🏭 Should Amazon Sellers Abandon China?

🏴‍☠️ ANOTHER DONE FOR YOU SCAM BITES the DUST

Wealth Assistants promised to manage Amazon stores for investors in return for a minimum $35,000 upfront and a share of income.

They handled sourcing, customer service, and shipping, guaranteeing a first-year break-even with money-back assurance.

Many invested heavily, lured by the promise of easy profits. However, in October, the company collapsed, citing supply chain issues and economic downturn.

One seller took out second mortgage and sent the company $55k in September 2022, but his store only made about $15k in gross sales.

You know what they say about offers that sound too good to be true ...

🏭 CHINA has PROBLEMS - MIGHT BE TIME to LEAVE

China is still the world’s factory. It has massive natural resources and is a well-oiled machine when it comes to physical product production and logistics.

But don’t let the shiny new high rises, advanced payment systems and modernization fool you. It has more debt than the USA and Europe combined.

China is in trouble - big trouble. And you need to pay close attention if you manufacture goods there. For starters, the USD has appreciated 19% against the Yuan - are you asking for price adjustments from your supplier?

Many top experts, including BDS Dream 100 member Steve Simonson, who has been sourcing in and visiting China for decades, and at one point was importing hundreds of containers per month from China, says the writing is on the wall.

Amazon sellers are increasingly avoiding China as a manufacturing hub due to concerns about safety, government monitoring, supply chain difficulties, and geopolitical tensions, leading to a shift towards other Asian nations and potential onshoring in the United States and Mexico.

Start planning to get out now he says, or at some point in the near future (as little as one year or at most 10 years) you and your business will probably be sorry you didn’t. In fact not doing so could potentially bankrupt you.

It has gotten so bad, that Steve and many other top sourcing executives no longer feel safe visiting China. It’s becoming a No-Go Zone for executives, and foreigners are thinking twice about business trips to the country after Beijing has barred some from leaving and is admittedly monitoring your every move.

Steve says many sellers either dismiss the threats or are not fully up to speed on what is happening so they can make their own informed decisions.

Alibaba sees the writing on the wall too. It is making aggressive moves to expand beyond being known as just a source for finding Chinese suppliers.

China may inevitably catch up to the U.S. in absolute GDP. But its creativity will never match America’s, because its culture does not permit a free exchange and contest of ideas. Over 40% of the population aged 16-24 is unemployed.

According to a YouGov survey, those considering China an "enemy" of America grew to 80% in Aug 2023, up from ~39% in the same month in 2017, while those considering the country an "ally" shrunk to just 8.7% as of August.

On the other hand, a separate poll saw a surge in positive attitudes towards the US amongst Chinese citizens: in April 2022, over 80% of Chinese respondents viewed the US as an enemy; by 2023, this figure had fallen to less than 50%.

Social scores are also being applied to foreigners, who it is believed are watched and listened to everywhere they go in China (that includes phone calls, texts and online). Fake food and painted black pigs are pervasive (listen to this podcast for an insightful explanation, or watch it on Youtube).

Trust and integrity are not part of the Chinese way. Cheating when possible is part of Chinese culture. The Chinese proverb "if you can cheat, then cheat" is translated from the phrase "能骗就骗" (Néng piàn jiù piàn). This phrase has been subject to discussion and interpretation, but the literal translation suggests an encouragement to cheat whenever possible.

Over the past three decades, China experienced a significant economic supercycle, driven by a relentless focus on manufacturing growth and consumption.

This growth not only boosted China's global influence but also supported the global economy, with countries and businesses, including those in the U.S., banking heavily on China's rapid modernization.

However, the Chinese Communist Party (CCP)'s policies led to major issues like a property market bubble, excessive local government debt, and an overreliance on investment.

Despite these challenges, the CCP did not make the necessary economic corrections, prioritizing growth above all.

Recently, under Xi Jinping's leadership, China's focus has shifted from economic growth to national security and power, affecting its governmental priorities and international behavior.

This change means no significant economic stimulus is expected to counteract potential recessions, and the explosive growth previously anticipated from China is unlikely to return any time soon.

This shift impacts not only Chinese businesses but also international companies, including those in America, leading to reduced demand, unstable supply chains, and a more challenging diplomatic landscape.

The Chinese economy faces a complex future, balancing the need for economic stability with the CCP's increasing emphasis on national security and power, signaling a new era in China's global role and its relationship with the rest of the world.

China's billionaire class is increasingly seeking to move their wealth and themselves out of the country. The number of ultra-wealthy individuals in China is declining, with Forbes reporting a decrease from 607 billionaires last year to 562.

Despite strict official limits on foreign currency transfers, wealthy Chinese have found various means to move their funds abroad, such as through Hong Kong's less restrictive financial system or by investing in overseas businesses.

This shift represents a significant departure from the entrepreneurial freedom of the 1990s and early 2000s. High-profile cases like Alibaba founder Jack Ma's disappearance after criticizing regulators and the arrest of Hui Ka Yan, founder of Evergrande, underscore the increasing risks for China's wealthy.

How does all of this affect you, the Amazon seller sourcing in China?

This podcast should be mandatory listening for every Amazon seller sourcing in China, or planning to visit in the near future.

Just a few of the points:

• Amazon sellers should be cautious when discussing China when there

• China is a chaotic place not to be trusted for manufacturing.

• Vietnam emerges as a viable alternative to China for manufacturing.

• India lacks the manufacturing base and infrastructure to be a major manufacturing hub.

• Exposure of compliance issues and slave labor in China's supply chain

• Small businesses in China are facing financial pressure and bankruptcy

• There are parallels between the current situation and the fall of the Soviet Union.

• Former head of global worldwide at Amazon, Jeff Wilke, is promoting the idea of onshoring manufacturing, including Mexico.

• There is a manufacturing renaissance happening in the United States, with abundant raw materials, power, and skilled labor.

• Turkey is a good opportunity despite geopolitical challenges

• NEGOTIATE! Price, currency, and other terms are negotiable due to China's desperation for orders
  

Last Wednesday evening more than 300 Amazon sellers and internet marketers gathered in Austin for an incredible Holiday Experience hosted by Kevin King, Amy Wees, Chelsea Cohen and David Gonzalez.

A silent auction during the event raised more than $10,500 for Watts of Love and will make a huge impact in the lives of 1,470 people.

When you become successful, one of the best things you can do is give back. Hopefully those of you that were not in Austin are doing your part to help someone in need this holiday season.

MARK YOUR CALENDAR NOW - OCT 14, 2024

Amazon “Unboxed” is coming to Austin, Texas instead of New York next year – October 14-16 to be exact. On October 14, you’ll be able to join us if you dare for an evening where ghouls mingle and spirits soar – a spooktacular ecommerce networking event that promises otherworldly wonders!

🇨🇳 CHINESE SELLERS on the RISE

Despite a lot of action against Chinese-based sellers in the past couple of years to weed out bad actors and cheaters, the percentage of Chinese-based sellers on Amazon marketplaces continues to rise.

In Canada alone, 58% of all sellers on Amazon are based in China.

There are 10 categories in particular China-based sellers on the US Amazon marketplace prefer. 54% of all sellers in “Clothing, Shoes & Jewelry” are based in China. Some sub-categories like “Dresses → Club & Night Out” are 97% Chinese sellers and in “Women's Sunglasses” 85% are China based.

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🕍 ASGTG in BROOKLYN 3 WEEKS AWAY

More than 1,000 sellers are expected for this one-day event in Brooklyn on January 10. Outstanding networking with top Amazon sellers and lavish food all day, including breakfast, lunch, and dinner.

There will be more large sellers in one place than any other event. A few years ago, info from inside Amazon revealed 7% of worldwide sales on Amazon come from one postal code in Brooklyn, NY where ASGTG is held.

I first spoke at the event in 2017, and this year will be my sixth time speaking. If you can make it, use the promo code “KevinKing15off” for a discount on your ticket (I’m not an affiliate). If you can’t make it, there is a live streaming option available that also includes the recording of previous events.

Want to be featured in this section? Use your referral link in this email to refer at least 10 active subscribers, then email me to get your event, course, webinar or tool “Shouted-Out” free to 6,500+ very active subscribers.

✌🏼 I hope your sales have reached an all time daily high as last minute shoppers scurry about adding to cart.

See you again on Thursday …

The answer to today’s STUMP BEZOS is
“#1 is Reward”