Changes in technology and shipping have allowed companies like China's e-commerce giants Shein and Temu to thrive in the US.

ShipMatrix President Satish Jindel joins Yahoo Finance Live to take a closer look at both company’s business models.

Jindal praises both companies' “impressive” story—the ability to consolidate production and manufacturing processes in a way that is extremely cost effective. Jindel suggests that rising labor costs in the US makes buying products from China “more attractive” due to cost benefits.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: Satish, we initially reached out to you because of a journal article that you were quoted in and was talking about how China-backed retailers are shipping millions of US packages a day. Talk to us just about the supply chain, the landscape up until this point. We had spent so much about the pandemic talking about the fact that more and more is being manufactured here in the US. But how much do we still rely on China and are very much reliant on supply coming out of there in terms of the fact that we are extremely far from this decoupling narrative that has certainly taken hold over the last year or two?

SATISH JINDEL: You know, the story of Temu and Shein is a very impressive one. What's important here is to realize that the internet has finally come to full scale in enabling the consumer to be able to buy the products almost directly from the manufacturer. And what Temu and Shein are doing is they are getting the orders from the consumer, and then obtaining the products from the small manufacturer in China doing the packaging, doing the validation of the quality and everything in real time, eliminating the need for a lot of warehouses and stocking it, which adds to the inventory cost and shipping the item individually packaged with the address label of the consumer directly from China using the lower labor cost that they have compared to what we have in the US.

And I may add that you may have heard this week or yesterday how many states have increased the minimum wages. Well, guess what? That just makes it more attractive for every task that can be done in China instead of bringing it here and then having an American worker spend the time undertaking those activities.