Since 2023, against the background of weakening external demand, China’s foreign trade has encountered periodic pressure, and the exports of some major foreign trade towns have declined to a certain extent year-on-year.
However, Shenzhen, which has ranked first among mainland foreign trade cities in terms of export scale for 30 consecutive years, has performed a wonderful show of growth against the trend this year, and its performance is very “amazing” among export-oriented cities.
Recently, we learned that the export volume of many companies in Shenzhen has achieved rapid growth this year.
Shenzhen Customs data shows that in the first three quarters of 2023, Shenzhen’s export scale reached 1.8 trillion yuan, an increase of 17.7%.
More importantly, Shenzhen’s export scale is still increasing for developed markets such as Europe and the United States.
Some analysts pointed out that the frequent highlights of Shenzhen’s foreign trade are inseparable from years of continuous technological innovation.
In particular, many leading companies rely on their strong product capabilities to continuously enter developed markets such as Europe and the United States.
A large number of Shenzhen’s advantageous products and industries are currently irreplaceable in other production areas. This is also the reason for Shenzhen’s export growth against the trend.
From an enterprise level, Shenzhen’s foreign trade exports have many highlights.
“Our company has experienced a certain decline in orders since last year, but since the second half of this year, especially in the third quarter, it has begun to gradually recover. Although it has not yet reached the previous peak period, this year’s revenue has been growing month-on-month.” A relevant person in charge of a consumer electronics company in Shenzhen said that as the company’s inventory declines and overseas market demand gradually recovers, the company’s market confidence in the second half of the year and next year is also rapidly recovering.
In fact, this year, especially since the second half of the year, the revenue and profits of many companies in Shenzhen are recovering and growing rapidly.
For example, Transsion Holdings, which mainly relies on overseas markets, achieved revenue of approximately 43.022 billion yuan in the first three quarters, a year-on-year increase of approximately 19.40%, and net profit attributable to the parent company was approximately 3.884 billion yuan, a year-on-year increase of approximately 72.01%.
With the wave of new phone releases in the third quarter and the gradual improvement of the economic environment, the global smartphone consumption environment in the third quarter showed a rebound in demand.
This is obviously good for Shenzhen, where the mobile phone industry chain is concentrated.
The person in charge of Honor, a well-known mobile phone brand in Shenzhen, said that judging from the Chinese market rankings for the third quarter of 2023 released by relevant data agencies, Honor ranked first in China’s mobile phone market share in the third quarter.
“Three years after the smartphone industry was in trouble, variables have emerged. Honor is the first to break through, making the third quarter of this year an inflection point for a new innovation cycle.”
The mobile phone industry chain is not the only industry that is experiencing rapid recovery and growth.
Wind data shows that among the 439 Shenzhen A-share listed companies, 158 had a net profit increase of more than 20% in the first three quarters of this year, accounting for about 36%.
Among them, BYD’s revenue in the field of new energy vehicles increased by more than 50%, and its net profit increased by nearly 130%; Zhengtong Electronics with an AI concept increased its revenue by 27%, and its net profit increased by 125%; Cross-border e-commerce brand AVIC Times’ revenue increased by 30%, and its net profit increased by more than 40%.
As a city dominated by private enterprises, Shenzhen’s private enterprises imported and exported 1.84 trillion yuan in the first three quarters, and the total import and export value exceeded 1.8 trillion yuan for the first time, setting a record high in the same period, with a year-on-year growth of 14.5%, and the growth rate was 7.2 percentage points faster than Shenzhen as a whole.
Among them, the export scale reached 1.2 trillion yuan, an increase of 31.9%.
Exports of many industrial chain enterprises in Shenzhen have recovered rapidly. The biggest highlight is that the scale of exports to developed markets such as Europe and the United States is still growing rapidly.
Data released by Shenzhen Customs shows that in the first three quarters, Shenzhen’s imports and exports to the top four trading partners, including Hong Kong, ASEAN, the United States and the European Union, were 442.39 billion yuan, 437.6 billion yuan, 314.48 billion yuan and 311.97 billion yuan respectively, with increases of 3.3%, 7.8%, 12.9% and 13.3% respectively, accounting for more than half of the total, reaching 53.8%.
Wu Haifeng, a researcher at the Institute of Advanced Finance at the Chinese University of Hong Kong (Shenzhen), said, “Shenzhen’s overall exports can achieve positive growth because Shenzhen’s export products have a good structure and relatively high profit margins. They are not just some traditional low-end products, but mainly high value-added products such as new energy vehicles and charging piles. It is difficult for other places to replace them on a large scale. This is the key. Exports to developed markets such as Europe and the United States
The reasons for growth against the trend are similar. Most Shenzhen products are highly sticky and irreplaceable, and customers in developed markets also have strong demand. Unlike traditional products such as clothes and hats, which are prone to substitution.
He also pointed out that Shenzhen enterprises have strong technological innovation capabilities and empower products through multiple forms such as chips, AI large models, and digitalization. The products have a higher user experience and are more favored by customers.
“Places such as Southeast Asia and India do not have this kind of industrial innovation capability, but China’s new energy vehicles can begin to be exported to developed markets such as Europe and the United States, and they are also very popular locally.”
Data released by Shenzhen Customs shows that in the first three quarters, Shenzhen
Shenzhen’s exports of mechanical and electrical products accounted for more than 70%. The “three new” products such as lithium-ion batteries, electric passenger vehicles, and solar cells exported 49.65 billion yuan, 13.11 billion yuan, and 2.22 billion yuan respectively, an increase of 24.1%, 432%, and 21% respectively.
In this context, many leading companies in Shenzhen have also begun to take the lead in “charging” into developed markets such as Europe and the United States.
BYD stated in a previous investor relations record: “Since officially announcing its entry into the European passenger car market at the Paris Auto Show in 2022, BYD has rapidly promoted 5 new energy vehicles to 19 European countries and regions within one year, covering the top five European automobile countries (Germany, the United Kingdom, Spain, Italy, France) and multiple regions in Northern Europe. A total of more than 140 stores have been opened. As a global leader in new energy vehicles, as of the end of October 2023, BYD’s cumulative sales of new energy vehicles have exceeded
5.7 million units, and the cumulative export volume of new energy passenger vehicles exceeds 230,000 units.
In the future, BYD will continue to delve into the European market, bring high-quality new energy products to consumers, and help local green transformation.”
The relevant person in charge of Huabao New Energy also said.
In the past few years, the company’s sales in the U.S. market have mainly relied on online channels such as Amazon and the brand’s official website. With the accelerated construction of the U.S. localization team, the offline channel business has been developing smoothly. It has now entered more than 4,000 stores of the top ten well-known retailers in the United States.
The company is increasing global offline channel development and capability strengthening, accelerating the rapid establishment of offline channels and entering stores. Currently, it has entered more than 8,000 well-known offline retail stores around the world. It is expected that the number of stores will exceed 10,000 this year, a significant increase compared with the 4,000 stores at the end of last year.
At the same time, the company will further improve the full value chain M2C (manufacturer-to-consumer) business model integrating R&D innovation, manufacturing, brand marketing, retail channels, and after-sales services, further reduce operating costs, continue to increase investment in R&D, prepare technology reserves in advance, accelerate the launch of new generation products, and enhance overall competitiveness.
It is not difficult to find that the reason for Shenzhen’s rapid export growth and continued breakthroughs in developed markets lies in its continuous technological and product innovation.
The “National Innovative Cities Innovation Capacity Evaluation Report 2022” released by the Ministry of Science and Technology and the China Institute of Scientific and Technological Information shows that Shenzhen has ranked first for four consecutive times.
As a regional innovation highland, Shenzhen, an innovative city, plays a vital role and is an important pillar in building an innovative country.
At the same time, Shenzhen’s ability to maintain rapid export growth is also inseparable from policy support.
In July this year, Shenzhen issued the “Guiding Opinions on Shenzhen Financial Support for Foreign Trade Stabilization and Optimal Structure”, which included a total of 24 measures to support the high-quality development of foreign trade.
The document mentioned that in terms of increasing import and export credit support, financial institutions are encouraged to do a good job in credit extension in the field of foreign trade, actively meet the foreign trade financing needs of private, small and medium-sized enterprises, and use monetary policy tools to support the development of foreign trade enterprises; innovate credit products, stabilize and expand imports and exports in key areas, and develop foreign trade supply chain finance; cultivate and expand export credit insurance policy financing, and expand the use of RMB in cross-border trade financing.
How should Shenzhen maintain its core competitiveness in exports in the future?
Wu Haifeng believes: “The key is to continuously improve the technological capabilities, innovation capabilities and digital level of products. Products cannot be replaced by those labor-intensive industrial countries. At the same time, we must continue to optimize our export structure and achieve a capital- and technology-intensive export structure. This is the key to maintaining product competitiveness forever. It is formed by the accumulation of long-term investment and cannot be replaced overnight.”
It is worth noting that Shenzhen enterprises also have challenges on the road to continuously increasing exports and continuing to globalize.
Transsion Holdings pointed out that since its inception, Transsion has insisted on deeply exploring global emerging markets represented by Africa, and based on the successful experience of Africa and other markets, it has expanded into global emerging markets.
Currently, TRANSSION’s global sales network covers more than 70 countries and regions.
When entering many overseas markets with different languages, cultures, customs, policies and regulations, the key issue faced by Transsion is “localization”, including unfamiliar market environments, differentiated needs of users and many other challenges.
“Faced with unfamiliar emerging markets, TRANSSION has always adhered to the development concept of ‘Glocal’ (global thinking, local innovation). On the one hand, it adheres to localized innovation in terms of products, marketing, channels, business models, etc., and conducts targeted technology research and development and product innovation through insights into local market characteristics and consumer needs to provide users with highly suitable products.
At the same time, it has established a complete sales network and after-sales service in the local area and adopted marketing innovation methods suitable for the local area.
On the other hand, Transsion is deeply integrated into the local economic and social development, focusing on win-win cooperation, localized employment and corporate social responsibility.
“‘Localization’ has always been the key to building long-term competitiveness and winning of the brand overseas,”
