6. Spillover effect in Huaqiangbei and GNP concept

There will be a spillover effect when Huaqiangbei develops to a certain stage. Talent, brands, technologies, capital, models, and concepts will be exported, spread and copied. SEG plazas emerged across China a few years ago. Here I want to discuss GNP (Gross National Product), i.e. Gross Domestic Product (GDP) plus net factor incomes from abroad, mainly overseas incomes from capital, technologies, management, labor remuneration, which is the main feature of internationalization. We have to learn from Japanese and South Korean companies, which encountered similar difficulties as we do now. Due to natural resources and market size and other endowments, Japan's former richest man, Uniqlo's owner, Mr. Tadashi Yanai, moved the focus of business overseas to hedge against the low desire domestic market. A few years ago, Uniqlo opened 866 shops in Greater China, more than 813 shops in Japanese market. Uniqlo's revenue in Greater China is nearly RMB 28 billion in 2022. I know Uniqlo because of the sexual scandal, and I ever bought casual trousers in Uniqlo Huaqiangbei shop. Samsung’s overseas mobile phone sales are much higher than its domestic sales. Transsion, G5 and One Plus arising from Huaqiangbei successfully expanded overseas market. Transsion Holdings (688036.SH) released its semi-annual financial report on August 28, 2023, recorded revenue of RMB 25,029 million with a year-on-year growth of 8.31%, net profit of RMB 2,102 million with a year-on-year increase of 27.10%. Transsion mobile phones with AI beauty technology improves the recognition of the selfies of African users. That’s why their products are popular in Africa.

“Slkor, Silicon Carbide Expert” Profile

Huaqiangbei Shiqiang Song believes that Huaqiangbei is a thoroughly tempered node of the international electronic information hardware supply chain, and its semiconductor industry chain covers the whole world, connecting with the overseas market in all aspects. The electronical components and parts are characterized as small volume with high value, high standards and accurate models, and easy storage and transportation. The merchants in Huaqiangbei used to serve customers around China, now they can serve the customers from Southeast Asia and even the world. It is natural for the companies in Huaqiangbei to expand overseas markets.

Vietnam, India, Cambodia, Indonesia, the Philippines and other Southeast Asian countries obtained many low-end production capacities of the manufacturing industry by virtue of their low labor costs and other advantages. China's manufacturers are also actively expanding overseas markets. TP-LINK, T&W, Longhorn, Hottech, SDG, and Skydragon has built plant in Shenzhen-Hai Phong Economic Cooperation Zone of Vietnam. Recently, a large number of Chinese enterprises have started investing in Mexico and South America. These enterprises are upstream and downstream customers of Huaqiangbei. Companies in Huaqiangbei can take the opportunity to expand overseas markets.

Internet trading platforms such as hqew.com, lcsc.com, ickey.cn, and ichunt.com are equivalent to a virtual Huaqiangbei in the Internet space. Customers can find and purchase the products they need online. These platforms all have their overseas version. International platforms such as digikey.cn and mouser.cn, together with international integrated platforms such as alibaba.com aliexpress.com and Amazon, all can support transactions around the world. In addition, current information technology, digital technology, and translation software make it so easy to sell products abroad. My friend in Chengdu, Brother Wei, whose English is poorer than mine, uses iFLYTEK translation software to arrange for four Pakistani female employees to sell their "Henglitai" microwave RF devices, vying for the market share of Kinghelm products.

Introduction of Huaqiangbei business expert Shiqiang Song

To be continued...