The relentless competition in China's e-commerce industry has created an environment where businesses must constantly innovate to surviveOver the past year, platforms like Taobao, JD.com, and Douyin have introduced new policies aimed at enhancing consumer protection, such as the "refund without return" serviceHowever, while these policies may have been designed to benefit consumers, they have also placed significant strain on merchantsAdditionally, the widespread adoption of low-price strategies has further squeezed sellers, forcing them into a difficult position where they are often operating at a loss just to maintain market presenceWith rising costs, shrinking profit margins, and an increasingly saturated marketplace, businesses are facing unprecedented challenges.  

Amid this intense competition, a new wave of entrepreneurs is emerging—young successors of manufacturing businesses, often referred to as the “second-generation factory owners&rdquoThese individuals, armed with fresh ideas and a deep understanding of digital commerce, are leading a quiet revolution that is reshaping China's industrial landscape.  

A striking example of this transformation is Wu Xiangju, chairman of Oukeis Household Products Co., Ltd., based in YiwuInspired by the way Chinese tea brand BaWangChaJi borrowed luxury brand Dior’s aesthetic to design its cup packaging, Wu applied the same principle to garbage bagsThrough Alibaba’s B2B platform 1688, he was able to rapidly expand into overseas markets, achieving a threefold revenue increase and an eightfold profit growth within a yearRemarkably, Wu’s company had been on the verge of bankruptcy in 2022 due to overwhelming debtBy focusing on a single product category—garbage bags—he successfully turned the business aroundToday, one of his bestselling garbage bag lines generates an annual revenue of 50 million yuan.  

Similarly, 26-year-old Huang Yuxiang took over his family’s struggling factory when it faced a cash flow crisis

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By leveraging e-commerce, he transformed the business and created a high-end fashion brand on 1688. Meanwhile, Stanford graduate Dong Fanming merged Silicon Valley innovation with traditional food manufacturing, introducing AI-driven automation into his family’s pastry businessHis efforts have not only modernized production processes but have also positioned the company for broader expansion through digital platforms.  

The rise of these young factory owners is not an isolated phenomenonAccording to research from 1688, nearly 80% of these “factory successors” are from the post-90s and post-2000 generations, with those born after 1995 being the core drivers of changeMost of them hold university degrees, and more than half have overseas education experienceFurthermore, 54% of them have been managing their family businesses for more than three years and are now making independent business decisions.  

As they strive to redefine traditional manufacturing, these young leaders are finding strong support from e-commerce platformsIn response to mounting pressures on businesses, 1688 has launched multiple initiatives such as the “Spring Revival Plan,” the “Business Growth Plan,” and its latest “Strong Recovery Plan” to help merchants enhance their competitiveness and scale their operationsOther platforms, including Pinduoduo, JD.com, Douyin, and Kuaishou, have also introduced industry support programs, investing heavily in developing manufacturing hubs worth billions of yuan.  

According to Wang Qiang, General Manager of 1688’s Business Development Center, the “Strong Recovery Plan” is designed to accelerate the recovery of manufacturing hubs at a time when inventory cycles are shifting from passive de-stocking to a gradual economic reboundHe emphasized that 1688 is not indiscriminately supporting all merchants but is instead focusing on high-quality suppliers that can align with the platform’s growth trajectory

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These businesses must demonstrate innovation and strong supply chain capabilities, allowing them to capture larger shares in both domestic and global markets.  

As China’s manufacturing sector undergoes rapid evolution, new trends are emergingCompanies are extending their supply chains upstream and downstream, increasing profitability through flexible, customized productionAdditionally, industrial clusters are becoming more specialized, with key enterprises coordinating supply and demand to enhance overall efficiencyMeanwhile, some manufacturers are moving away from price wars by investing in new product development and branding, enabling them to command premium pricing.  

Beyond industry transformation, AI technology is playing a crucial role in modernizing traditional factoriesAs the new generation of entrepreneurs takes over family businesses, they are integrating digital and intelligent solutions to boost efficiencyDong Fanming’s ultimate goal is to achieve full AI automation in his factoryAlready, his facility has adopted AI-powered quality inspection systems capable of assigning unique QR codes to each product for precise trackingAI has also helped optimize production formulas, improving product quality and consistency.  

Despite these advancements, Dong remains unsatisfiedHe believes that while AI has significantly enhanced production processes, the overall transition is still too slow compared to the rapid changes occurring in the broader marketTo keep pace with technological advancements, he argues that traditional factories must accelerate their digital transformation efforts.  

AI is not only reshaping factory operations but is also central to the digitalization of supply chains and e-commerce servicesOver the past year, large-scale AI models have showcased their immense potential, with DeepSeek marking a new phase in AI applicationsRecognizing this shift, 1688 has integrated DeepSeek’s AI model and plans to make it available to merchants by mid-February

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By the end of February, AI-powered tools will be fully integrated with merchant operations, with dedicated business models rolling out in early MarchNotably, all AI tools will be offered to merchants free of charge.  

According to Zhuo Han, General Manager of 1688’s Industrial Ecosystem Development Department, AI will drive a massive transformation in e-commerce marketingFeatures such as automated content generation for different platforms and instant translation of product listings will streamline operationsIn the near future, Zhuo envisions a scenario where “one entrepreneur plus one AI” could be a viable team structure, significantly reducing labor costs while improving operational efficiency.  

Despite its vast potential, the widespread adoption of AI in e-commerce and manufacturing also presents challengesSome industry experts warn that AI-generated content may blur the lines between authenticity and manipulation, raising concerns about transaction securityAs AI becomes more embedded in commerce, regulatory frameworks will need to evolve to ensure responsible and ethical usage.  

In the face of intense domestic competition, many manufacturers are looking abroad for new growth opportunitiesFor China’s industrial clusters, globalization has become a strategic imperative, and the new generation of factory owners—many with international backgrounds—are actively expanding their global footprints.  

Huang Yuxiang, a top merchant on 1688, has successfully exported his premium cashmere coats to France and Australia while also exploring emerging markets like Kazakhstan. “Unlike Amazon and TikTok’s retail-driven models, 1688’s cross-border platform connects us directly with B2B clients, making it ideal for businesses looking to build long-term partnerships,” he explainedBy leveraging cross-border e-commerce, Huang has transitioned his factory from an OEM model to an independent brand, with overseas orders now accounting for more than 30% of total sales.  

Meanwhile, Wu Xiangju has taken Yiwu’s spirit of “intense competition” global

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