China’s Suzhou city plans supercharged cross-border e-commerce business after Shein and Temu success

The municipal government of the city in eastern Jiangsu province unveiled a three-year plan to attract cross-border e-commerce projects
As China-founded businesses like Shein and Temu find booming success overseas, more areas in China are trying to tap overseas consumers for growth

E-commerce

Kelly Le

Published: 10:00pm, 11 Apr 2024

Why you can trust SCMP

The hi-tech manufacturing hub of Suzhou has unveiled a plan to double the city’s cross-border e-commerce annually for the next three years, as it looks to tap into the growing influence of Chinese platforms such as Shein and PPD Holdings’ Temu.

The municipal government of the city in eastern Jiangsu province has issued a policy document aimed at accelerating local business digitalisation, attracting top cross-border e-commerce projects, and building a robust ecosystem for related businesses, according to a government document published on Monday.

Local officials said high-value-added industries – which include new energy, automotive electronics and parts, and artificial intelligence (AI) – will be the first to go overseas.

JD.com offers US$138 million in cash incentives to boost video content

If Suzhou can double its e-commerce exports and imports every year, the city’s annual turnover would amount to 150 billion yuan (US$20.7 billion) by 2026.

“At least 600 traditional foreign trade and manufacturing enterprises will conduct cross-border e-commerce annually,” the government said in the document. “By 2026, the number of the city’s cross-border online merchants will exceed 15,000.”

Authorities said they will give “key policy support” to benchmark enterprises, with higher contributions going to the cross-border trading sector. The document did not outline any details for the initiative.

Suzhou’s other measures involve building infrastructure and a support system for cross-border e-commerce development, including a robust and efficient supply chain, logistics and payment services.

Officials also set a goal of building overseas warehouses covering 1.5 million square metres to be operated by local enterprises, and to cultivate at least two cross-border e-commerce industrial parks by 2026.

Suzhou is introducing the plan as interest grows among major cities in China in finding new approaches to boost economic growth amid a slow post-pandemic recovery.

Cross-border e-commerce has been a bright spot for some Chinese firms, fuelled by the growing overseas popularity of retailers like China-founded online fast-fashion brand Shein and Pinduoduo’s sister platform Temu. Platforms under Alibaba Group Holding, owner of the South China Morning Post, have also been ramping up efforts to tap overseas consumers.

16:42

America’s threat to drop trade rule may hurt China, Temu and itself

With its aggressively priced apparel made in China, Shein has seen explosive growth over the past few years to now account for a fifth of the global fast-fashion sales, according to Coresight Research.

Temu’s big marketing campaigns during the Super Bowl both last year and this year have helped it quickly grow to rival Shein and other budget retailers.

Temu bought six slots this year in the most expensive television ad real estate in the US. At an average cost of US$7 million per 30-second ad, the company likely spent tens of millions of dollars on the campaign.

China’s export and import trading volume of cross-border e-commerce reached 2.38 trillion yuan last year, up 15.6 per cent year on year, according to China customs data. The figure is expected to reach 2.95 trillion yuan in 2024, according to iResearch, a Chinese think tank.

Suzhou is still trying to catch up to more established cross-border e-commerce hubs, most notably cities in Guangdong province.

The majority of cross-border e-commerce businesses are located in the southern province, which is home to more than 13,000 merchants. Jiangsu and Anhui come in second and third, according to data from iResearch.

Post