Author | Lilith

Editor | Li Xiaotian

Everything in life is inseparable from industrial products.

The seasonal clothing you choose from your wardrobe, the buses and subways you commute on every day, as well as the computers and folders on your desk, are all finished industrial products.

China is the only country in the world that has all industrial categories in the United Nations Industrial Classification and occupies an important position in the global supply chain. Data shows that in 2023, China's exports of manufactured goods amounted to US$310.9232 billion, accounting for 92% of China's total goods exports.

The export of industrial products has become a new cross-border growth point in recent years.

Image source: Unsplash

It is worth mentioning that with the advent of the era of cross-border B2B e-commerce and the improvement of the global supply chain, enterprises are taking MRO industrial products as important materials to maintain their daily operations, and their purchasing demand continues to grow.

China's industrial products are characterized by their comprehensiveness, and this gives China a unique advantage in the MRO field. As a result, MRO industrial products have become a hot commodity in the "cross-border e-commerce of industrial products," attracting more and more sellers to join.

The E-commerce Institute of the Ministry of Commerce's International Trade and Economic Cooperation Research Institute released the "China Industrial Products Export Path Map" (hereinafter referred to as the "Report"), clarifying new opportunities for industrial product exports and cross-border e-commerce of MRO industrial products.

Image source: Amazon Business

How to seize the trillion-dollar market opportunity for MRO industrial products to go overseas? Xiaguangshe will provide a detailed interpretation based on the "Report."

The industrial product export track is a low-key "big player" in cross-border trade, known for its large scale and diverse categories.

Take a dress as an example - its production process may involve hundreds of different industrial products, from textile machinery to dyes, from sewing threads to labels, to plastic packaging, and more. Many industrial products are not directly visible to consumers but are an essential foundation for the creation and existence of countless consumer goods.

Today, why do we emphasize the general trend of industrial products going overseas again?

First, the global manufacturing export hub is continuously shifting towards Asia and Oceania. As a major manufacturing country, China can gain more opportunities from this trend.

When it comes to industrial products, many people's minds jump to brand names like 3M, Honeywell, and Grainger. Although the top list of industrial product competition has long been dominated by European and American companies, the global industrial landscape has begun to change since the 21st century.

After entering the 21st century, Asian countries such as China, Vietnam, and India have entered a stage of rapid development, with vast and relatively low-cost labor resources, giving them a competitive advantage in labor-intensive manufacturing. Meanwhile, the manufacturing industry in Europe and North America is facing challenges such as higher labor costs, market saturation, and slow economic growth, which are the root causes of the changing global industrial landscape.

Data speaks for itself. According to the "Report," the share of manufacturing exports from Asia and Oceania in global manufacturing exports has jumped from 34% in 2000 to 48% in 2022, while that of North America and Europe has fallen from 60% in 2000 to 46% in 2022.

Image source: "China Industrial Products Export Path Map"

With this trend continuing, industrial product exports will bring sustainable growth and prosperity to China and other Asian countries.

Secondly, China's leading position in global industrial product exports is particularly prominent, and its supply chain capabilities are improving year by year, aligning with the global trend of transforming the manufacturing structure towards higher value-added products and services.

According to the "Report," China's exports of manufactured goods accounted for 20% of the global total in 2022, compared to 10% for Germany, 5% for the United States, and 5% for Japan.

As the "World's Factory," China's rich supply chain and comprehensive industrial categories provide unique conditions for the production of industrial products.

The "Report" shows that China's exports of manufactured goods amounted to US$332.7602298 billion in 2022, accounting for 92.6% of China's total goods exports. China is the only country in the world that has all industrial categories in the United Nations Industrial Classification, and among the 500 major industrial products, more than 220 are produced in the largest quantities globally.

At the same time, China's industrial product supply chain capabilities are developing year by year, forming industrial clusters and transitioning towards innovation and high-tech, rather than staying at the stage of "OEM production." This aligns well with the trend of the European and American manufacturing industries transitioning towards higher value-added products and services.

Xiaguangshe has followed Amazon Business to visit industrial clusters in Luoyang, Xiamen, and Suzhou. Taking Suzhou as an example, it has made continuous breakthroughs and active transitions in the manufacturing field, giving birth to a series of high-tech industrial brands such as Puyuan Precision, EECO, Tineco, and Ribao Technology. Furthermore, Suzhou leverages its comprehensive industrial chain and supply chain system to promote high-quality industrial products globally through cross-border e-commerce, expanding export scales and demonstrating strong industrial agglomeration effects and innovation potential.

Thirdly, the market demand for industrial products is stable and substantial, providing sellers with opportunities to generate long-term profits.

Taking MRO industrial products as an example, some industrial machinery and equipment may not need to be replaced for several years or even decades, but during this period, customers require regular maintenance and repair services. For example, in the industrially robust North American and European markets, the demand for industrial products from enterprises is more sustained and substantial. These enterprises need to regularly purchase industrial products to maintain their operations, and suppliers can rely on the stable demand in these markets to generate long-term profits.

Additionally, many industrial products involve complex technologies and professional knowledge, allowing suppliers to achieve higher profit margins based on technical barriers. At the same time, this also means that customers are relatively less price-sensitive as they focus more on product quality and performance.

To quote an industry insider, "Instead of competing in the 'internal convolution' of consumer goods, it's easier to swim in the blue ocean of industrial products."

The "Report" shows that the global B2B e-commerce volume will continue to grow, with the global B2B e-commerce transaction size reaching US$23.433 trillion in 2023 and expected to reach US$37.129 trillion by 2027, representing a compound annual growth rate of 12.2% from 2023 to 2027.

With the expansion of the global B2B market, industrial products have transitioned from the traditional foreign trade stage to the cross-border economic era.

When discussing cross-border e-commerce for industrial products, the category that cannot be ignored is MRO industrial products.

MRO stands for Maintenance, Repair, and Operation and encompasses materials and services used to maintain, repair, and operate equipment in actual production processes without directly contributing to the product itself.

Image source: "China Industrial Products Export Path Map"

If you have a restaurant, home appliance store, and clothing store next to each other, MRO would be the small but comprehensive hardware store in the corner. MRO typically refers to industrial products that are not raw materials for production, such as refrigerators in restaurants, carts in home appliance stores, and packaging bags in clothing stores. They are essential for maintaining the daily operations of enterprises but do not directly participate in the production process.

The "Report" points out that MRO is the primary category in cross-border e-commerce for industrial products. Moreover, digitization is the main trend in the development of MRO industrial products. Currently, the global annual compound average growth rate of MRO digitization is 13%.

MRO industrial products cater precisely to the digitalization and online demands of both buyers and suppliers, becoming a new path in the cross-border era of industrial products.

During the traditional trade period, MRO transactions were a headache for both buyers and suppliers.

For example, if you are the owner of a cold drink shop, the refrigeration equipment you purchased with a significant investment might suddenly malfunction. In the era before cross-border e-commerce, you would need to urgently contact multiple suppliers or visit hardware stores to find suitable parts, potentially delaying your business regardless of the outcome.

As an MRO supplier, you would also find that MRO industrial products have a vast number of SKUs, making inventory management difficult and demand alignment between buyers and suppliers challenging. Furthermore, during the traditional foreign trade period, there were multiple channel levels, and prices were not transparent. The profits from the products you worked hard to sell might be peeled away layer by layer, with only "middlemen earning the difference."

Today, the digital and online business procurement model provided by cross-border e-commerce can significantly improve transaction frequency and efficiency for sellers, reduce intermediary links, and more efficiently align supply and demand.

Specifically, buyers can easily compare products and prices from different suppliers to quickly find the required parts. Suppliers can utilize data analysis tools to optimize inventory management, reduce backlogs, and lower storage costs. Simultaneously, a transparent pricing system and direct transaction methods enhance trust between buyers and sellers, laying the foundation for long-term cooperative relationships.

Which cross-border e-commerce platform is more friendly to MRO industrial product sellers?

The "Report" analyzes the pros and cons of independent websites, information matching platforms, and cross-border B2B e-commerce platforms from four dimensions: infrastructure, traffic conversion, professional services, and customer experience.

Based on a comprehensive analysis of the "Report," cross-border B2B e-commerce platforms, represented by Amazon Business, perform relatively comprehensively, helping sellers reduce costs, improve efficiency, and enhance brand influence through various aspects such as logistics, payment, and data analysis.

Chongqing Shenchi Electromechanical Co., Ltd. specializes in general-purpose machinery products, a relatively niche category. However, it has unlocked more B-end customers through Amazon Business. In 2023, Shenchi Electromechanical's total sales on Amazon amounted to nearly RMB 30 million, representing a year-on-year growth of nearly 100%.

According to Mr. Xie, head of Shenchi Electromechanical's General Machinery Business Department, after Shenchi set up enterprise pricing and quantity discounts on Amazon Business, the first order was quickly closed, and the entire process was natural, highly efficient, simple, and fast.

Image source: Shenchi Electromechanical

"Initially, we only regarded Amazon Business as an additional traffic entrance. Later, under the professional guidance of the account manager, we began to carefully plan our strategy. By setting reasonable tiered pricing and discount prices, we were surprised to find that Amazon Business attracted many high-quality B-end customers," said Mr. Xie.

As a buyer, ExxonMobil, one of the world's largest publicly traded oil and petrochemical companies, also acknowledged Amazon Business's role in simplifying procurement processes. "Our company has a wide range of main products and significant procurement needs for components with different specifications and parameters, leading us to spend considerable time on supplier management, procurement cost control, and more... Amazon Business effectively enhances the automation of these daily purchases. On the Amazon Business website, we can quickly find cost-effective products, greatly simplifying the transaction process," they said.

If industrial product exports are a blue ocean, MRO industrial products are an emerging track within that ocean.

The "Report" shows that the global MRO industrial internet is still in its early stages. According to estimates by CICC, the internet penetration rate of leading MRO enterprises in China was less than 0.5% in 2022, while that of leading enterprises in mature markets such as Europe, America, and Japan exceeded 5% in 2021. This indicates that now is an opportune time to enter the MRO industrial product market.

The "Report" identifies six key nodes and success factors for cross-border e-commerce in industrial products: market research and positioning, flexible and efficient supply chains, compliance risk prevention and control, professional talent support, product innovation and customer outreach, and brand building.

Jiangsu Jingchuang Electric Co., Ltd. (hereinafter referred to as "Jingchuang Electric") specializes in AI instrumentation tools and cold chain monitoring control systems, addressing a niche category within MRO industrial products. Jingchuang Electric joined Amazon in 2015 and opened Amazon Business in 2016, retracing the successful path of cross-border e-commerce for industrial products.

Firstly, at the initial stage of its launch, Jingchuang Electric spent considerable time conducting market research and determined to focus its cold chain products on scenarios such as pharmaceuticals, food, precision instruments/equipment, museums/computer rooms, and refrigerated packaging factories. Taking pharmaceuticals as an example, the British and German governments have strict requirements for pharmaceutical regulation, and enterprises must provide all temperature control records within a specific period to ensure the quality and safety of pharmaceuticals. The increasing demand for cold chain equipment in these scenarios has brought opportunities for Jingchuang Electric.

Source: Jingchuang Electric

Secondly, Jingchuang Electric excels at leveraging digital tools on the platform to facilitate transactions, making the supply chain more flexible and transactions simpler. Earlier this year, Jingchuang Electric promptly responded to a large procurement request for temperature control recorders from a major B-end customer on the UK site, engaging in counter-offers and quotations. Ultimately, a large order worth 70,000 pounds was secured, encompassing over 1,000 units.

Thirdly, Jingchuang Electric places great emphasis on technological innovation as the core driving force for development. Building upon this foundation, it utilizes tools such as reviews to gather customer feedback and iteratively improve its products through innovative thinking.

Cindy, the Operations Director of Jingchuang Electric USA, cited an example. Previously, the company developed a temperature and humidity recorder with a standby time of 7 days. "We believed that the standby time should be sufficient to meet customers' normal usage needs," but many customers feedback that "they hoped for an even longer standby time." Consequently, the company internally iterated on the product, extending the standby duration to two months, resulting in a nearly halved return rate.

Lastly, through precise market research, flexible supply chain management, and continuous technological innovation, Jingchuang Electric has not only successfully met customer demands but also significantly enhanced its brand reputation, realizing the internationalization of MRO industrial products.

In fact, as the penetration rate of the global MRO industrial internet gradually increases, Jingchuang Electric's success is not an isolated case but a microcosm of the industry's overall development trend. For instance, Zhuoshi Technology, specializing in optical fiber fusion splicers and cutting machines, has iterated its products through Amazon Business, raising the average order value. Meanwhile, Kefeiya, primarily engaged in steel furniture production, has designated its smart factory as a dedicated production facility for cross-border e-commerce supplies within just one year of joining Amazon, supporting customized flexible production to better serve customers...

Furthermore, Amazon Business has provided a strong impetus for MRO industrial enterprises like Jingchuang Electric.

As stated in the report, cross-border e-commerce plays a crucial role in expanding global markets for industrial products, precisely matching supply and demand, reducing transaction costs, enhancing digital capabilities, and accelerating product innovation. It has transcended the limitations of traditional trade by enabling direct connections between sellers and global buyers.

Source: Amazon Business

At this year's Amazon Business Annual Forum, Amazon Business announced the launch of the 'Amazon Business Industrial Goods Global Expansion Incubator.' With the initiation of this program, more industrial enterprises will receive comprehensive support ranging from market research to brand building.

Through the 'Global Expansion Incubator,' Amazon Business will assist industrial goods sellers in enhancing their awareness, product capabilities, brand strength, and operational efficiency. It will also delve into 60 industrial clusters across China, focusing on 100 core industrial product categories, and incubate 500 high-value industrial goods brands for global expansion, supporting enterprises in achieving simultaneous success in both the B2B and B2C cross-border e-commerce segments.

The trillion-dollar market for the internationalization of MRO industrial goods awaits visionary and courageous explorers.