The relentless competition in China's e-commerce industry has created an environment where businesses must constantly innovate to survive. Over 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" service. However, while these policies may have been designed to benefit consumers, they have also placed significant strain on merchants. Additionally, 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 presence. With 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&rdquo. These 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 Yiwu. Inspired 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 bags. Through 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 year. Remarkably, Wu’s company had been on the verge of bankruptcy in 2022 due to overwhelming debt. By focusing on a single product category—garbage bags—he successfully turned the business around. Today, 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. 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 business. His 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 phenomenon. According 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 change. Most of them hold university degrees, and more than half have overseas education experience. Furthermore, 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 platforms. In 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 operations. Other 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 rebound. He 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. 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 emerging. Companies are extending their supply chains upstream and downstream, increasing profitability through flexible, customized production. Additionally, industrial clusters are becoming more specialized, with key enterprises coordinating supply and demand to enhance overall efficiency. Meanwhile, 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 factories. As the new generation of entrepreneurs takes over family businesses, they are integrating digital and intelligent solutions to boost efficiency. Dong Fanming’s ultimate goal is to achieve full AI automation in his factory. Already, his facility has adopted AI-powered quality inspection systems capable of assigning unique QR codes to each product for precise tracking. AI has also helped optimize production formulas, improving product quality and consistency.  

Despite these advancements, Dong remains unsatisfied. He 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 market. To 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 services. Over the past year, large-scale AI models have showcased their immense potential, with DeepSeek marking a new phase in AI applications. Recognizing this shift, 1688 has integrated DeepSeek’s AI model and plans to make it available to merchants by mid-February. By the end of February, AI-powered tools will be fully integrated with merchant operations, with dedicated business models rolling out in early March. Notably, 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 marketing. Features such as automated content generation for different platforms and instant translation of product listings will streamline operations. In 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 challenges. Some industry experts warn that AI-generated content may blur the lines between authenticity and manipulation, raising concerns about transaction security. As 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 opportunities. For 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 explained. By 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. Recognizing a lack of aesthetically designed garbage bags in the U.S. market, he launched a line featuring tear-free designs and prints inspired by Western cultural elements. Within a month, his product entered Amazon’s top 100 bestsellers. Looking ahead, Wu plans to expand into Russia, Central Asia, and the Middle East in 2025, aiming for cross-border sales that surpass his company’s total revenue in 2020. “China’s strength in manufacturing isn’t just about cost advantages—it’s about agility and responsiveness to market demands,” he emphasized.  

E-commerce platforms are playing a crucial role in enabling these international expansions. 1688 is rapidly building a global supply chain network, with localized teams already established in Vietnam and plans to launch warehouses in Kazakhstan, Uzbekistan, and other regions by 2025. Meanwhile, JD.com’s global platform has expanded into the U.S., Japan, Singapore, and Malaysia, aiming to establish a seamless overseas logistics system capable of delivering goods within 2–3 days.  

While the path to global expansion offers immense opportunities, it is not without challenges. Cultural differences, regulatory complexities, and shifting consumer preferences demand a high level of adaptability. However, as China’s manufacturing sector embraces digitalization and AI-driven innovation, a new global supply chain model is emerging—one where agility, technological integration, and strategic market entry redefine the value of “Made in China.”