0:00

Have you ever heard of China

0:02

New South City? Probably not, but

0:04

if you're an Amazon seller, you should

0:06

know about it. China South City

0:08

is located in Shinjin China and

0:10

is basically what I would call

0:13

the Mecca of Chinese Amazon sellers.

0:15

It's a huge, literally huge

0:17

office building slash shopping mall

0:19

where nearly every single one

0:22

of China's largest Amazon cellies

0:24

either has an office or

0:26

has had an office. Now I

0:28

don't really want to compare it to the Pentagon,

0:30

but that's probably the closest comparison I

0:32

can give. China, New South City, first

0:34

off, don't think about the word city, it's

0:36

not really a city, it's just a building,

0:39

but it's basically the size of like the

0:41

Pentagon divided by four. It's a massive building.

0:43

Now you know how some people think that

0:45

COVID came from a laboratory in Wuhan,

0:47

and it used to be the conspiracy

0:49

theories, but now it's kind of become

0:52

a mainstream thing? Well, regardless. China South

0:54

City is essentially the Wuhan laboratory of

0:56

every Amazon marketing tactic you know, whether

0:59

it's white hat or black hat. So

1:01

a few weeks ago I had the chance

1:03

to visit China South City in

1:06

Shinjin China and in this podcast

1:08

I'm going to give you a

1:10

quick little rundown of what the

1:12

Mecca of Chinese Amazon sellers looked

1:15

like. what they're up to, what

1:17

kind of tactics they're using, and

1:19

what you as a Western Amazon

1:22

seller can take away to your

1:24

business. Ready to start and grow

1:26

your own profitable e-commerce brand? This

1:29

is the e-com crew podcast, the

1:31

web's most transparent podcast, where we

1:33

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1:36

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1:38

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1:41

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1:43

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1:46

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Seriously, make boring work for you. Okay,

2:20

so like I mentioned China South City

2:22

is located in Shinjin China in a

2:24

district called Pingshan Now if you're not

2:26

familiar with Shinjin Shinjin is right on

2:29

the border with Hong Kong in southern

2:31

China Now Shinjin has been the capital

2:33

of e-commerce in China basically ever since

2:35

e-commerce became a thing so Shingen in

2:37

a lot of ways is kind of

2:40

like the Silicon Valley of China. Now,

2:42

whereas in San Francisco you don't necessarily

2:44

have a lot of e-commerce sellers in

2:46

the tech hub of America, in China

2:49

it's a little bit different. So Shingen

2:51

is the capital of basically every technology

2:53

company and e-commerce companies are rolled into

2:55

that. So most of the largest e-commerce

2:57

sellers have offices in Shingen and on

3:00

top of that, most of them have

3:02

offices in this building called China South

3:04

City. So China's South City is really

3:06

far away from the glamorous Ritzy downtown

3:08

core of Xinjiang. So if you've never

3:11

been to Xinjiang, you should because Xinjiang

3:13

is in a lot of ways kind

3:15

of like Dubai of Northeast Asia. However,

3:17

China's South City, it's about 60 to

3:20

90 minutes away from that downtown core.

3:22

So it's kind of in the industrial

3:24

area of Xinjiang. It's not in this

3:26

Ritzy part of Xinjiang. Now as you

3:28

pull up to China South City and

3:31

you look at it from the outside,

3:33

It looks just like a shopping mall.

3:35

And so when I had a couple

3:37

friends tell me, hey, you know what

3:40

Dave, you should go check out China

3:42

South City, and I took their advice,

3:44

and I took a taxi down to

3:46

China South City, and I get to

3:48

this massive shopping mall. thinking, why did

3:51

you send me here? So you pull

3:53

up to this master building, it looks

3:55

like a shopping mall, you get in,

3:57

and it looks like a shopping mall.

4:00

So the first two floors of this

4:02

building are essentially a shopping mall. It

4:04

has all of your main luxury design

4:06

stores that you would expect, it has

4:08

your KFCs, your coffee shops, all of

4:11

that. However, once you get past the

4:13

first two floors, and you start working

4:15

your way up to the third, fourth,

4:17

fifth, sixth, seventh, seventh, eighth, ninth, ninth,

4:20

tenth, tenth, tenth, tenth, tenth, tenth, tenth,

4:22

tenth, That is where the Amazon Chinese

4:24

seller magic happens. And that's where all

4:26

these Chinese sellers are based. So this

4:28

massive building is about 10 floors, and

4:31

like I mentioned, floors 3 to 10ish

4:33

are all Amazon sellers. Now, when I

4:35

was there, it's hard to nail down

4:37

exactly how many Amazon sellers were there,

4:40

but basically every single office space was

4:42

for an Amazon seller, or at least

4:44

an e-commerce seller, and it was definitely

4:46

hundreds of different sellers. Now that number

4:48

is gone down a lot and I'll

4:51

explain here in a few minutes why

4:53

that number is so much smaller now

4:55

that it used to be two or

4:57

three years ago. So the first question

5:00

is, why does the Chinese Amazon seller

5:02

laboratory of Shinjin exist? Well if you've

5:04

ever been to China you know that

5:06

for the most part similar industries tend

5:08

to kind of bubble together. So if

5:11

you're a toy seller and you're looking

5:13

for toy manufacturers, well most of them

5:15

are around a province called Jjjang. If

5:17

you're selling auto parts like I am.

5:20

Most of the sellers are in a

5:22

province called Anhui. And when it comes

5:24

to Amazon sellers, well, they congregate together

5:26

too, and they're mostly located in Shenzhen.

5:28

So the fact that all e-commerce sellers

5:31

are kind of together in like this

5:33

one geographic area, not that surprising, but

5:35

the fact that they have a single

5:37

building where most of the largest companies

5:39

have offices, that was a little bit

5:42

surprising. Now speaking to people, some people

5:44

believe that the Chinese government was subsidizing

5:46

China South City to some degree, some

5:48

people didn't think they were, but one

5:51

thing is clear, the Chinese government overall

5:53

is subsidizing a lot of growth for

5:55

e-commerce in China. And why? Because China...

5:57

loves Amazon sellers because they're exports. When

5:59

you're an Amazon seller in China, you're

6:02

exporting all your products. And basically every

6:04

single government in the world loves exports.

6:06

So these Amazon sellers are getting help

6:08

from the government in one way or

6:11

the other. Whether or not China South

6:13

City is subsidized or not, kind of

6:15

unclear, it did seem to be. a

6:17

more popular thought than not that, yeah,

6:19

the Chinese government was subsidizing it to

6:22

some degree, whether it's tax breaks or

6:24

something else. Most did believe that it

6:26

was subsidized in some portion. A big

6:28

example of this came when I was

6:31

touring one of the streaming spaces, which

6:33

I'll get into in a second, and

6:35

the main kind of tea drinking room

6:37

in the streaming space was basically just

6:39

dedicated for Chinese communist officials. So one

6:42

of the people working there was telling

6:44

me a little bit about it. He

6:46

says, you know what, if this was

6:48

just like... your average worker tea drinking

6:51

space, it wouldn't like anything like this,

6:53

but we basically set this up to

6:55

impress the Chinese communist officials when they

6:57

come by and check out where their

6:59

tax dollars are going. So regardless of

7:02

where the money for China South City

7:04

was coming from, one thing was clear,

7:06

and that was the fact that having

7:08

all of these sellers together in one

7:11

building was just incredibly productive and positive

7:13

for the sellers there. So Western e-commerce

7:15

sellers, we all like to poo-poo on

7:17

China and Chinese sellers for just being

7:19

all black out, and that's the only

7:22

reason why they can succeed. But China's

7:24

South City is really an example of

7:26

the other reality. Sometimes Chinese sellers just

7:28

have better tactics, and the Chinese government

7:31

has better initiatives to support their e-commerce

7:33

sellers. So in this case, Chinese sellers,

7:35

and maybe the Chinese government, knows that,

7:37

you know what, if you put a

7:39

bunch of e-of e-commerce sellers together in

7:42

the same building, well, and learn from

7:44

each other and grow from each other.

7:46

It's basically like the world's largest Amazon

7:48

mastermind happening seven days a week. Now

7:51

if you think about you as a

7:53

Western seller, how many networking events do

7:55

you go to in a year? Maybe

7:57

one, maybe two, maybe none? You're definitely

7:59

not. doing it every single day. But

8:01

here at China South City, it was

8:04

basically a seven day a week

8:06

mastermind happening every single day of

8:08

the week. And I can see just the

8:10

power of having all these sellers

8:12

based together on one building firsthand.

8:14

So it is worth mentioning that a lot

8:16

of the sellers were still relatively secretive

8:19

about what they sold. So you walked

8:21

into one of these office buildings or

8:23

office spaces. They didn't really necessarily want

8:25

to tell you every single thing that

8:27

they sold. There was still a little

8:29

bit of secrecy there, kind of like

8:31

we have in the West. But people

8:33

were extremely friendly and open and everybody

8:35

had an open door and almost all the

8:37

sellers knew each other or at least knew all

8:40

the other sellers on the same floor. So there

8:42

was a lot of networking back and forth. So

8:44

the guy that was giving us a tour, he

8:46

walked into every single Amazon seller's

8:48

office there and just said hi

8:50

and showed us around the space

8:53

and their offices, introduced us to

8:55

employees, and no one batted an

8:57

eye. Think about that same scenario in

8:59

the West. Imagine somebody just walks

9:01

into your office and brings a

9:03

couple of friends or a couple

9:06

of LaWai, white guys slash Westerners,

9:08

into their office and starts touring

9:10

around your office. Not going to happen,

9:12

at least not going to happen without

9:15

you calling the police. In China though, or

9:17

at least in China so city, this was

9:19

the case. You could walk into anybody at

9:21

its offices and they were all extremely eager

9:23

to talk to you and tell you about

9:26

their business, maybe not their products, but tell

9:28

you about their business, and also share some

9:30

strategies. So yeah, there are some black

9:32

hat things which happened in China and in

9:34

a place like China so city, which I'll

9:37

get to in a second. But let's just

9:39

be real for a second, right? Like it's

9:41

really easy to say that, hey, that guy's

9:43

beating me because he's a dirtier and not

9:45

playing by the rules. That might be a

9:47

small, small fraction of it, but you know,

9:49

there are just overall strategies which

9:52

the Chinese e-commerce community is doing

9:54

better than we are in the

9:56

West. So what exactly happens

9:58

in China South City? Well, off of

10:00

China's South City, let's again skip by those

10:02

first couple floors, which are shopping mall for

10:04

the other eight floors. Roughly three quarters of

10:07

it was being used as office space by

10:09

Chinese sellers, and about a quarter of it

10:11

was being used for warehouse space. It was

10:13

really kind of weird that you would basically

10:15

be using the 10th floor of an office

10:17

building as warehouse space, but they were. They

10:19

would load up pallets and pallets worth a

10:21

product and go into the service elevator and

10:23

go into the service elevator and load them

10:25

up and down. 10 stories of that building

10:27

each and every day. It was crazy. I

10:29

can't imagine that ever happening in Canada or

10:32

the US warehousing product on the 10th

10:34

floor of an office building, but hey,

10:36

that's how it works in China. Now

10:38

in the office space, why don't they

10:40

have so much office space? Well, I

10:42

guess that was a big distinction between

10:44

Western sellers. So in New South City,

10:46

even if you're a seller or a

10:48

few million dollars, it wouldn't be uncommon

10:50

for you to have dozens of employees.

10:52

And that was one advantage

10:54

that Chinese sellers definitely had

10:56

there is that they were able to

10:59

hire lots of local people because salaries

11:01

are still relatively low in China,

11:03

and they don't need to outsource to

11:05

the Philippines like we do in the

11:08

West. So in the West, you know,

11:10

it's really hard to have all

11:12

of your stuff based in America or

11:14

even Canada. So in America, you might

11:17

pay $80,000 a year. for a decent

11:19

digital marketer in China. It's a

11:21

small fraction of that. You know, it's

11:23

anywhere from probably 20 to 40,000 dollars

11:26

a year. Now, it's a little bit higher

11:28

than in the Philippines, but it's pretty

11:30

comparable to the Philippines. So it's a

11:32

big advantage that these Chinese sellers have

11:34

is that they can hire their staff

11:37

locally. And you can say what you

11:39

want about remote work. I've seen it

11:41

firsthand. Like, people working in an office

11:43

together. They're much more productive. are much

11:46

more efficient working together in the

11:48

same space than working remotely from

11:50

your own home, especially in the

11:52

Philippines where you have probably 14

11:54

cows moving outside your door and

11:57

38 family members all sharing one

11:59

tiny apartment. like you're just much

12:01

more productive working together in an

12:03

office and the Chinese sellers here

12:05

in China South City they have that

12:08

advantage. All of their staff were in

12:10

one area and they were paying them

12:12

relatively low wages compared to one

12:14

in the West. Now I mentioned also

12:17

that sellers were using a big portion

12:19

of their space as basically warehousing

12:21

and What they were doing is they

12:24

would bring in a good portion of

12:26

their products before they would send it

12:28

to FBA and they would open every

12:30

single box and inspect every single item

12:33

looking for defects and other problems which

12:35

might occur for a customer. So it was

12:37

really eye-opening talking to these guys. And

12:39

I said, why are you doing that?

12:42

They're like, well, we're going to get

12:44

killed our return rates if we don't

12:46

inspect all these products. And if we

12:48

can reduce our return rates, well, this

12:50

is well worth it. And think about

12:52

yourself as a Western seller. What percentage

12:54

of your products are you inspecting? 5%

12:56

maybe? 3%? The 0%? It's probably not

12:59

100%? And to be fair, these Chinese

13:01

sellers weren't inspecting. but they were inspecting

13:03

a lot more than your average Western

13:05

seller and they were doing it in

13:07

person at their offices and just making

13:09

sure that they caught any major defects

13:11

before they got sent to FBA and

13:14

before they got sent to Amazon customers.

13:16

Okay, so I've been a bit of an

13:18

apologist for the Chinese sellers here. Basically, you

13:20

try to say, the only reason they get

13:22

ahead is because they're better than Western sellers.

13:25

Well, it's just partially true, but there's also

13:27

some other shady things which happen as well.

13:29

So let me get into that for a

13:31

moment. In terms of shady, the most shady

13:33

thing, which happened actually happened about two or three

13:36

years ago. So in 2021, right around

13:38

Black Friday, Cyber Monday. as some of

13:40

you may recall, Amazon did a massive

13:43

account suspension sweep and they basically banned

13:45

thousands of sellers for review manipulation. And

13:47

we just sent an article actually

13:49

on econ crew about this, really good article,

13:51

go check it out, detailing how some of

13:54

these sellers have been out back and they're

13:56

even going public on the Hong Kong stock

13:58

exchange. But long story... short, 2021, a lot

14:01

of the largest Amazon sellers in

14:03

China were banned permanently. And needless

14:05

to say, a lot of these

14:08

sellers were based in China South

14:10

City. So when Amazon suspended these

14:12

sellers permanently, basically these guys had

14:15

their businesses shut down effectively. So

14:17

I talked to one seller at China

14:19

South City. They had 400 employees

14:21

in 2021. And basically overnight, right

14:23

after their account got suspended, they

14:25

laid off almost everybody and they

14:27

went out to 20 employees. So

14:30

that review suspension sweep that

14:32

Amazon did in 2021 really

14:34

shook the entire e-commerce industry

14:36

in China right to its core. And

14:39

in the West, when all that went

14:41

down, it was kind of like a

14:43

footnote on a blog somewhere. It wasn't

14:45

really that newsworthy of a thing. But

14:48

in China, it was the news in

14:50

e-commerce circles. And it

14:52

actually continues to be news to

14:54

this day. Like a lot of people still...

14:57

Have PTSD, looking back at that 2021

14:59

Amazon review sweep that they did. And

15:01

to give you some perspective, Amazon does

15:04

a ton of conferences in China each

15:06

and every year, and a lot of

15:08

times they bring in some of their

15:11

highest executives like Darmesh into these conferences,

15:13

and there were rumors that after they

15:15

did this account suspension sweep, Amazon was

15:18

basically refusing to send any of

15:20

its highest executives there. to China for

15:22

fear of their safety. Now, whether that's

15:24

true or not, I don't know, but

15:26

that's definitely the rumor that went around

15:28

and Amazon definitely was not sending executives

15:31

there at the time. So Amazon will

15:33

probably just say, oh, you know, we

15:35

had schedule classes or whatever, but, you

15:37

know, probably a good chance that they were

15:40

a little bit concerned for their safety

15:42

as well. So yeah, in 2021, basically

15:44

from my understanding, China South City was

15:47

a total cesspool of review manipulation. It

15:49

was the laboratory of review fraud

15:51

going on. It was based there

15:53

in Chinatown City. Now, after the

15:55

review sweeps, people stop manipulating

15:57

reviews more or less from

15:59

what can tell. Now talking to

16:01

sellers at New South City no one

16:03

was openly talking about doing any type

16:05

of review fraud. Of course we all

16:08

know that it does happen to some

16:10

degree but it definitely didn't appear to

16:12

be happening in some mass of scale

16:14

like it was two or three

16:16

years ago. However, there were some

16:18

other kind of shady things going

16:21

on. I think the biggest one

16:23

has to do with tariffs. And

16:25

I could go on a bit

16:27

of a soapbox here about Trump's

16:29

tariffs and saying how they adversely

16:31

affect North American sellers, but specifically

16:34

North American and Western sellers more

16:36

than overseas sellers. And why? Because,

16:38

like I discovered there in China,

16:40

I shouldn't say discovered, just reaffirmed

16:42

my already firmly held belief that...

16:44

Chinese sellers for the most part are

16:47

not paying their full duty bill when

16:49

they import into America. So even talking

16:51

to some Western sellers based in China,

16:53

they weren't paying their full duty bills

16:56

either. And I had one person tell

16:58

me how they would never use an

17:00

American freight forward or customs broker because

17:02

they would always want to use their

17:05

HS codes and they weren't allowed to

17:07

use their own HS codes. And basically

17:09

what he was saying is, I pick

17:11

an HS code that is exempt from

17:13

Trump's duties. rather than necessarily the quote

17:16

unquote correct HS code and so some of

17:18

this was people just deliberately manipulating the system

17:20

knowing full well what they're doing but some

17:22

of these sellers and I talked to multiple

17:24

like this well they said you know what

17:26

sometimes there's five or six different HHS codes

17:29

or sometimes there's five or six different applicable

17:31

HS codes to my item and of course

17:33

I'm gonna pick the one with no duty

17:35

opposed to the one with higher duties and

17:37

they didn't really understand the fact that Legally,

17:40

there's only ever one HS code for an

17:42

item. So they just thought, you know, they

17:44

were doing what was legal and just

17:46

those smart things to do. But really,

17:49

as it turns out, no, that's totally

17:51

legal what they're doing, but they operate

17:53

more or less under immunity because what's

17:56

going to happen if they do get

17:58

caught for basically evading duties. Well, can

18:00

the Chinese government take their funds in

18:02

China? No. Could they maybe take any

18:05

funds based in America? Sure. Could they

18:07

affect their importing into America? Sure. But

18:09

for the most part, Chinese-based businesses are

18:11

kind of immune from getting caught for

18:14

duty manipulation. So yeah, duty manipulation was

18:16

by far the number one tactic going

18:18

on in China, South City, and just

18:20

China overall. So touring China for a

18:23

couple weeks. Like every Chinese seller is

18:25

evading duties to some degree. Are they

18:27

doing it 99% for 99% of the

18:29

products or 1% of the products? You

18:32

know, it's the full spectrum, but everyone

18:34

I talked to was doing it to

18:36

some degree. Like I mentioned, it could

18:38

be just using an incorrect HS code,

18:41

it could be under declaring goods, it's

18:43

the whole gauntlet of duty manipulation. And

18:45

after Trump takes office, if he does

18:47

execute on that promise of increasing duties,

18:50

these tactics are only going to increase

18:52

that much more. The other thing is,

18:54

is that all of these Chinese sellers

18:56

all had multiple Amazon accounts. And to

18:59

me, I guess, you know, as a

19:01

company, we have three Amazon. We have

19:03

three Amazon. We have three. I'm surprised

19:05

that more Western sellers don't have more

19:08

Amazon accounts. However, the Chinese sellers definitely

19:10

had more even had spreadsheets to keep

19:12

track of all the different Amazon accounts

19:14

they had. And sometimes these accounts were

19:17

open with Amazon's full blessing. And sometimes

19:19

these accounts were opened very, how do

19:21

we say anonymously. So Amazon didn't necessarily

19:23

know that it was the same company

19:26

running these several different Amazon accounts. So

19:28

every Chinese seller had multiple Amazon accounts.

19:30

And why is that important? Well, if

19:32

you have multiple accounts, especially if you

19:35

have ones which Amazon doesn't know about,

19:37

it gives you a little bit. bigger

19:39

shield against Amazon potentially suspending your Amazon

19:41

account because hey if one gets suspended

19:44

I still have others so yeah most

19:46

Chinese sellers I should say all Chinese

19:48

sellers we're operating multiple Amazon accounts and

19:50

that can be blackout that can be

19:53

white out it can be either or

19:55

so yeah those were the big kind

19:57

of Black Hat tactic things that I've

19:59

seen going on first hand. Again, some

20:02

LaWai walking around there, am I privy

20:04

to every tactic that's going on there?

20:06

Probably not, but I think people are

20:08

being fairly Canada and again, I don't

20:11

think it's a cesspool that it once

20:13

was in terms of Black Hat tactics.

20:15

Okay, so let me move on here

20:17

and wrap up with a couple things.

20:20

So after that massive account suspension sweep

20:22

in 2021, something negative happened if you're

20:24

Amazon. So, on a positive note, it

20:26

basically made Chinese sellers clean up their

20:29

acts. They were all so scared of

20:31

being suspended permanently again, or for the

20:33

first time, that most of them stopped

20:35

doing all these really dirty tactics, and

20:38

they more or less cleaned up their

20:40

games. Okay, that's a good thing if

20:42

you're Amazon. However, the bad thing is,

20:44

it also made these Chinese sellers believe

20:47

that they couldn't rely on Amazon anymore.

20:49

Amazon couldn't be their bread and butter

20:51

and their sole source of revenue. It

20:53

really made Chinese sellers uncertain about Amazon,

20:56

how much they could trust them. So

20:58

I think a lot of the Chinese

21:00

sellers were operating under the understanding that,

21:02

hey, you know what, if we get

21:05

caught for all this review fraud, yeah,

21:07

we know we shouldn't be doing this,

21:09

you know, if we get caught. We'll

21:11

pay the penalty, maybe our account gets

21:14

suspended for a few weeks or a

21:16

few months, but eventually we'll get it

21:18

back and we'll get our money back,

21:20

and Amazon's holding as well, and we'll

21:23

all move on. So that's what Chinese

21:25

sellers were kind of operating under. However,

21:27

when Amazon went on, to permanently suspend

21:29

these guys, a lot of times, not

21:32

give them back their money, destroy their

21:34

inventory, you know, because they couldn't do

21:36

anything with it. It just really shook

21:38

these Chinese sellers. And so the result

21:41

has been almost all Chinese sellers now,

21:43

at least the ones that I spoke

21:45

to, were very aggressively trying to diversify

21:47

away from Amazon. And that's true for

21:50

your average Amazon seller as well, based

21:52

in North America. We're all trying to

21:54

diversify. Everybody wants to have 50% plus

21:56

of their revenue coming through Shopify. However...

21:59

these guys were just taking it to

22:01

a whole other level. So I talked

22:03

to one seller, they were selling

22:05

in dozens of different marketplaces. So

22:07

yes, that included every single basically

22:10

country that Amazon operates in, it

22:12

included Walmart, eBay, yada yada, all

22:14

your usual suspects, but also included

22:16

a bunch of platforms I never

22:19

even knew existed. For example. Dolerama!

22:21

Apparently you can be a marketplace

22:23

seller for Dolerama and they were

22:25

selling a Dolerama or maybe it

22:28

was dollar store, whatever it was.

22:30

It was one of the dollar

22:32

stories in America. They had an

22:34

account there and they had a ton

22:36

of different accounts on these little tiny

22:38

platforms and marketplaces like that.

22:40

And it was kind of funny because

22:42

I mean my first thought was geez,

22:45

dude, you are spending a lot of

22:47

work trying to get a couple sales

22:49

a month from Dolerama. are way more

22:51

committed and just motivated than I

22:53

am. And I really had some nice juxtaposition

22:55

when I was talking to a friend

22:57

the night before. I'm like, oh, you

23:00

know, I don't think we bothered to

23:02

open up an Amazon.c.uk account because all

23:04

the tax burden and everything seems like

23:06

too much work. And meanwhile, I'm complaining

23:08

about opening up a third or

23:10

fourth marketplace and these guys in

23:12

China are opening up dozens of

23:15

different marketplaces a year. Just

23:17

crazy the different level of effort

23:19

that they were putting in. to their

23:21

businesses. So in addition to all these kind of

23:23

quote unquote BS marketplaces like Tallarama

23:25

there was one marketplace which isn't so

23:27

BS which almost all the sellers were

23:30

talking about and this was like the

23:32

word of the day as I toured

23:34

China South City and that marketplace you

23:36

know it's Timu. So most of the

23:38

sellers there were looking to get into

23:40

Timu and actually I shouldn't say most

23:42

of them were looking to get into Timu

23:45

almost all we're already selling in

23:47

Timu and they... kind of looked

23:49

at T-M-U as the next big

23:51

growth driver for their businesses. So everyone

23:53

I spoke to, they mentioned T-U,

23:55

like that was the word of the

23:58

day at China South City. T-U-T-U-T. That

24:00

is where a lot of these sellers

24:02

were seeing where the growth was going

24:04

to be for their company over the

24:06

next year or two. Now we're the

24:08

sellers kind of skeptical about Timu doing

24:10

the same thing on Amazon did, you

24:12

know, and getting them in with these

24:14

teaser raids and hey look at the

24:16

fees are so low and how much

24:19

money you can make and then eventually

24:21

drive up fees like Amazon's done. Yeah,

24:23

they were skeptical of that. But I

24:25

think Chinese sellers were also pretty real

24:27

with themselves. And this is a good

24:29

takeaway, I think, for a lot of

24:31

people listening here is, you know, at

24:33

least Chinese sellers, they were saying, yeah,

24:35

you know, a team, we might jack

24:37

up the fees, but you know, while

24:40

the get in is good, we're going

24:42

to take what we can. And it

24:44

might go away tomorrow, might go away

24:46

in a couple years, who knows, but

24:48

we're going to make as much money

24:50

as we can right now. And we're

24:52

not going on that money as we're

24:54

not going on that money as we're

24:56

not going on that. No worries, but

24:58

we're going to get as much as

25:00

we can get right this second. And

25:03

that's been their attitude to Amazon. That's

25:05

their attitude now towards Timu. And so

25:07

quite a bit different from us Western

25:09

sellers who are thinking a little bit

25:11

more long term. We're thinking, oh, you

25:13

know, how could I build a company

25:15

for the next hundred years? And how

25:17

can I make this big long term

25:19

brand? I don't think these sellers are

25:21

thinking about brand at all. And the

25:23

truth of it is, I think on

25:26

Amazon. 99% of us, it's a commoditized

25:28

product. It's not a brand. It's an

25:30

Amazon product. That's what it is at

25:32

the end of the day. Amazon's the

25:34

brand, not us. And the Chinese sellers

25:36

are, I think, just a little bit

25:38

more candid and real with themselves about

25:40

that fact. And finally, the last thing

25:42

I should mention is that live selling

25:44

is absolutely massive in China, and it

25:46

has its footprints in China self-city everywhere.

25:49

So there were recording studios on almost

25:51

every floor just for live streamers. So

25:53

it was almost like a universal studios,

25:55

but just for live stream selling. And

25:57

if you're not familiar with live stream

25:59

selling, that's basically the home shopping network,

26:01

but for e-commerce. And Amazon has been

26:03

trying. into this in North America with

26:05

Amazon Live, it hasn't taken off to

26:07

any degree like it has in China.

26:10

So in China, live selling, no other

26:12

way for me to explain it. It's

26:14

just absolutely massive. If you're a big

26:16

influencer in China, you can make a

26:18

huge amount of money just by selling

26:20

live while you're streaming. So in China,

26:22

South City, there was a studio for

26:24

pretty much every category that you can

26:26

imagine that you can sell in it.

26:28

The most memorable one was we walked

26:30

into one of these studios. and it

26:33

was set up to look exactly like

26:35

the North Pole and it was only

26:37

for live stream selling of holiday decor.

26:39

Just mind-boggling how much work they've all

26:41

put into these little studios bespoke for

26:43

every category a niche that you can

26:45

think of. That was also one of the

26:47

quagmires a lovely sellers we're facing where they

26:49

all thought... you know live stream selling is

26:51

going to take off in North America at

26:54

some point but how do they as Chinese

26:56

sellers take advantage of that because there's a

26:58

pretty big cultural barrier there and language barrier

27:00

and they couldn't quite figure out how to

27:02

crack that nut and they mentioned to me

27:04

as well like you know how can we

27:06

partner with Western sellers so we can both

27:08

work together and take advantage of this massive

27:10

opportunity which is coming. And I don't really

27:12

have a good answer for them. I guess

27:14

if you're looking to partner with a Chinese

27:17

seller, well, I don't know over to China

27:19

South City and find a Chinese Amazon seller

27:21

who you can partner with and you can

27:23

be the face of their brand for live

27:25

selling. So there you have it. That's my

27:27

little tour of China South City. If you're

27:29

in Shenzhen, yeah, go check it out. It's

27:31

in Ping Shan district, pretty far away from

27:33

the airport and the downtown core. But it's

27:35

a cool place to check out. visited there

27:37

for the first few minutes. I thought, I

27:39

don't know, I know I'm like an undercover

27:42

detective and I got to make sure nobody

27:44

sees me because people are going to be

27:46

really suspicious of me and then as I

27:48

walk through for the first couple minutes and

27:50

every single person working in an office just

27:52

waved to me or smiled at me. I

27:54

realized, oh, okay, it's cool for Western if

27:56

you're walking around here, nobody really cared. So

27:58

if you are an engine, go check it

28:00

out. China South City in Pingshan District. Now

28:02

the final note, so I'm going to

28:05

give a hockey analogy here and as

28:07

a good Canadian I apologize in advance,

28:09

but in hockey you often have these

28:11

fourth-line players who are basically

28:13

dirty players with almost no

28:15

talent and they'll hit their opponent

28:17

down low or maybe make a dirty

28:19

hip check and then score an ugly

28:21

goal, but they really don't have a

28:23

lot of talent. And as Western Sellers,

28:26

we like to think of our Chinese

28:28

opponents as being those dirty NHL players

28:30

who don't have a lot of skill

28:32

and only can succeed by playing the

28:34

game dirty. However, in hockey, you often

28:37

have players like Brad Marcant. And

28:39

if you watch hockey, you know who

28:41

Brad Marcant is. If you don't, you have

28:43

no idea who he is. But let me

28:45

tell you about Brad Marcant. He's

28:47

the dirtiest player that you can ever

28:49

imagine. If there's... Something that he can

28:51

do to get an inch, he will

28:53

do it no matter how kind of

28:56

dirty and sleazy that thing might be.

28:58

However, he's extremely talented, one

29:00

of the most talented players in

29:02

the entire league, but he

29:04

still plays like a bit of

29:07

a dirtball every now and then.

29:09

And that's kind of your Chinese sellers.

29:11

They will play the game dirty and

29:14

they will do every trick there is

29:16

in the game to get ahead. However.

29:18

They're also extremely motivated,

29:20

hardworking, and talented. And

29:22

I think we have to give

29:24

our opponents credit when we're

29:26

competing with them on Amazon. Yeah,

29:29

they have some tactics that they're using

29:31

to get ahead, which are dirty. But

29:33

they also have a lot that we

29:35

can learn about in terms of just

29:37

work ethic and motivation. So I'll leave

29:39

you guys with that. And until the

29:41

next one, happy selling. We hope you

29:44

enjoy this episode of the ecom crew

29:46

podcast. If you haven't done so already,

29:48

please head over to iTunes and leave

29:50

us a review. It helps more than

29:53

you know. Did you know that ecom

29:55

crew has a ton of free content

29:57

including e-commerce courses? Head over to ecom

30:00

crew. That's going to do it for this

30:02

That's going to do it for

30:04

this episode of the Econ Until

30:06

the Until the next one, happy

30:08

selling and talk to you soon.

30:10

you soon.