The "Shadow World" in Globalization

Text by | Ren Qian, Shi Jiaxiang

Edited by | Chen Zhiyan

Source | AnYong Waves (ID: waves36kr)

Cover Image Source | IC photo

When will Chinese founders be able to build truly global multinational corporations?

Facing this question of the era, while e-commerce giants, Chinese manufacturers, and domestic brands are "conquering territories" and riding the waves in different ways, in places seldom noticed by people, behind the grand narrative of Chinese enterprises' new maritime adventures, there has long been a crucial "shadow world" hidden.

In the past two decades, a series of perhaps still somewhat unfamiliar names have emerged, such as Zongteng, Wan Yitong, Fanding, Airwallex, PingPong, Xunhui, Taitung, Mobvista, and Deel. From logistics and payment to marketing and human resources, the people and events among them have jointly built the underlying infrastructure that supports global operations, connecting the Chinese business world with the rest of the world.

In the middle of this year, "AnYong Waves" interviewed more than a dozen front - line global service providers and their investors. The question we wanted to answer was simple yet important: How did the "shadow world" in globalization come into being? And why did these Chinese companies stand out?

Below is a revealing file about the "shadow companies" in globalization. You will see how these companies hidden under the spotlight have evolved from tools to ecosystems, from the virtual to the physical, and ultimately become an important part of reshaping global business operations in the triangular game of technology, policy, and capital.

Logistics: Intensification of Time and Space

The Winning Strategy of Cross - border Pioneers

The pandemic has changed everything in cross - border e - commerce and directly brought SHEIN, a company hailed as China's most mysterious billion - dollar company, into the public eye. When the outside world was amazed at SHEIN's scale, they actually overlooked the invisible logistics giant behind it, Zongteng Group.

In 2007, Wang Zuan, a native of Changle, Fujian, who graduated from the Department of Software Engineering of Fuzhou University, founded Zongteng and became one of the first batch of "pioneers" in the domestic cross - border e - commerce industry. He quickly became a core large - scale seller on eBay. Different from sellers mainly relying on direct mail, Zongteng believed at the beginning that if they wanted to sell goods, they should first transport the goods to the United States and then sell them. So, they built an overseas warehouse in New Jersey, New York, USA.

He Chuan, a partner of Zhongding Capital and an early investor in Zongteng, told "AnYong Waves": "Because they had experience in e - commerce, understood the needs of sellers, and knew the rules of the platform, Zongteng's overseas warehouse service ability was excellent."

Wang Zuan is an open - minded person with many good friends in the cross - border circle. Seeing that he did a good job in logistics, his friends simply entrusted their logistics to him. Gradually, Wang Zuan also found that Zongteng's advantage lay in goods sourcing organization and warehouse management. In addition, in 2014, they scaled back their e - commerce business, and he led Zongteng to transform into one of the first logistics enterprises to invest in cross - border logistics infrastructure construction and focus on warehousing in Europe and the United States.

Being an early entrant is not enough to explain why Zongteng stood out. The key lies in the choice of freight methods. Different from other logistics companies that prefer postal parcels and emphasize asset - light freight methods, Zongteng targeted dedicated lines and overseas warehouses from the start. In 2015, they started to acquire YunTu Logistics, a dedicated line transportation company; in 2016 and 2017, when the large and medium - sized product categories were on the rise, they built an overseas warehouse called Gucang in advance.

So, when the e - commerce wave came in 2020, ByteDance focused on cross - border e - commerce in 2021 and listed it as one of the three new business directions, and the "Four Rising Stars of Going Global" emerged, Zongteng, with its dedicated line and overseas warehouse business, quickly pulled ahead of other service providers.

Today, Zongteng is a "sun - never - sets company" integrating cargo collection, transfer, and delivery. It has thousands of employees overseas and operates four Boeing 777F cargo planes, transporting goods from China to various parts of Europe and the United States.

In the deep waters of cross - border logistics, a core discovery is that heavy - asset investment is not a burden but the key to building a solid barrier.

The traditional Internet logic tends to the flexibility and low risk of the asset - light model. However, in the logistics industry, its first - principle reveals a fundamental logic: when an enterprise has more cargo volume, it can obtain cheaper transportation capacity, resulting in lower costs, and thus attract more customers.

This means that the early strategic investment in heavy assets such as self - owned cargo planes, overseas warehouse networks, and automated equipment can provide stronger transportation capacity control, higher timeliness, and lower unit costs. This investment ultimately forms a barrier that is difficult to replicate, enabling the enterprise to stand out in the fierce competition and become a leading player.

At the same time as Zongteng, Wan Yitong, founded in 2012, initially also relied on the cross - border dividend to provide full - scenario overseas warehouse services for sellers and reached a strategic cooperation with eBay in 2014. However, as leading e - commerce companies entered the market with semi - managed and fully - managed models, Wan Yitong quickly adjusted its strategy and shifted its focus to automated warehouses and self - built routes.

Gao Songyang, the co - founder of Wan Yitong, told "AnYong Waves" that Wan Yitong was the first company in the overseas market, except Amazon, to layout automated warehouses. To ensure delivery timeliness, it also built a network by collaborating with trucking companies and regional suppliers, self - built trunk lines from the west coast to the east coast of the United States, and achieved efficient service with 95% of orders in the whole United States delivered within three days from a single warehouse.

Fanding International, which completed a multi - million - dollar financing recently, was founded in 2013. It started with the import cross - border (overseas shopping) business, mainly focusing on the furniture and home furnishing industries, laying the foundation for its overseas warehouse system mainly based on sea transportation.

Fanding's turning point occurred in 2022. It seized the opportunity of China's new energy and photovoltaic industries going global and upgraded its "e - commerce overseas warehouse" to an "industrial overseas warehouse" to adapt to the 2.0 era of China's industrial going - global. In addition, Fanding also established sales channels overseas for customers producing high - value - added products, helped customers with overseas distribution, opened up local small and medium - sized B - end sales channels, and served a large number of overseas small and medium - sized distributors, providing them with one - stop local business solutions.

Now, Fanding is no longer like a typical logistics company. "It is more like a supply - chain agency company for selling goods," an investor commented to "AnYong Waves."

As China's industrial going - global enters a deeper 2.0 era, customers' needs are no longer limited to basic logistics services but require more comprehensive market entry and sales solutions. By deeply participating in customers' sales and distribution links, logistics companies can provide higher added value, enhance customer stickiness, and thus improve their position and profitability in the value chain. This blurring of service boundaries indicates that more cross - border integrated service models will emerge in the future to provide more comprehensive "one - stop" solutions and establish stronger "trust - intermediary" value.

Even software companies in the cross - border industry, such as Yicang Technology, have also stepped into the logistics field. Chen Lei, the founder of Yicang Technology, told "AnYong Waves" that they have been moving closer to logistics. Their main business is to provide logistics solutions for small and medium - sized white - label merchants (with an annual export volume of about 100 million yuan), aiming to match the loose network with overseas warehouses to achieve the same transportation cost as brand merchants.

However, the "one - stop" approach is not easy. In the logistics industry, "scale means everything," and the concentration of leading players is an inevitable trend. As He Chuan said, "Similar to the domestic express delivery industry a decade ago, the concentration of cross - border e - commerce logistics is also rapidly increasing. Strong overseas operation ability, network coverage ability, equipment automation ability, internal IT ability, etc., make leading enterprises more and more competitive."

Dangers and Opportunities in Last - mile Delivery

In the overall cross - border logistics chain, last - mile delivery has become the biggest variable and also brought a new opportunity cycle for new - generation logistics operators.

During the pandemic, Zongteng found internally that the biggest bottleneck in cross - border e - commerce was last - mile delivery. Li Cong, the vice - president of the group, pointed out at that time that cross - border e - commerce logistics mostly relied on agency models to earn information differentials, with weak local delivery capabilities. And due to high labor costs, last - mile delivery often accounted for 50% of the total transportation cost.

This might be part of the reason why Zongteng invested in UniUni in 2022. In 2019, Peter Lu (Lu Junwei) seized the opportunity of the explosive growth of cross - border orders during the pandemic and founded UniUni. He told "AnYong Waves" that Temu offered a price of $3 per piece, while the average price of other logistics service providers was between $8 and $10, and delivery resources were in short supply. Peter Lu realized that this was a business with economies of scale. "When the delivery density reaches a certain order volume, it is definitely profitable at $3 per piece."

Therefore, UniUni formulated a development strategy of "providing services to cross - border brands at cost - close prices to achieve scale and network effects." It first collaborated with part - time drivers and then started to build its own fleet. Its growth path is quite similar to the early development model of China's "Shentong, Yuantong, Zhongtong, and Yunda" express delivery companies.

In addition to strategic investment layout, Zongteng has also incubated a last - mile delivery company internally, which is currently in contact with investors on a small scale.

Another company focusing on last - mile delivery is iMile. It started in the Middle East in 2017, targeting the last - mile delivery of local e - commerce. Gao Wenli, the co - founder of iMile, told "AnYong Waves" that China's express delivery industry leads the world by several years, Southeast Asia by about five years, Europe and the United States by about five to ten years, South America and the Middle East by ten to fifteen years, and Africa by about twenty years.

iMile entered the Mexican market in August 2021 and announced last year that it had obtained the T1 small - parcel customs clearance license issued by the Mexican government. It has also entered Brazil and Africa successively. They hope to achieve large - scale layout by "exporting the model to developing countries" through the spill - over of their capabilities.

We also have to mention J&T Express, another participant in cross - border logistics last - mile delivery. It started in Indonesia in 2015, entered China in 2020, and successively replicated its domestic express delivery model in Latin America and the Middle East in the following year. Different from pure last - mile delivery companies only fulfilling cross - border logistics, J&T Express is reshaping the logistics ecosystem in emerging market countries with the operation model of Chinese economy - class express delivery companies, including competing for the last - mile business of cross - border logistics.

An executive of J&T Express in Mexico once told "AnYong Waves," "From the moment we started in 2015, our consensus was that once we entered a country, we had to quickly establish a express delivery network covering the whole country."

In Peter Lu's view, the cross - border logistics industry was a blue ocean at the beginning, but eventually, multiple players will enter and compete on price. So, UniUni's next step is to upgrade its network to cover all postal codes in North America and become a local logistics service provider in the United States. "Chinese logistics service providers are upgrading logistics in different corners of the world."

Data shows that Chinese manufacturing and goods account for 15% of the world trade volume, twice that of the United States, but this does not match China's current position in the world's logistics industry. A senior overseas investment professional told "AnYong Waves" that well - known logistics giants today have grown along with their countries' foreign trade. So, Chinese logistics service providers all have the opportunity to become world - class logistics giants.

"Seven of the world's ten largest ports are in China. Why can't seven of the world's ten largest logistics companies be Chinese?"

Finance: Tech - savvy and Niche - focused

The Battle with Super Apps

A Payment Revolution Triggered by Pain Points

In 2015, Jack Zhang, a former foreign exchange trader, and his alumni Max Li were running a boutique coffee shop in Melbourne. Due to global sourcing of rare coffee beans, they had to pay suppliers in Indonesia and Kenya every month. However, the high telegraphic transfer fee of up to A$50 each time, the arrival time of five days or even longer, and the 3 - 5% hidden markup on the exchange rate by banks made it extremely difficult for them to run a small - scale, high - frequency business.

At that time, the foundation of traditional cross - border payment was still the SWIFT settlement system and the correspondent bank model born in the 1970s. International remittances had to go through 5 - 6 banks for transfer, and the capital flow was extremely opaque. Profound innovation often emerges from personal dilemmas. One early morning, Jack Zhang wrote a long - pondered conclusion on the back of an inventory book: "All existing solutions are just patching the old system. The real solution is to rebuild the clearing and settlement network."

Meanwhile, as Amazon opened its global store - opening business to Chinese sellers in 2015, the demand for cross - border e - commerce and global digital trade suddenly exploded. And the maturity of cloud computing technology made it possible to build a global account network.

This is the background for the birth of Airwallex, a payment platform that completed a $300 million Series F financing this year and is valued at $6.2 billion, and also the reason for the rise of a new wave of cross - border fintech enterprises in China and even globally.

If there are "Two M's" (Ma Yun and Ma Huateng) in the domestic payment market, then there are also two well - known figures in the global cross - border payment industry - Zhang Zhengyu and Chen Yu.

Zhang Zhengyu founded Lianlian Digital in 2009. Although he independently developed China's first - generation mobile phone bill air - recharge system, he shifted the battlefield in 2013 when mobile payment boomed, and its development was always lukewarm. Until 2016, it entered the cross - border field, served large customers, and rapidly expanded with the advantage of licenses.

Almost at the same time, Chen Yu, who used to work as an actuary in an American insurance company and later joined Deloitte, found that cross - border e - commerce sellers had slow capital repatriation and high handling fees. He founded PingPong in the United States and launched a "1% capped fee rate" model. This was revolutionary compared to the prevailing 3% industry fee rate at that time, and PingPong became famous overnight.

In 2016, Bao Han, Meng Po, and Dong Chao, who came from traditional financial institutions, also noticed the pain points of enterprises with international business in receiving and paying during their overseas expansion and founded Xunhui SUNRATE. Xunhui SUNRATE takes the corporate service route, focusing more on customized solutions for large customers. Its