Week #17: U.S. House Passes DJI Drone Ban | Shein Increases Prices Ahead of IPO
Latest news and analysis on China’s global e-sellers
Here’s our pick for last week’s news:
Eleven Chinese Firms Make their Marks in Kantar's Global Brands Ranking
Temu Marks its Debut in Brazil
Shein and Temu Face Tax Crackdown in South Africa
TikTok Partners with Thai Government to Boost SME Sales
Shein Increases Prices Ahead of IPO
South Korea's International Cargo Hits Record High Amid Surge in AliExpress and Temu Sales
U.S. House Passes DJI Drone Ban
Loctek Announces $78 Million Investment in Overseas Warehouse
LightInTheBox's Revenue in 2024 Q1 Decreases by 51.8% to $71.2 Million
Eleven Chinese Firms Make their Marks in Kantar's Global Brands Ranking
In the latest Kantar BrandZ Most Valuable Global Brands ranking, 11 Chinese brands have secured their positions. Tencent leads the pack, ranking 10th globally in 2024, followed by Kweichow Moutai at 18th, Alibaba at 28th, and Douyin/TikTok at 35th.
Haier has notably risen to 58th place, up from its debut at 89th in 2019. Other prominent entries include China Mobile at 63rd, the Industrial and Commercial Bank of China at 67th, and Huawei at 71st. Pingan, Pinduoduo, and Nongfu Spring round out the list, occupying the 90th, 94th, and 96th spots, respectively.
Despite challenging macroeconomic conditions causing Shein, Meituan, and JD to exit the top 100, the resilience and global potential of Chinese brands are evident. Haier's climb to 58th highlights this strength, reporting global revenues of $51.24 billion and a total profit of $3.68 billion in 2023. Additionally, Haier has maintained its position as the leading global retailer of large home appliances for 15 consecutive years.
Temu Marks its Debut in Brazil
Temu has officially entered the Brazilian market, expanding to 70 countries. The launch offers a variety of low-cost products starting at R$1.99, with benefits like free shipping and pre-approved credit to avoid delivery delays.
Logistics are managed by J&T Express, with options like Correios available. Despite low prices, Temu provides free shipping and promises free returns if items are damaged. Customers also receive R$10 in credit if deliveries are late.
Temu introduced a "30-day price adjustment policy," a unique feature among competitors like Shopee, AliExpress, and Shein. This policy credits the difference to the customer's virtual account if the price drops within 30 days of purchase, excluding promotional items.
Brazil, with its 216 million people, has become a key market for Chinese cross-border platforms in 2024. Of the major platforms—SHEIN, AliExpress, TikTok Shop, Shopee, and Temu—four now operate in Brazil. The focus now shifts to when TikTok Shop will enter, as it currently prioritizes the US market.
Shein and Temu Face Tax Crackdown in South Africa
The South African Revenue Service (SARS) will begin imposing a 45% import duty plus VAT on all clothing parcels starting July 1, 2024. Previously, the de minimis rule allowed these companies to deliver clothing parcels valued under R500 with only a 20% import duty and no VAT.
Anthony Thunström, CEO of The Foschini Group, stated, "It's a significant move, and I believe it will benefit the local industry, including local production and jobs." This change follows accusations from local clothing retailers and stakeholders in the textile industry that Chinese companies were exploiting a tax loophole to keep their prices low.
A Temu representative told IOL News, a local South African media outlet, "Our competitive prices are due to supply chain efficiencies and operational expertise, not from circumventing rules or exploiting tax loopholes." IOL has also reached out to Shein for comment but has not yet received a response.
TikTok Partners with Thai Government to Boost SME Sales
TikTok Shop has signed an MoU with Thailand's Department of Business Development to raise the GDP contribution of SMEs from 35% to 40% by 2027.
The partnership focuses on three main areas: helping local businesses tap into the digital economy, providing educational resources on TikTok Shop, and fostering a community for smart economic development.
"We recognize the potential in Thailand's 43 million TikTok users, most of whom are highly active on the platform," said Napintorn Srisunpang, Deputy Commerce Minister. Thais spend eight hours daily on the internet, with 63 million online users, representing 88% of the population.
According to "The TikTok Effect: Accelerating Southeast Asia's Businesses, Education, and Community," SMEs in Southeast Asia have boosted their income by nearly 50% through TikTok. This offers Thai SMEs a chance to learn new skills, like live streaming on TikTok Shop.
In 2023, TikTok Live data revealed 700,000 Thai creators streaming monthly, highlighting strong user engagement.
Shein Increases Prices Ahead of IPO
Shein has raised prices by over a third on key products in a bid to boost revenues ahead of its planned IPO. According to London-based research firm EDITED, Shein's average price hikes have outpaced those of competitors H&M and Zara when comparing prices from June 1 with those a year earlier.
In the United States, Shein's largest market by sales, the average price for women's dresses has climbed by 28% over the past year, reaching $28.51. Despite this increase, Shein's dresses remain significantly cheaper than those at H&M ($40.97) and Zara ($79.69). However, Shein's price hikes have been more substantial than those of its rivals during the same period.
Retail experts suggest that Shein aims to show its capacity to sustain recent growth and sell higher-priced products in preparation for its stock market listing. "If they can demonstrate that these prices stick, then the valuation increases significantly," said Alex Romanenko, head of retail at pricing consultancy Pearson Ham Group.
Shein is targeting a valuation of approximately £50 billion in a London listing. The company declined to comment on its IPO plans or valuation.
Louise Deglise-Favre, an apparel market analyst at GlobalData, noted that Shein's growth is likely to slow in established markets like the U.S. and the UK. "Globally, Shein may sustain similar levels of growth as it enters and develops new markets, strategically increases some prices, or through acquisitions," she added.
South Korea's International Cargo Hits Record High Amid Surge in AliExpress and Temu Sales
South Korean airlines recorded an all-time high in international cargo volume between January and May of this year, driven by an uptick in parcels from Chinese e-commerce platforms such as AliExpress and Temu.
According to the Ministry of Land, Infrastructure, and Transport, as reported by Yonhap News Agency, the total international cargo volume transported by 11 South Korean airlines—including Korean Air, Asiana Airlines, Jeju Air, Air Busan, and Air Incheon—reached 1,154,524 tons during this five-month period. This marks a 17.2% increase compared to the same period last year and is the highest volume recorded since the ministry began compiling aviation statistics in 2009.
Korean Air led with approximately 660,000 tons, representing 57.2% of the total international cargo volume, followed by Asiana Airlines with around 308,000 tons (31.3%), and low-cost carriers such as Jeju Air with 51,000 tons (11.5%).
According to the International Air Transport Association (IATA), global cargo—measured in cargo tonne-kilometers (CTK)—increased by 11.1% year-on-year in April. The Asia-Pacific region saw an annual CTK growth rate of 14%, surpassing the 12.7% growth in Europe, 10.6% in Africa, and 7% in North America. This increase in cargo volume is reported to be attributed to the growth of the Chinese e-commerce market.
U.S. House Passes DJI Drone Ban
The United States House of Representatives passed a bill banning the future sale of DJI drones within the country, making the implementation of the DJI ban increasingly likely.
The proposed legislation, known as the Countering CCP Drones Act, aims to place DJI on a Federal Communications Commission (FCC) blacklist, thereby preventing new DJI drones from accessing the communication infrastructure required for operation in the U.S.
This legislation would not restrict the use of DJI drones already purchased in the United States but would prohibit the sale of new DJI products. This action would effectively eliminate the most popular and advanced drones currently used in the U.S.
DJI, a Chinese company, controls over 70% of the global drone market, a dominance that has raised concerns among U.S. lawmakers.
Loctek Announces $78 Million Investment in Overseas Warehouse
Loctek Holdings, a leading provider of ergonomic furniture, has disclosed plans to invest $78 million in the construction of an overseas warehouse. The company's wholly-owned subsidiary, Ellabell Bryan Lecangs LLC, is set to sign a construction contract with Clayco, Inc. for the Ellabell Overseas Warehouse Project in Georgia, USA. The estimated total cost of the project is $78 million.
In 2023, Loctek's overseas warehouse generated a sales revenue of 131.24 million USD, up by 94.03% YoY. Loctek rolled out its overseas warehouse and cross-border logistics since 2020. As of the first quarter of 2024, the company boasts 13 self-operated overseas warehouses globally, serving over 600 foreign trade entities. Revenue from this sector primarily stems from last-mile delivery, storage fees, operational charges, and additional value-added services.
LightInTheBox's Revenue in 2024 Q1 Decreases by 51.8% to $71.2 Million
LightInTheBox has reported its financial results for the first quarter of 2024, showing a total revenue of $71.2 million, a 51.8% decrease year-over-year. The net loss for Q1 2024 was $3.8 million, compared to a net loss of $4 million in Q1 2023. For Q2 2024, the company expects net revenue between $60 million and $70 million.
"In the first quarter of 2024, we encountered macroeconomic challenges and intensified competition. We addressed these challenges by adopting a strategy focused on quality growth and shifting our emphasis from sales growth to profitability. Additionally, we aimed to enhance brand awareness through cost-effective products and optimized consumer experience," stated He Jian, the company's Chairman and CEO.
Founded in 2007, LightInTheBox is a global online retail company that delivers products directly to consumers worldwide. In 2013, the company went public on the New York Stock Exchange, becoming the first Chinese cross-border e-commerce stock. With millions of customers in over 200 countries, LightInTheBox maintains a strong presence in North America, Asia, Europe, the Middle East, South America, and Southeast Asia.