According to an analysis report, overseas brick-and-mortar retailers are being compelled to transform due to the combined pressures of Sino-US trade friction and online competition. For Chinese sellers, this transformation represents an opportunity. For instance, the shift from FOB to DDP requires suppliers to handle customs clearance and warehousing, transferring clearance risks while also improving cash flow. This raises the entry barrier for Chinese sellers expanding overseas, elevating requirements from mere manufacturing to include storage and distribution, which is expected to increase industry concentration. Furthermore, strengthening online-to-offline integration mechanisms has intensified the introduction of online bestsellers into physical stores and the reduction of intermediaries.
In this context, the following types of companies are anticipated to benefit from this wave of change: 1) enterprises capable of creating popular products; 2) companies gradually replacing intermediaries; and 3) firms focused on offline sectors lacking dominant brand products. The core views are as follows:
The current wave of overseas expansion by Chinese companies is undergoing profound changes. Domestic manufacturing has completed the transition from OEM to ODM and is gradually taking the lead in this consumer goods cycle. Simultaneously, the rapid expansion and intelligent upgrading of overseas warehousing and distribution systems have effectively addressed infrastructure challenges, while the engineer dividend has enhanced companies' ability to develop hit products based on market demand. The increasingly mature cross-border e-commerce ecosystem enables faster and more accurate product iteration, while also helping domestic companies reach and understand end-consumer needs. The convergence of these three major changes lays a solid foundation for the branding of Chinese companies overseas.
Multiple factors are interacting, pushing overseas physical retailers into a transitional period. While end-demand in the US has remained robust, the structure of offline channels has undergone significant changes. The retail landscape can be divided into "marginal channels" and "lighthouse channels." On one hand, marginal channels (small and medium-sized channels) are weakening amid trade tensions, with smaller retailers continuously closing stores. These channels are shifting risks upstream in the supply chain through models like OBM-to-DDP, while also introducing new categories with low risk and light asset models, such as shop-in-shop formats, to improve store efficiency. On the other hand, under traditional product selection models, major retailers like Walmart and Best Buy primarily relied on buyers sourcing from trade shows and supplier samples. Recently, as these "lighthouse channels" accelerate the development of their own online platforms, their product selection has increasingly turned to third-party e-commerce platforms like Amazon to discover and validate hot-selling items. They first test these products on their own online channels, then introduce the top performers to physical stores based on sales data.
What types of companies can successfully enter the offline market? Due to channel structures and long-standing consumption habits, the online penetration rate in the US is unlikely to reach Chinese levels, making an offline presence an essential direction for branding companies. The report provides a detailed analysis of five export-oriented companies—Anker Innovations, Zhejiang Zhengte, Carote, Jiangxin Home, and Great Star—examining their development strategies and channel layouts to identify common traits of those successfully entering offline channels. Two types of companies are identified as capable of breaking into the US offline market: 1) those with the ability to create online bestsellers; and 2) those with strong supply chain control capabilities, enabling them to replace traditional Western distributors.
For example, Anker Innovations uses technologies like Power IQ to revolutionize products, creating a flywheel effect between online and offline sales. Zhejiang Zhengte first sold its starry sky canopy on Costco's online platform, successfully creating a hit product through cost-effectiveness and DIY-friendly design before introducing it to physical stores. Carote has built a leading cookware brand through strong design, high value-for-money, and a wide SKU range, with a clear strategy in 2024 for online growth to fuel offline expansion and strengthen brand presence in stores. Jiangxin Home leverages high product capability and integrated production and sales to offer a premium alternative to LA-Z-BOY functional sofas, expanding its reach through offline shop-in-shop models and moving towards OBM. Great Star continuously invests in R&D to achieve product leadership, while expanding through strategic acquisitions and channel development, using integrated production and sales to replace traditional brands and intermediaries.
Risk warnings include: 1) weaker-than-expected consumer demand in overseas markets such as Europe and the US; 2) significant increases in raw material prices; and 3) exchange rate fluctuation risks.