AI-driven overseas expansion: A new driving force for Chinese brands’ overseas expansion

In the wave of globalization, Chinese brands are ushering in a new era of going global. The article details the development of China's cross-border e-commerce, from its infancy to its brand development, and how AI technology helps companies achieve brand upgrades in the global market. With the deepening of digital transformation, Chinese brands are standing at a new starting point, ready to meet the challenges and opportunities of the 4.0 era.

Since 2024, cross-border e-commerce has become a highlight in my country's foreign trade sector.

The latest statistics from the General Administration of Customs show that in the first half of this year, my country's cross-border e-commerce imports and exports reached 1.22 trillion yuan, a year-on-year increase of 10.5%, 4.4 percentage points higher than the overall growth rate of my country's foreign trade in the same period. Although the overseas market still has huge potential and broad prospects, it is also highly competitive and involution is intensifying. Merchants are also facing difficulties such as expensive traffic, difficult conversion, and low profits.

Therefore, achieving the transformation and upgrading from product export to brand export has become a must-answer question for more and more cross-border sellers.

The surging wave of artificial intelligence has brought new development opportunities to the branding upgrade of cross-border e-commerce. More and more enterprise-level AI applications are reshaping corporate productivity with their powerful data processing, intelligent analysis, prediction capabilities and personalized user experience. The industry is undergoing a profound transformation and has entered the "AI moment".

As Cambridge scholar Yin Yiding said in his book "High Potential Brands": Chinese brands going overseas have gone through the "hardware era", "software era" and "small parts era", and the next stage will usher in the 4.0 era of Chinese brands going overseas. This is the explosive period of Chinese brands going overseas, that is, all kinds of traditional enterprises will go overseas after completing the digital transformation. At this stage, the main body of going overseas has returned to traditional enterprises, but these enterprises have transformed into new digital era enterprises with big data collection and analysis, flexible manufacturing, user-driven, precise customization, instant response, and the ability to achieve global coverage.

1. Brand expansion overseas is the only way for cross-border e-commerce

Since the 1990s, China's cross-border e-commerce has gone through four stages of development.

First, it was the embryonic stage from 1998 to 2010. During this period, cross-border e-commerce first sprouted from the soil of B2B, but it was dependent on traditional foreign trade and completed information docking online. After 2004, with the development of online trading platforms, changes in payment tools such as Paypal being acquired by Ebay and the birth of Alipay promoted the rapid development of the industry. At this stage, the function of cross-border e-commerce platforms is no longer just to provide a place to display product information, but to realize the electronicization of payment, logistics, services and other links.

From 2010 to 2019, China's cross-border e-commerce entered a period of rapid development. During this period, with the rapid growth of China's export trade, the cross-border e-commerce industry further expanded, many factories and service providers joined in, B-end buyers gradually moved towards scale, and the number of C-end mobile users also ushered in a big explosion. A large number of B2C cross-border e-commerce companies began to be established, such as SHEIN, Anker Innovations, etc. This stage was also a period of major changes in cross-border e-commerce.

From 2020 to 2022, China's cross-border e-commerce market will enter a period of adjustment. Against the backdrop of a century of change and a century-long epidemic, the world economic situation and market environment have undergone sudden changes, such as the stagnation of overseas supply chains and the increase in shipping prices, leading to adjustments in the industry. During this period, the top camps have been divided, and many companies have accelerated their branding transformation.

From 2023 to now, the cross-border e-commerce industry has entered the "long-termism" path of brand expansion overseas. As shipping prices return to normal, policy support is strengthened, and the supply and cost sides have improved, leading companies have taken the lead in stabilizing and recovering. During this stage, refined operations, localized operations, and digital/informatization systems have received attention and practice, and brand transformation has been accelerated. From early foreign trade factories to general product distribution, to the boutique model, to today's brand deep cultivation period, full-link digital capabilities and rapid iteration of product design have become core competitiveness.

In September 2024, Kantar, an international market consulting firm, released the "Top 100 Chinese Brands 2024", which mentioned that the proportion of overseas business of the top 100 Chinese BrandZ brands has increased from 6.7% in 2020 to 13% in 2024. The "Top 50 Chinese Global Brands 2024" released by the agency also showed that at least 70% of consumers are willing to consider Chinese brands, and 75% of consumers choose Chinese brands for factors other than price.

The DTC model is becoming a new driving force for cross-border e-commerce brands to expand overseas.

The DTC model allows brands to have more control over every aspect from production to sales, including pricing, marketing strategies, customer service, etc., so that they can respond more flexibly to market changes and consumer needs. By communicating directly with consumers, brands can better understand consumer needs and preferences, thereby providing more personalized products and services and enhancing consumer brand loyalty.

Since 2021, brand independent sites represented by SHEIN, PatPat, Cider, Cupshe, etc. have successively obtained large amounts of financing, attracting top venture capital such as Vision Fund and Capital Today. According to data from Zheshang Securities, the market size of China's cross-border e-commerce independent sites will reach 3.4 trillion yuan in 2024, accounting for 35% of the cross-border e-commerce B2C market. Independent sites have become an important position for cross-border e-commerce sellers to achieve brand development.

2. AI empowers cross-border e-commerce to accelerate its iteration

In the process of cross-border e-commerce branding upgrade, the importance of digitalization is gradually increasing.

For cross-border e-commerce platforms and sellers, they need to have a deep insight into local needs and launch localized products in accordance with local conditions in every link, including design, product selection, operation, customer service, marketing, and supply chain. In the AI ​​boom, intelligent decision-making tools and marketing tools can effectively help e-commerce sellers reduce costs and increase efficiency, and reach consumers more deeply.

FUNNYFUZZY, a cutting-edge pet lifestyle brand, is a new generation of DTC brand that implements brand development strategies in all aspects under the digital empowerment of AI. Through upstream and downstream collaborative innovation and the creation of a flexible supply chain, FUNNYFUZZY is able to control the quality of its products to a high standard, even surpassing the standards of leading mature brands in Europe and the United States to a certain extent.

In terms of marketing, in the early stages of the brand development, FUNNYFUZZY used a large number of Meta's advertising AI creative tools to produce a large number of marketing materials at a low cost for promotion and trial and error, and to find potential audiences more efficiently. In the growth stage of the brand, Meta's A+SC and other AI advertising were used to save manpower and improve the effectiveness of advertising, thus achieving greater growth.

The application of generative AI in FUNNYFUZZY's daily work has reached more than 35%. The application of AI technology has become the core of FUNNYFUZZY's market competitiveness. The more accurate advertising and in-depth market analysis brought by AI have enabled FUNNYFUZZY to stand out from the competition.

Chen Shuo, founder and CEO of FUNNYFUZZY, believes that AI-assisted digitalization + direct sales can create a more efficient retail model. For example, based on first-party data such as user purchase behavior, AI can be used to predict the possible time of the next purchase, thereby accurately pushing marketing information and increasing repurchase rates.

It is worth noting that Meta, as a social media platform and innovative marketing solution provider, has made a lot of investments in the field of AI in the past few years to further improve the advertising system and help companies achieve better marketing results. Meta's advanced enabling products (Advantage+) use AI in all aspects of marketing activities, which can realize the automation of the entire process from crowd positioning, bidding, creative material production to advertising delivery and optimization.

For example, the emerging jewelry brand 37Jewelry achieved a 20% increase in return on expenditure and a 9% reduction in cost per conversion by using Meta Advanced Smart Shopping Ads (A+SC) compared to traditional advertising. Moreover, compared to manual advertising, A+SC controlled the fluctuation of conversion results within a relatively reasonable range, helping the brand achieve stable and continuous new product development effects.

In October 2023, Meta launched the first generative AI ad creative feature in its ad management tool. This feature opens a new era of creativity, maximizing the work efficiency, personalization and marketing performance of all advertisers. In May 2024, Meta launched enhanced generative AI features such as full image and text generation and more tools and services, and integrated new generative AI features into the Advantage+ Creative product, making AI more closely integrated in the entire marketing process such as content creativity and advertising, bringing a marketing effect of 1+1＞2.

For example, during the 2023 Cyber ​​Week shopping festival, the beauty and skincare brand Fresh not only used automated advertising products such as advanced empowering smart shopping ads (A+SC) and store ads (Shops ads) to optimize advertising delivery and purchase paths, but also conducted in-depth research on generative AI, using Meta's text generation function to produce a variety of creative copywriting, and promoting sales conversions by providing personalized advertising information.

This new marketing strategy and attempt has brought gratifying results to Fresh. The evaluation results show that from November 11 to December 2, 2023, by combining A+SC, store advertising and generative AI text generation functions, Fresh's return on advertising expenditure increased by 5.1 times and purchases increased by 42%.

3. Social media marketing, building a brand mind moat

In his book A Brief History of Social Media, British scholar Tom Standage systematically combed through the development and evolution of social media from papyrus letters thousands of years ago to the current Internet era, thus proving one point: social media is not a new invention of the Internet era. It originated in ancient Rome more than 2,000 years ago, which is closely related to human social nature. In the Internet era, social media has two important development trends: diversification of profit models and openness of social platforms.

Nowadays, social media has become the first channel for some consumers to "discover" and "buy", and more and more people are discovering and purchasing products on social media.

Data released by Statista in July 2024 showed that the proportion of global social e-commerce in retail e-commerce sales has increased significantly, and is expected to reach 22% in 2028. Social Media Examiner's 2023 online survey of global marketers showed that the growth rate of Facebook and Instagram in the future use of social media in global brand marketing is relatively fast.

FUNNYFUZZY, a new generation of overseas DTC brand, has been relying on the huge number of active users, rich layouts and material forms of the Meta social platform to drive traffic to its independent website and operate the brand since its establishment, and has embarked on a new path from traffic business to overseas brand.

In 2021, FUNNYFUZZY's official website was launched. For a new site, there was no traffic base. Therefore, placing advertisements on Meta to obtain traffic was the main means of attracting traffic. FUNNYFUZZY used Meta's excellent advertising algorithm to reach people who were interested in the product, and optimized the materials and pages through detailed feedback data, so that the ROAS of the product continued to improve.

In the view of Chen Shuo, founder and CEO of FUNNYFUZZY, the algorithm of e-commerce or search platforms is that users have shopping intentions and search with clear needs. Social platforms like Meta are discovery-based. When a brand has good products and ideas, it needs to use a large number of precise exposure methods to let more people know about it and achieve purchase conversion. At this time, Meta's advertising is the most direct and effective. These advantages enable it to help new brands quickly find potential users in the initial stage, verify whether the product meets user demands, and collect a large amount of user feedback on the product, and continuously transform the product, so as to run out and win the first stage of brand development.

In 2023, the FUNNYFUZZY brand gradually entered the growth stage. At this stage, the core strategy of FUNNYFUZZY is driven by fan growth. Find loyal fans through popular products and brand communication, tap into more needs behind them, and achieve continuous brand enhancement and performance growth. FUNNYFUZZY operates accounts on social media such as Instagram and Facebook more attentively, systematically carries out brand communication and community building, accumulates private domain traffic, and precipitates brand voice. The natural social attributes of the Meta platform and its large and active users also help FUNNYFUZZY obtain a lot of real product reviews and user feedback, many of which are even transformed into new design inspirations, which feed back to FUNNYFUZZY's product innovation and upgrades.

Regarding future growth, Chen Shuo said that Meta is still a very important growth position. The more important growth point in the next stage is to use the fans accumulated on Meta to carry out more diversified brand promotion, achieve the improvement of the entire brand system, further enhance the brand voice, and obtain a broader growth space.

Now, with the continuous development and evolution of social media forms, short videos are becoming a new trend in social media marketing.

A report by third-party research organization Wyzowl found that 91% of companies use video as a marketing tool; 82% of people said they decided to buy products or services by watching brand videos. According to Deloitte Insights, about 70% of Generation Z prefer to watch short videos rather than traditional TV shows and movies. This change in consumption habits has made short videos the main medium to attract this group of people. Harvard professor Thomas Kolopoulos talked about the book "The Circle Effect" in which Generation Z showed obvious social verticalization and labeling preferences in content consumption. They prefer to use external symbols and personality marks to identify their peers, forming niche circles with tight internal stickiness.

On Meta's platform, short video content is growing rapidly, with more than 3.5 billion people forwarding Reels content every day. Reels combines audio, visual effects and storytelling to effectively stimulate users' emotional resonance and achieve better marketing results. The survey shows that the use of Reels live-action videos can increase the cost of a single purchase by 11.5% and the cost of a single installation by 12%.

As short video marketing becomes popular, cross-border sellers can use Reels short videos to reach high-quality new audiences, trigger resonance, deepen connections with consumers, and drive business growth. Meta's short video social platform Reels is becoming a crucial frontier for brand marketing.

Conclusion

Today, a new wave of globalization is surging and in full swing. For Chinese cross-border sellers, only by achieving leapfrog development from Made in China to Chinese brands can they stand out in the fierce international market competition, take the lead, and move towards a new stage of "high-quality overseas expansion". As a social media platform and innovative marketing solution provider, Meta will always use its huge user base and advanced AI innovation technology to empower and protect the brand building of Chinese companies.

Author | Lian Meizhen Editor | Liu Jingfeng