CNBC's The China Connection newsletter: Chinese exporters increasingly need to build brands to survive

"Do you need a U.S. warehouse?"

"Do you need a Mexico warehouse?" "Shipping to Europe?"

Salespeople, speaking in Mandarin Chinese, weren't shy about pushing their logistics services when I attended the 10th Shenzhen International Cross-Border E-Commerce Expo this week. One logistics company even hired foreign-looking models in glittery silver dresses to parade around the venue.

It's one of the biggest events of the year for companies selling from China to the U.S. and other countries via the internet. In the midst of a tepid truce in the U.S.-China tariff war, many companies appeared eager to enter the U.S. market.

But the game to survive has changed.

"The past 30 years have helped Chinese companies to become very mature in supply chain integration," Tina Hsu, partner at startup AIGC Empower, told me in Mandarin at the expo. "Today, if there is a tool that can help [businesses] tell a story better, resonate with users … they could go overseas with the identity of a brand to operate in a healthier manner that's longer term and with higher profits."

AIGC Empower claims it has those tools. At a joint launch with Amazon and Wayfair in Zhuhai, China, last month, Hsu said AIGC introduced two generative AI-powered products: a system for quickly researching local markets to understand consumer needs, and a tool for producing images for product advertisement. The service starts at 10,000 yuan ($1,390) per product per year — and has already received around 100 orders, Hsu said.

"To be honest, it's not every customer here who can appreciate the value" of our product and the need for branding, she said, noting it's Chinese entrepreneurs who studied abroad that understand it best. But she warned that without inherent differentiation, Chinese companies will find it hard to survive overseas in the next 30 years.

While a few companies with Chinese roots such as Temu and Shein have grabbed the most attention when it comes to cross-border e-commerce, several smaller Chinese businesses have also been tapping the internet to sell directly to overseas consumers, as competition at home has intensified.

"The U.S. consumer market is still the world's largest, and the destination for most cross-border e-commerce sellers," said Li Xiaoming, distribution manager at Miao Shou, which sells software that allows merchants to analyze data from multiple e-commerce platforms in one place. That's according to a CNBC translation of his Mandarin-language remarks.

Although companies have turned to other countries, they're still holding onto some resources for deploying into the U.S. market — if conditions improve in the next few months, he said.

Regardless, Chinese sellers are piling into the cross-border e-commerce trend.

Miao Shou claimed that it had a total of 800,000 customers as of June, with around 200,000 companies joining the platform in the past six months. Li said the company aims to double clients' sales transaction volume on its platform this year.

To stand out in such a competitive environment, these companies need better branding and marketing, especially in the current trade climate.

"We believe tariffs this time mark a process of complete market reshuffling," pushing out companies that previously only relied on price, not product quality, to compete, Bear Huo, China general manager at fintech startup FundPark, said in Mandarin, translated by CNBC.

With $750 million in financing from Goldman Sachs and HSBC, FundPark lends money to smaller Chinese businesses selling their wares overseas. Huo, who used to work at Alibaba, said that the startup has become an official loan provider for certain Chinese sellers on Walmart, and aims to reach a similar partnership with sellers on Amazon later this year.

Huo said FundPark is lending more to businesses for advertising as clients have ramped up their marketing spend to up to 20% of the product transaction value — a jump from 3% to 5% in 2023.

While ad spending can lead to short-term spurts in sales, building a brand is a longer-term process, and a far more challenging task. Even advertising legend John Hegarty has described the difficulties of getting companies to make bold, transformational moves in order to stand out in the market. But if Chinese exporters are to compete globally, they need to focus on the hard task of building a brand.

It's similar to what's playing out in China's cut-throat electric-car industry. Companies have been slashing prices and offering more high-tech features, but to stand out over the longer-term, they need to create brands that resonate with consumers.

Some Chinese companies believe they already have what it takes to build a brand, but lack the legal resources to protect themselves — especially as market incumbents launch targeted lawsuits that can force a Chinese seller to go out of business.

It's become such a pressing challenge that a group of Chinese merchants have backed a new platform that uses a low-cost insurance structure for litigation services that can otherwise be quite expensive, according to Jack Zhang, secretary-general at the Shenzhen Cross-Border E-Commerce Association's legal insurance division. He's leading the project with a team of about 30 people.

His plan is to group lawsuits into the thousands or tens of thousands, thereby negotiating a lower rate with law firms in the U.S. or another market. It's far from an operating service, and Zhang hopes he can reach the 1,000-case threshold around this time next year.

Several companies at the expo also advertised services from compliance to business registration — getting a U.S. trademark will cost the equivalent of $485, now available at a $150 discount, one flyer said. But as many of the vendors appeared to mimic each other's style, only attempting to undercut others on price, it's clear the concept of a brand has yet to take off.

China's retail sales sharply beat expectations in May. Sales recorded their largest jump since December 2023, boosted by government subsidies and surging online shopping as a major e-commerce sales event started early. Industrial output and fixed-asset investment both saw growth soften from the prior month and missed expectations.

U.S.-China renewed trade truce left military-grade rare-earth issue unresolved. That's according to a Reuters report, citing two people briefed on the London bilateral meeting. Beijing has yet to loosen its grip on exports of some specialized rare-earth magnets, while U.S. maintains curbs on exporting cutting-edge AI chips to China.

China resumed Boeing's jet deliveries. Boeing delivered a new 787-9 aircraft to China's Juneyao Airlines on Saturday, months after Beijing had suspended the U.S. aerospace giant's deliveries amid tit-for-tat retaliation against Washington. That delivery comes after China agreed on dialing back some punitive measures against the U.S. with more trade negotiations underway.

— Anniek Bao

Chinese and Hong Kong stocks fell early Wednesday amid mixed trading in the region, as escalating tensions between Israel and Iran weigh on investor sentiment.

Mainland China's CSI 300 was down 0.18%, while Hong Kong's Hang Seng Index — which includes major Chinese companies — had lost 1.7% as of 2:00 p.m. local time.

The performance of the Shanghai Composite over the past year.

June 18-19: Lujiazui Financial Forum in Shanghai

June 19: Deadline for ByteDance to sell off TikTok U.S., likely to be extended

June 24-26: World Economic Forum's "Summer Davos" in Tianjin; AIIB Annual Meeting in Beijing