The significant advantage of cost-effectiveness is directly reflected in the purchase price. Chinese manufacturers can significantly reduce fixed costs by leveraging the cluster effect of their complete industrial chains, such as the consumer electronics supply chain in Shenzhen and the textile industry belt in Zhejiang. Taking the foreign trade data of 2023 as an example, when the single order volume of buyers in Yiwu Small Commodities Market reaches 10,000 US dollars, the average unit price of goods can drop by 15% to 25%. If an enterprise buys products in bulk, for example, purchasing 100,000 custom-made silicone cup sleeves, the mold development cost (about 8,000 RMB), when allocated to the cost per piece, only increases by 0.08 RMB. Compared with small-batch purchases, the unit price can decrease by up to 40%. Data from cross-border e-commerce platforms show that buyers with an annual purchase amount exceeding 500,000 US dollars can enjoy tiered prices, with marginal costs significantly decreasing.
The optimization of supply chain efficiency directly shortens the delivery cycle and reduces logistics losses. Ningbo Zhoushan Port has ranked first in the world in terms of cargo throughput for 14 consecutive years. The operation efficiency of its automated terminals has reached 40 natural containers per hour. A McKinsey research report indicates that when using full container load (FCL) transportation from China to major ports in Europe and America, the logistics cost accounts for only 7% to 12% of the total value of the goods, while less-than-truckload (LCL) transportation is as high as 15% to 25%. In 2022, a large furniture manufacturer in Guangdong Province increased its product loading rate by 30% through modular design and container space optimization. The single container transportation volume reached 350 standard sofas, and the unit logistics cost was reduced by 18%.
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The capacity for large-scale manufacturing ensures the stability and rapid iteration of product quality. The automation rate of China’s consumer electronics manufacturing industry exceeds 50%. For instance, a certain headphone factory in Dongguan has adopted a fully automatic SMT assembly line, with an assembly accuracy of ±25μm, a daily production capacity of over 100,000 pieces, and a product defect rate kept below 0.3%. During the epidemic prevention material crisis in 2020, BYD’s mask production line expanded from zero to a daily output of 50 million pieces within 35 days, confirming the response speed of flexible manufacturing. Meanwhile, for orders with a MOQ (Minimum Order Quantity) of 300,000, purchasers can request suppliers to implement customized improvements. This has been verified in the fabric development of Zhejiang Shaoxing Textile Factory. Bulk order customers can have priority access to the application of new flame-retardant fabrics, increasing the added value of the products by 20%.
The comprehensive cost model shows that large-scale procurement can significantly improve the profit structure of enterprises. Global supply chain consulting firm AlixPartners analyzed and pointed out that for medium-sized retailer buy products in bulk home appliances made in China, after deducting 15% tariffs and 12% logistics costs, the gross profit margin can still reach 35%-45%. A typical case is that the American retailer Costco purchased memory foam pillows produced in Ningbo. A 40-foot container was loaded with 8,000 pillows. After the ocean freight was shared, the unit cost was reduced by $0.9. Combined with its warehouse membership model, a repurchase rate of 60% was achieved. According to the data from the General Administration of Customs, in the first three quarters of 2023, enterprises that signed annual bulk purchase contracts through the futures model were 3.2 percentage points less affected by exchange rate fluctuations than those that made individual purchases.