The famous economist Lang Xianping once proposed a theory of the "6+1" industrial chain: "6" refers to: first product design, second raw material procurement, third warehousing and transportation, fourth order processing, fifth wholesale operation, and sixth terminal retail; "1" refers to: product manufacturing.
 
Looking at China's foreign trade enterprises, China mainly controls raw material procurement, warehousing and transportation, and manufacturing, while developed countries control both ends of the smile curve: product design, order processing, wholesale operation, and terminal retail.
 
Recalling the scenes in "Global Entrepreneurial Madness" makes it easier to understand; each competitor has spent several years prior to conceive entrepreneurial ideas and design innovative products. During the competition, they find Chinese suppliers to manufacture products according to their designs and then ship them back to the UK for sale.
 
The manufacturing craftsmanship in China astonished the guests. For example, Rabina, who designed a new type of writing board, said, "Chinese suppliers are amazing; they can meet all my requirements, even the smallest ones." The craftsmen in Amanda's supplier factory worked overnight to help her overcome the welding problem of ultra-thin environmentally friendly materials.
 
The suppliers featured in the program are representatives of excellent foreign trade enterprises in China. However, even for major manufacturers in China like Dennis, who produces high-end dresses, and Banner, who produces toys, they introduce themselves with phrases like "producing dresses for high-end designers" and "suppliers for global toy giants like Walmart," rather than promoting any brand of their own.
 
The direct consequence of this is that our suppliers earn meager manufacturing fees, while the vast majority of the product's added value lies with the designers and sellers. The dress that Dennis sells to dress designer Caroline costs about $9 each, while these dresses, after being designed and processed by Caroline in the UK, can sell for £150 to £300 each. After deducting various necessary costs, Caroline's profit is also quite considerable. Arran, who designed a portable Bluetooth refrigerator, sells his product for £99, while the core component of his product—the speaker—has a procurement price of £1.23 in China. This roughly estimates that the profit margin can reach several hundred percent or even thousands. It is not hard to imagine that if our manufacturers with manufacturing advantages had their own brands and designs, the situation would be completely different.
 
The reason why China is at the low end of the manufacturing industry chain is that it originally started with OEM production. While Chinese manufacturers imitate or even counterfeit others' brands, developed countries' manufacturing industries are quietly undergoing transformation and upgrading time and again. Unlike Chinese manufacturers, many foreign manufacturers focus on building their own independently developed brands.
 
For more than a decade, China has established an empire that can be called the world's "cheap" factory. The products that developed countries currently transfer to China and other countries for processing have their own brands and designs, while what is transferred to China is merely the production base; the real "brain" of the enterprise remains in their home country.
 
The United States was once the "world's largest manufacturing country." Later, low-tech manufacturing enterprises in this country flocked to China in search of cheap labor, turning China into a manufacturing powerhouse. As the trend of rising natural energy consumption and resource product prices in China becomes irreversible, manufacturing production costs are increasing, coupled with the dual pressure of developed countries returning to manufacturing and developing countries accelerating their catch-up, China's manufacturing advantages are gradually being lost.
 
The root causes of the loss of China's manufacturing advantages mainly lie in three aspects: first, the continuously rising production costs in China. The large total labor force and low costs were once China's prominent comparative advantages in manufacturing, but with changes in population structure, this advantage is gradually diminishing. Now, China's average labor cost is more than 2 to 3 times that of Southeast Asia; second, the lack of globally recognized brands. For more than 20 years, the lack of core technology has been regarded as a curse overshadowing the fate of "Made in China," relegating it to the lowest end of the food chain; third, the appreciation of the renminbi. Foreigners have to pay several million dollars or more to purchase goods of the same quality and quantity. Therefore, the appeal of "Made in China" is continuously discounted.
 
The loss of China's manufacturing advantages undoubtedly serves as a wake-up call for us. The urgent task is to reposition Chinese manufacturing, which is both a daunting task and a hurdle that must be overcome.
 
In the future, companies will not reduce costs by relying on cheap labor, but by efficiently integrating the six major components in the "6+1" model. The beautiful transformation of "Made in China" goes beyond internal technological content and external packaging marketing; it also involves the reconstruction and integration of the value chain, finding its place in the global manufacturing value chain.
 
In January 2013, the Chinese Academy of Engineering launched and carried out a major consulting project called "Research on the Strategy of a Strong Manufacturing Country." The project team believes that China's manufacturing industry is large but not strong, with the main problems being weak independent innovation capabilities, reliance on others for core technologies and key components; prominent product quality issues; low resource utilization efficiency; and an unreasonable industrial structure, with most industries still at the mid-to-low end of the value chain.
 
Zhou Ji, president of the Chinese Academy of Engineering, pointed out that the main line of development for a "strong manufacturing country" in China is to reflect the deep integration of information technology and manufacturing technology. Here, information technology can be simply understood as big data in the internet era. In the future, "Made in China" will be firmly tied to e-commerce platforms like Alibaba.
　
Whether "Made in China" can ultimately become a "Chinese brand" largely depends on e-commerce platforms. E-commerce has indeed helped "Made in China" significantly, allowing small and medium-sized foreign trade enterprises to smoothly sell products abroad, while also bringing in corresponding technologies, concepts, and innovations.
 
To integrate into the global manufacturing value chain and share a piece of the pie in areas such as design, branding, and retail, China's manufacturing industry must complete the internal reconstruction of the supply chain.
 
Yu Yong, vice president of Alibaba Group, once stated: Entrepreneurs must pay attention to the value they provide to customers and the reshaping of the internal supply chain, which is very critical. The core competitiveness of manufacturing in the past was quality and low price, but today China needs to have a greater voice in the global supply chain. The first step is to rely on industry collaboration, and the second is to rely on platforms. The essence of the platform is not just an aggregation effect, but rather big data reconstruction. Big data reconstruction will change the supply chain of foreign trade, and this change will be detailed down to the changes in each small and medium-sized enterprise's own supply chain. In this process, Alibaba will provide support, and small and medium-sized enterprises will complete it.
 
Making it easy for everyone to do business has always been Alibaba's corporate belief. In this major transformation of the foreign trade industry, what can Alibaba do to help small and medium-sized enterprises? Yu Yong introduced that trade should return to trade, and manufacturing should return to manufacturing; this is an inevitable trend. Today's successful enterprises first focus on being small and detailed. If a company segments its positioning, it can reach end customers through the Alibaba platform and gain user data. User data can change many things, such as design, manufacturing, branding, channels, positioning, seasonal changes, the entire production process design, and all flexible production aspects will undergo reconstruction.
 
For small and medium-sized enterprises, entrepreneurs are the core of the entire business and also the bottleneck of the entire enterprise. The height to which this big tree of a business can grow basically depends on how many resources this entrepreneur can grasp and how much energy they have. Energy is the core competitiveness of an entrepreneur: "Alibaba's platform is to release this core competitiveness. I will help you with logistics, I will help you with customs and tax collection, I will help you with talent, I will advance your loan, and the subsequent collection has nothing to do with you. This is what we mean by returning business to its essence," said Yu Yong.
 
China's foreign trade industry has entered a new era of foreign trade. The famous economic expert Mr. Ma Guangyuan once said that the difference between old and new foreign trade lies in a shift in mindset. If small and medium-sized entrepreneurs can open their minds, embrace the internet, and better integrate manufacturing with the internet, then the competitiveness of Chinese manufacturing will be greatly enhanced, and it will not be long before Chinese manufacturing steps out of the bottom of the supply chain.