Routes for Chinese goods entering overseas markets

Lesson 05 · 50 min · 1 / 20

Routes for Chinese goods entering overseas markets

One phone stand, two routes, different money and different risk

Open with the two options and ask which leaves more money. Do not calculate yet; the case will do that.

Opening question · 2 / 20

Wholesale at US$4.20 or retail at US$9.90?

• A: 8,000 units to a German chain, 45-day terms.
• B: AliExpress retail, free shipping, ads and returns.
• The retail price is more than double.
• Which route leaves more money - and which can be financed?

Take a vote. Most students will choose B because of the price; keep the vote for the end.

Learning objectives · 3 / 20

By the end, you can...

• Distinguish three routes by buyer and control.
• Map Alibaba's platforms to routes and markets.
• Analyse overseas warehouse trade-offs.
• Use customs export data without confusing its scope.

O2 is tested by Q1; O3 by Q3 and Q5; O4 by Q2.

Concept 1 · Three routes · 4 / 20

Same factory, three ways to reach a buyer

Ask who owns the customer in each route. The answer explains who controls price and data.

Concept 1 · From factory to buyer · 5 / 20

The route determines who stands between factory and buyer

Remove boxes to show B2C/DTC: fewer intermediaries, but the seller takes on traffic, fulfilment and returns.

Evidence · Customs series · 6 / 20

Exports grew - with a scope warning

• Source: customs statistics (SRC-038).
• Export share rose from about 58% to about 80%.
• This is cross-border trade, not domestic online retail.

Ask what the number does not show: profitability, platform GMV, or which route grew.

Data · 2018–2025 · 7 / 20

Export value and export share both rose

Reveal one bar at a time. Ask students to read value and share separately. The chart does not identify causation.

Concept 1 · Control trade-off · 8 / 20

B2B versus B2C: who pays for demand?

Tie the right column to §1.7's rising traffic cost. Ask why a factory might still prefer the left column.

Concept 2 · Warehousing · 9 / 20

Speed is bought with cash and forecast risk

Ask which item in the case would suit a warehouse and which would not. The new colour is the counter-example.

Common error · 10 / 20

A warehouse is not a customs exemption

• Duty and compliance do not disappear.
• Storage and local returns add cost.
• The cross-border nature of the sale remains.

Correct this immediately if a student says "warehouse avoids tax". It is a persistent and costly misconception.

Concept 3 · DTC · 11 / 20

A platform store is not automatically DTC

Ask what the brand actually owns in each case. DTC is a control claim, not a domain name.

Concept 4 · One group, many routes · 12 / 20

Read the platform name as a route

Ask students to place a new platform into one of the four boxes. The box tells them the buyer and direction.

Offline channel · 13 / 20

Met online, closed offline

• 1.55 million m² and 74,600 booths (SRC-045).
• Fairs support samples, trust and large orders.
• Platforms start conversations; fairs can close them.

Do not present fairs as nostalgia. They solve verification problems that platforms still cannot fully solve.

Case · Teaching case · 14 / 20

Two routes for one phone stand

• Unit cost US$2.10 including packaging.
• A: 8,000 × US$4.20, ex-works, 45-day terms.
• B: US$9.90 retail, 8% commission, US$2.50 marketing, US$3.10 logistics, 4% returns.
• Compute contribution and cash cycle.

Require written assumptions before numbers. The figures are illustrative, not a real quote.

Case analysis · 15 / 20

The numbers point in different directions

Ask why total contribution and unit margin tell different stories. Volume matters as much as margin.

Common misconceptions · 16 / 20

Four claims to retire

• DTC means opening a platform store.
• Overseas warehouses avoid duty.
• Customs exports are domestic online retail.
• A higher retail price means higher profit.

For each, ask for a counter-example from the case or the platform layout.

Classroom activity · 17 / 20

Route choice for one product

Reject answers that only say "B2C earns more". Require a switching condition.

Self-check · 18 / 20

Five questions

• Q1 platform routes · Q2 customs share
• Q3 warehouse benefit · Q4 DTC capability
• Q5 when a warehouse is least suitable

Q5 is the application question; if students miss it, revisit the warehouse trade-off slide.

Summary · 19 / 20

What you can now do

• Choose a route by buyer and control.
• Read platform names as route and market maps.
• Treat warehousing as a forecast decision.
• Separate customs trade data from domestic retail.

Re-run the opening vote and ask which number changed a student's mind.

Sources & next · 20 / 20

Sources and preparation

• Textbook §1.2.2, §1.7; Chapter 2 §2.1, §2.2.3–2.2.4.
• Customs SRC-038; Canton Fair SRC-039/SRC-045.
• Next: B2B, B2C, platforms and brand operation.

Remind students that the case numbers are illustrative and that customs data have a specific scope.