Quick Summary of the Core Content
Recently, a new cross-border business model has emerged from the combination of overseas internet influencers and the supply chains in China's Pearl River Delta: In the past, overseas influencers either took brand ads for quick profits or sold products for commissions. Now, they are collaborating with Chinese factories to create their own brands from scratch. Influencers use their followers' real needs to drive sales, while Chinese factories have shifted their approach from simply receiving orders to producing products before they even exist, handling the entire process from research and development, design adjustments, to production and warehousing. This partnership complements each other's weaknesses—addressing the issue where influencers lack product manufacturing skills and Chinese factories struggle with determining where to sell their products. Several successful cases with annual sales in the hundreds of millions of dollars have already emerged, marking this as a new opportunity in cross-border e-commerce.
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Detailed Analysis
1. Influencers Creating Brands: The Desire to Stop Being “Free Speakers”
In the past, overseas influencers' monetization methods were straightforward: they either filmed promotional videos for brands or conducted live sales for commissions, with a one-time deal. For example, if Nike paid you $5,000 to film a video for their sneakers, you would only earn that amount, regardless of how many pairs of shoes were sold. However, this model is no longer viable. Brand orders are highly unstable, and top influencers may earn millions, while those with smaller followings might struggle to secure a steady income. For instance, MrBeast, the world's most popular influencer, lost $120 million on video production in 2024 but made $250 million from his own chocolate brand, showing that creating a brand offers much higher profits.
Influencers have realized this shift. Instead of handing over their massive followings to brands for free, they prefer to control the pricing and profits. Creating their own brands allows them to set their own prices, potentially generating 100 times more revenue than from advertising.
2. Why Choose Chinese Factories Over American Ones? It’s About Convenience, Not Just Cost
Many assume that influencers choose Chinese factories because of lower production costs, but the real reason is the exceptional level of support provided by the Chinese supply chain. Most overseas influencers lack the necessary resources to produce products independently. Chinese factories, with their flexible manufacturing systems, can handle even small batches and make significant adjustments to the product design without high costs. This is a unique service available worldwide.
3. Chinese Factories Are Willing to Collaborate: They Can’t Afford the Low Margins
Domestic factories are facing fierce competition, with margins reduced to just 3%-8%. In the past, they could earn 10%-15% on overseas orders. Now, many factories are competing to offer even lower prices, leaving them barely covering expenses. Collaborating with influencers provides them with access to a live market source of demand, as influencers know what young people prefer. This collaboration also allows factories to earn long-term commissions from the brands and build a stable customer base, breaking away from the cycle of low-price competition.
4. The New Model Isn’t Easy: Two Major Challenges Remain
Two key issues need to be addressed before this model can become widespread:
- Fans Don’t Always Buy: Influencers may have a large following, but not all of them will buy the products. For example, a popular sports drink failed because the taste was unsatisfactory. Successful brands need to continuously improve their products and maintain customer relationships.
- Risk Allocation: In the new model, factories often have to invest in research and development upfront, and if the products don’t sell, the costs are unclear. There are no established rules for cost-sharing and responsibility in case of failure.
5. This Is More Than Just a Trend: It’s a Sign of China’s Supply Chain Upgrading
This is not just a temporary trend; it represents a significant upgrade in China’s supply chain capabilities. While the penetration of social e-commerce in Europe and America is still around 20%-30%, China’s market is more fragmented, with diverse consumer preferences. Chinese factories can help creators turn innovative ideas into market-ready products, offering a much more valuable service than simply manufacturing goods.
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In summary, the new cross-border business model combines the strengths of influencers and Chinese supply chains to create sustainable and profitable brands, representing a significant advancement in China’s global economic influence.