production process of this process.This group of people may have made a lot of Polo shirts. Well, after he said more, he became, well, the workers are also very fast.Yes, and the faster the worker, the lower the cost, and he can filter through the data feedback at each step.Well, this worker should be given this, so he will also reduce the loss of your cooperation with the factory.Well, these losses are finally reflected in the price.So why is it called attraction disorder as I mentioned earlier?Let the entire industry chain be more certain, um, then his entire circulation will be more certain, and then his small orders will be returned quickly.
