NetEase Yeation Rides on Hangzhou’s New Manufacturing Plan
COVID-19 and China
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Youdao (网易有道) filed for IPO in the United States on October 1, representing the first subsidiary of NetEase(NTES:NASDAQ) to be listed publicly. Today we will look into another branch under this eye-catching video game giant in China, NetEase Yeation, now functioning as the e-commerce arm of the group.

Based in Hangzhou, NetEase Yeation has redefined China's manufacturing industry by applying a new supply chain management model called C2M (customer to manufacturer). What we used to and still do is to have goods produced by a manufacturer, then to different distributors, retailers and finally reach to the customer. NetEase Yeation has skipped the distributor and retailer part by directly connecting with the manufacturer with customers and sell the products via its online platform. This innovating approach has changed from the traditional purchasing process to a reverse process that can be better participating in the product design and manufacture, establishing a customer-led supply chain.

On September 20, Hangzhou has released the ‘new manufacturing plan’ on September 20, focusing on the digitalization and quality of manufacture industry. The plan will push the projects touted as ‘hundred-thousand-ten thousand’ in the process of optimization, meaning the innovation based on information technology will cover 100 programs aimed at smart manufacturing, 1,000 projects related to IoT and 10,000 applications based on cloud service.

Under this background, NetEase Yeation positioned itself as a key role in the revolution to assist the traditional industry to a high-end, smarter, greener and service-oriented upgrading direction.

Different from the role played by Alibaba and, that acting as the transaction marketplace, NetEase Yeation will dive more into the supply chain and acting as the smart manufacturer who knows their customers better.

It takes the advantages of big data to protect and nurture its manufacturers, help suppliers to quickly acquire and respond to market demand, achieve the goal of matching information between supply and demand and benefit more to the consumers.

Currently, NetEase Yeation has achieved strategic cooperation with over 500 manufactories worldwide. Among them are many known foreign trade companies. Esquel Group (溢达集团), for example, founded in 1978, is the largest manufacturer and exporter on cotton shirts globally. The company runs an OEM model and will produce as many as 100 million shirts each year for famous brands of Ralph Lauren, Tommy Hilfiger, Nike and the likes.

In 2016, Esquel Group has chosen NetEase Yeation as its exclusive platform for the e-commerce business based on both parties' shared value in qualitative brands and the high-level of supply chain management. Moreover, the user data accumulated during the cooperation process will assist in cost reduction and to better meet the user demand in its next round of production, forming a healthy closed loop.

Besides the genius initiative, NetEase Yeation has been continuously confronted by news about the massive layoff, high inventory risk and a slowdown of its GMV since the beginning of 2019.

Senior executive Liu Xiaogang (柳晓刚) of NetEase Yeation said in early 2019 that the platform gave up GMV for the moment to upgrade the quality of its goods and improve the efficiency of its supply chain. The argument got support from the release of NetEase Q2 financials, as the gross profit of the e-commerce sector has recovered to 10.9% record high this year.

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