2024-08-20
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“If there is no scale, we create it.”
Text｜Li Xiaotian, reporter of "Chinese Entrepreneurs"
Editor: Yao Yun
Image source: Interviewee
The goal that Chen Xiufen set from Day One was finally achieved.
On April 16, an Airbus A330 freighter from Mexico's MAS Cargo Airlines, fully loaded with about 54.6 tons of 60,000 cross-border e-commerce products and other goods, took off from Wuxi Shuofang Airport to Mexico City. According to China Civil Aviation Network: This route is the first scheduled all-cargo route in Jiangsu Province connecting to Latin America, and it is also the only scheduled all-cargo route between China and Mexico currently operated by a Mexican airline in China.
On the same day, Chen Xiufen, founder of MGM Logistics Group, was in Mexico City, where she had dinner with airline partners to celebrate the maiden flight. Watching the live videos and photos sent by her colleagues in China, Chen Xiufen was overwhelmed with emotions.
"From the first day of starting our business, we wanted to own our own plane," said Chen Xiufen. When she saw the MAS plane flying from China to Mexico for the first time, she realized that her initial goal of owning her own plane in 3 to 5 years had finally become a reality in the 7th year.
By investing in MAS, the "Meishi Logistics Group (hereinafter referred to as Meishi Logistics)" founded by Chen Xiufen has indirectly controlled all MAS flights between China and Mexico. "It means we have exclusive operating rights," said Chen Xiufen.
Mexico City is currently the most important overseas base of M.L.C. Logistics. In order to overcome the distance and cultural differences brought by the region, Chen Xiufen has to travel back and forth 6 to 7 times a year. During local traditional festivals, she will celebrate with local employees at parties. "Many Chinese employees are shy in China, including myself. When I attend a Mexican party, I will unconsciously become very enthusiastic and unrestrained." Chen Xiufen explained that Latin American culture is generally more joyful and likes parties, and they need to integrate into the local culture.
On the official website of M.L.C. Logistics, four corporate talent concepts are listed: self-driven, proactive, mature and strong learning ability. After the entry of "proactive", M.L.C. specifically explained in detail that every day should be different from the day before.
This is a clear goal that Chen Xiufen has set for her employees and herself. Since she started her business in 2015, Chen Xiufen has said that she has completely changed as a person, spending almost every day learning. The recruitment criteria she set for the company's human resources is "every employee is a capable person, and everyone can complete a lot of work independently."
She called the parties that integrate into the local Mexican culture a "management detail" and the joyful atmosphere was intended to integrate into the local culture and better build trust with local employees.After 7 years in business, from having no orders to fly to now owning their own aircraft, Chen Xiufen and MOST Logistics are leaping over the cultural and market cycles, turning the previously niche Latin American market into a new gold mine.
Chen Xiufen is sharp.
In 2015, capital entered the market, star players emerged, and cross-border e-commerce entered a wave of "explosive period". In January of the same year, Yangmatou announced that it had completed a $100 million round of financing in the B round. This amount set a new record for financing in the cross-border e-commerce industry at the time, but the record was soon broken. In March, Jiemi announced that it had received millions of dollars in investment from IDG. In June, Xiaohongshu announced that it had completed tens of millions of dollars in round B financing as early as last year. In July, overseas shopping platform Momoso received tens of millions of RMB in round B investment. In August, Taoshijie announced that it had completed a $30 million round of financing. In September, Miya completed a $150 million round of D financing, led by Baidu, with a valuation of nearly $1 billion.
Chen Xiufen, who has experience as a freight forwarder, sees the potential for the development of cross-border e-commerce. According to the 2015 China E-commerce Market Data Monitoring Report released by the China E-commerce Research Center, the scale of China's cross-border e-commerce transactions was 5.4 trillion yuan, and the scale of export transactions reached 4.49 trillion yuan.
Chen Xiufen was also decisive. After realizing the potential opportunity, she resolutely resigned and hit it off with her friend Liu Yunyun, who also had international logistics experience, and decided to start a business. Her decisiveness was not only reflected in her ability to take action - in the face of the problem of start-up capital needed for entrepreneurship, Chen Xiufen sold her house and gambled her entire fortune to raise the first start-up capital to establish M-Lion Logistics.
Decisiveness means being swift and resolute on one side, but on the other side it represents risk. The beginning of MGS Logistics was a gamble.
Unlike most international logistics companies, MLS Logistics has chosen to invest heavily in the Latin American market since its inception.Choosing a place where there is already a business and then slowly taking root and growing would be a relatively "smart" choice. But Chen Xiufen still believed in her own judgment and chose the "blank slate" of cross-border e-commerce.
Jitu, a cross-border logistics company also founded in 2015, chose Southeast Asia and, relying on Alibaba's Cainiao Logistics, chose to cover the world in terms of cross-border business. In 2015, Latin America was a niche market in the field of cross-border e-commerce. "Until now, many people still say that this is a very courageous thing to do," said Chen Xiufen.
Courage comes from confidence in your judgment.
Before establishing the company, Chen Xiufen did a lot of market research. "We have visited the United States, Europe, and the Middle East. Compared with those mature markets, it would be very competitive if we wanted to enter. Latin America is different." During her several visits to Latin America, an idea kept lingering in Chen Xiufen's mind -Like China 20 years ago, cross-border e-commerce was still in its infancy.
"If you look at the hardware conditions in Latin America, such as the penetration rate of mobile phones, credit cards, and payment methods, they are all very suitable for the development of cross-border e-commerce. In addition, Mexico's per capita GDP is US$11,000, twice that of Southeast Asia. Their consumption habits are non-saving consumption. In Latin America, salaries are not paid monthly, but weekly or biweekly, and locals spend as soon as payday arrives." Chen Xiufen believes that these background conditions are very suitable for the development of cross-border e-commerce.
Another reason why she chose to bet there was the profits from local retail.
"We visited the local wholesale market and found that the profit margins for Chinese small commodities there are very high. Any stall may have a net profit of tens of thousands per month, and the prices of many similar products are 2 to 3 times higher than those in China." This made Chen Xiufen more certain of the advantages of the Chinese supply chain in Latin America. As long as there is a channel, there will be money to be made. This channel is cross-border e-commerce.
At that time, the only Chinese companies that could ship goods to Latin America were the post office and DHL. Chen Xiufen told China Entrepreneur that the post office's fulfillment time was about 60 days, while DHL could fulfill its contract within 10 days, but the price was expensive.
Thus, a perfect business closed loop took shape in Chen Xiufen’s mind:Betting on a market that is not fully developed but has huge development potential, bringing China's supply chain advantages to Latin America through cross-border e-commerce. As the most important part of cross-border e-commerce solutions, cross-border logistics will undoubtedly achieve great development.
Chen Xiufen has done a lot of homework, but she is also prepared for the worst. "At worst, I can go back and find a job." But this gamble is not pure. "We admit that betting on Latin America is a gamble, but it is based on our judgment of future potential."
However, Chen Xiufen still underestimated the risks.
"We have been in a state of no business since the first day of our establishment." Because of the lack of business, Chen Xiufen was anxious for about two years.
"The number of packages was too small, and I couldn't fly once a week, so my logistics plan would have no advantage," Chen Xiufen recalled.At that time, in order to strike a balance between cost and product, they required themselves to fly at least 3 to 4 flights per week, even if there were only 10 packages on the plane.
"Our air transport company would tell you that you need to have at least one ton of cargo for the price of a flight to be reasonable. But in the beginning, some packages were only 100 grams, which was completely different from traditional large cargo. As soon as the plane took off, it would lose money," said Chen Xiufen.
This predicament almost made it difficult for her to survive in the first two years of her business.
"At the most difficult time, there was only 500,000 yuan in the account, and we had to pay salaries the next day." That night, Chen Xiufen locked herself in the room and drank all night. While drinking, she reviewed the business history, trying to figure out which link had gone wrong.
Should I give up? Should I persist? What should I do? As the saying goes, "A poor couple is always sad", under difficult circumstances and pressure, people's emotions will change, and communication with partner Liu Yunyun will also involve mutual complaints from time to time. Because of the common goals and beliefs of the two, after gradually adjusting their status, mutual complaints became mutual encouragement. "We are still convinced that our direction is right, so in the end we supported each other spiritually and we have come to this day." Chen Xiufen said.
“If there is no scale, we create it.”
During the two years when there was almost no business, Chen Xiufen was never idle. At night, she had to connect with the local express delivery companies in Mexico. There was a 14-hour time difference between Mexico and China, so Chen Xiufen often went to bed at 2 a.m. During the day, the company also had to carry out other routine business.
The blank market has potential, but cultivating the market requires time and energy. I can only sleep 4 hours a day and have to travel to Latin America frequently during this period.
"At the beginning, when new fulfillment service providers emerged, I would go to the site to talk to them. Because for many Latin American companies, cross-border business is a brand new model. You have to help them understand this model, tell them that it has potential, and convince them to make initial investments," said Chen Xiufen.
Like devout "believers" of cross-border e-commerce, they go to local areas to "preach" and establish the initial framework and foundation.In addition to express fulfillment providers, Chen Xiufen also needs to connect the other end of cross-border e-commerce - persuading local e-commerce platforms.
In the initial understanding of the United States Lion, since China's supply chain has advantages, it should be a natural thing to expand to Latin America. In the communication between Chen Xiufen and the local e-commerce platforms in Latin America, she found that there is a reason why cross-border e-commerce in this land is like a "blank sheet of paper".
"Meikeduo (the largest e-commerce platform in Latin America) told us that they really wanted to develop business in China, but they didn't know any Chinese sellers and didn't know who to contact. Latin America and China are too far apart, and there are huge cultural differences, so it is very difficult to connect them. So in 2019, Meikeduo gave us authorization to attract investment in China, and in the first year we found about 600 merchants for them." Chen Xiufen told "China Entrepreneur".
Since 2019, Meikeduo and Meishi Logistics have been holding joint investment promotion meetings in China. According to Meishi, the number of merchants has grown from the initial 600 to 7,000 today.METRO Logistics builds bridges, providing Chinese merchants with opportunities to learn about Latin America, and providing Latin American platforms with high-quality Chinese sellers.
With the development of the cross-border e-commerce industry, the battle line has spread to Latin America.
Before 2018, SHEIN was the only company in Latin America operating a Chinese cross-border e-commerce platform. Now, all major e-commerce platforms have opened special areas in Latin America, and SHEIN has even developed local e-commerce business in Latin America. Mexico has become one of its top three sales markets.
"Before 2019, the penetration rate of e-commerce in Mexico was less than 5%, but in recent years it has grown to 15%. This process has actually stimulated the development of cross-border logistics as a whole," said Chen Xiufen.
In March 2023, Musk announced that he would invest $5 billion to build a super factory in Mexico. As soon as the news came out, the land price in Mexico skyrocketed. Chen Xiufen was very happy, which meant that her layout in Mexico three years ago had ushered in a big explosion.
Chen Xiufen called 2021 the most important year in the development of MGM - the first year of going global. That year, MGM's Series A financing was completed, which was a difficult decision for Chen Xiufen. "At that time, we were not short of money, but the decision to raise funds meant that my partner and I decided to do something big."
Going out to sea is what Chen Xiufen calls "doing something big", and the Citizens decided to set Mexico as their destination.
"Mexico is a wonderful place. First of all, it has a population of more than 100 million, and its per capita GDP is similar to that of China. Its e-commerce growth rate has ranked first in the world in 2023. Last year, the e-commerce growth rates of many countries were in the teens, but Mexico's was 25%. And if you look at its e-commerce structure, the entire market size is about 50.6 billion, most of which comes from contributions from local e-commerce platforms. The GMV that is truly related to China is less than 5 billion." Chen Xiufen said these data continuously and without any stumbling.
Based on these circumstances, they came to their own conclusions:In the future, new growth in China's cross-border e-commerce will definitely be in Latin America. It is estimated that by 2026, China's cross-border e-commerce platforms in Mexico will grow 6 to 7 times.
In 2021, based on demand and market predictions, the MOST Logistics team rented an overseas warehouse of nearly 18,000 square meters in Mexico.
"In the beginning, cross-border e-commerce mainly relied on small air parcels, but small air parcels have their disadvantages. They cannot carry large goods. So we believe that when cross-border e-commerce develops to a certain level, it will definitely move into the overseas warehouse model. Large goods are transported by sea to local warehouses and then sold. First, freight costs are reduced, and second, fulfillment efficiency is also greatly improved." Chen Xiufen told "China Entrepreneur".
MGS Logistics made the right bet again.
At the beginning of 2024, AliExpress first launched "semi-hosting" for cross-border e-commerce, followed by Temu and TikTok, which means that the era of "full hosting" in which cross-border e-commerce relied entirely on air parcels is over. Semi-hosting requires sellers to ship goods to overseas warehouses on their own and then sell them locally overseas.
Among the various links of semi-trusteeship, overseas warehouses have become an indispensable necessity for sellers.
In 2021, M.L.C. began to look for local logistics warehouses in Mexico. At that time, the warehouse vacancy rate was basically around 10%, and M.L.C. Logistics quickly found a warehouse and settled down. By 2023, this figure had dropped to 1% to 1.5%, and it was difficult to grab a suitable warehouse even if you waved money.
Warehouse rents have also increased by nearly 50% in the past year. The first warehouse leased by MOST in 2021 cost several dollars per square meter. The rent of the second warehouse in 2022 increased by about US$3 per square meter compared with a year ago. The price is still rising.
Against the backdrop of an increasingly better basic foundation, new "troubles" will also arise.
In order to better manage the local company in Mexico, Chen Xiufen began to make a series of attempts in personnel. She admitted that there were some problems with the initial personnel structure of CLS: "We all come from business backgrounds, and the people we recruit are also people who can do business. We always emphasize business first, but the company needs to make profits, and our organizational capacity building is actually far behind the development needs."
In order to make up for the shortcomings, after the financing, Meishi's human resources and financial departments underwent a major reshuffle. "Our current human resources director is the former assistant to the CEO of Walmart China, and the financial director also has overseas work experience for YTO. The young man who helped us with financing was once a director of the boutique investment bank Multidimensional Capital. He later joined our team and now helps us with overseas investment, financing, mergers and acquisitions, and business expansion."
This is especially true for overseas teams.
The team of M.L.C. Logistics in Mexico is a diversified team of "China + Latin America", with many Chinese people who grew up in Latin America. This configuration is for integration - such managers have a certain understanding of Latin American culture and are also influenced by Chinese culture.
Chen Xiufen told China Entrepreneur that there are huge cultural differences between Latin America and China, and it takes a long time of communication to persuade Mexican employees to accept Chinese-style work rules. "In the early stage, they communicated very well with local employees. For example, when it comes to overtime, we need to communicate with them first that the company is in the early stages of development and requires all employees to work together. After good communication, local employees can actually understand."
In the process of MTL's internationalization, Chen Xiufen required every employee to have an English name, and she named herself Chris.
In logistics, a traditional industry dominated by men in most cases, MTL's journey has not been smooth.
Chen Xiufen said that she is a girl with a baby face, and the fact that the co-founder is also a girl gives Meishi a unique feminine temperament. "Many people thought I was a boy when they heard my name Chris before they came to see me," Chen Xiufen said. When asked if her Chris was the abbreviation of Christina, Chen Xiufen denied it outright: "Chris is Chris, I just want to give it a boy's name."
The name is an expectation and also reflects cognition. Chen Xiufen told China Entrepreneur about the origin of the company name "Meishi": "Meishi is because we are two girls, and it is meant to convey beauty and provide a high-quality service experience. The lion is an animal that we both like very much. It represents strength and bravery, and also shows our determination to become an industry leader."
References:
"2015 China E-commerce Market Data Monitoring Report", China E-commerce Research Center
"Wuxi-Mexico City: Jiangsu launches first all-cargo route to Latin America", China Civil Aviation Network
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