General

Fragmentation of foreign trade orders has become a trend, at least for most small and medium-sized foreign trade enterprises. The "fragmentation order" here refers to small orders and short orders.

This is a new change in the international market formed after years of economic crises in Europe and America. There are many reasons for this change, but I think there are still three main ones. Firstly, the demand in the international consumer market has become more personalized, and consumers have become unwilling to compete with others. They are more pursuing unique and personalized consumer goods, and the changes in terminal demand are affecting their upstream supply chain. Therefore, foreign importers also require small orders, short lead times, and diverse styles when purchasing; Second, foreign importers have become more "obsessed" with "de stocking". Under the circumstances of changeable market demand and difficult situation to grasp, high inventory is a ticking time bomb scenario for importers, which will bring huge risks at any time, while small and short purchase orders can avoid the risk of high inventory; Third, after the global financial crisis, "cash flow" has become the most important issue for global trade circulation enterprises, because within a few years after the outbreak of the financial crisis, there are countless enterprises in the world that are "doomed" because of the rupture of the capital chain. In this context, "short, frequent and fast" fragmentation orders can speed up their cash flow for foreign importers, so as to avoid capital risks.

In fact, for many enterprises, "fragmentation foreign trade orders" are not popular, and even people will feel a pain: if they do not accept such orders, they are afraid of offending customers; If such orders are accepted, the factory will have a lot of trouble in production and cannot produce in bulk.

As far as I know, there are still many companies in China who are unwilling to accept such "fragmentation orders". Some companies refuse to accept even if they have no orders, because they always feel that this is not their "dish".

But what I want to tell you is that unless you are a powerful company or engaged in bulk commodity trade, "fragmentation orders" will be the reality you must face from now on.

"Fear of trouble" is an important reason why many enterprises refuse "fragmentation foreign trade orders", but how can there be any business in the world that can make money by closing its eyes?

In fact, things always have two sides. Although "fragmentation orders" are troublesome in terms of production and shipment, they also have an attractive side: they tend to be low risk and high profit.

A friend from a foreign trade enterprise told me that his company has received over 100 orders so far this year, but the total sales revenue is only over 2 million US dollars. The vast majority of these foreign trade orders are small, with the smallest orders only around $1000 and most of them being orders worth $10000 to $20000. However, the company's current profit margin is over 5 million RMB, and the profit margin for each order is very high, with some even reaching 100%.

According to the current market situation in the foreign trade industry, a gross profit of around 10% is a common situation for foreign trade enterprises. To achieve a gross profit of 5 million yuan, at least an order of around 50 million yuan needs to be made. To achieve the same profit, the risk of large orders is naturally much higher, the cash flow of the enterprise also needs to increase significantly, and there are also many other hard costs such as labor.

Adapting to change is the way for enterprises to survive. At present, the trend of fragmentation of foreign trade orders cannot be reversed, so foreign trade enterprises should adapt to this trend.