Currently, the Sino-US tariff war initiated by the Trump administration continues to escalate. Recent content released by the White House shows that some Chinese goods may face up to an additional 245% tariff, putting Chinese foreign trade enterprises under dual pressure of skyrocketing export costs and tariff barriers.
In this context, China's cross-border e-commerce B2B platforms are experiencing explosive growth: DHgate has climbed to second place on the US App Store free application chart, just behind ChatGPT; Alibaba International Station traffic surged and ranked among the top five shopping apps in the US region, demonstrating the strong resilience of digital trade channels.
Facing challenges, Chinese foreign trade enterprises are actively adjusting their strategies.
What is the impact of Trump's tariff policy on cross-border merchants? How will the out-of-country businesses of cross-border merchants continue? Will Chinese products become unsustainable in the US market due to policies?
Recently, Observer Network invited one of the cross-border merchants - Xiong Weiping, Director General of Hangzhou Jianzhi Enterprise, to jointly analyze the survival status of out-of-country enterprises under the tariff war, the impact of the recently popular B2B e-commerce platforms on merchants, and the future development expectations of out-of-country merchants. Below is the interview content:
Observer Network: Could you introduce your company's main business and product market situation, as well as the proportion of overseas business?
Xiong Weiping: We are a company specializing in outdoor electric pergolas, with a scale reaching around 100 million RMB in 2024.
Currently, all our business comes from online sales and exports, without any domestic sector. All production is domestic, and sales are international. Our business in the US market accounted for approximately 65% in 2024.
Our products focus on the high-end market, doing much better than peers in raw materials, various systems, and details handling. The price is roughly twice as much as that of competitors, sometimes even double, clearly showing a high-end market strategy.
US App Store total chart (left), US App Store shopping chart (right)
Observer Network: Is there competition in the US market, and how is it going?
Xiong Weiping: There is indeed competition, but most similar products in the US market are still imported from China. Our direct competitors today might be American merchants, but their procurement bases are still in China.
Observer Network: As mentioned earlier, many consumers are directly purchasing from us. Why do consumers directly buy from manufacturers under the current high tariffs?
Xiong Weiping: This might be due to a misunderstanding about tariffs. Many people think that after the tariff policy was introduced, the cost would be borne by the producers, but actually, the tariff is paid by dealers to customs, and after the goods arrive in the US, the US dealer pays the relevant fees.
There is also a phenomenon here: if we deliver $10,000 worth of products to the dealer, he may need to pay more than $20,000 to receive the goods, while at the retail terminal, they may triple the price, so it might sell for $50,000 to $60,000. This period affects the rise in retail prices.
Another example is that previously, the price quoted by my dealer to his client might have been only $40,000, but after the tariff increase, it could rise to $60,000. Therefore, many people start to consider whether they can directly purchase from Chinese manufacturers.
That’s why we say that Trump’s tariffs actually push consumer trends toward China because many consumers think, can I directly order from cross-border platform merchants? In this process, the dealer's process is cut out, and consumers directly purchase from us.
Observer Network: From the perspective of merchants, is the direct procurement model from factories to consumers good or bad for the entire overseas ecosystem, and how does it manifest specifically?
Xiong Weiping: The benefit is that there won't be as much price difference between the factory and the consumer. The downside is that, for example, many domestic factories that used to deal in traditional clothing trade may not accept small orders, requiring orders starting at tens of thousands of sets. Now, in the process of directly facing consumers, many manufacturers' production capacity and processes may not keep up, as these factories' production structures require large orders to cover venue and labor costs.
So the benefit lies in the fact that many small and medium-sized enterprises now have great opportunities. These scattered orders may not interest large companies, but these small companies might have the chance to take them on.
Speaking of the downside, overall, when we did B2B, maybe one person handled one dealer, and each dealer had 20 orders. Now it might become that one person needs to handle 20 end-users, so there may be factors of rising labor costs in this process.
However, for many small and medium-sized enterprises, if they can seize this opportunity to reshuffle, they can go deeper next.
Observer Network: Are there any products that can only be produced in China, or situations where Chinese products remain cheaper in the US despite the tariff?
Xiong Weiping: Yes, actually, if we look back in time, I was also discussing with friends from the platform this afternoon, asking them whether they thought the impact of the tariff was greater than that of the pandemic for us?
All responses were that the tariff might be bigger, but for me, the fluctuations caused by the tariff were actually smaller than those caused by the pandemic.
During the pandemic, all countries were doing one thing: locking themselves down first, solving internal problems before engaging in external imports and exports. During that time, it was noticeable that the more difficult the global pandemic situation became, the further China's exports went. The tariff issue affects "Made in China."
We visited many places last year, including the US, Europe, the Middle East, Australia, and South Korea, and found a situation: for a long time, a large number of products were exported by China. Previously, Chinese products were perceived as cheap and low-quality in the US. However, after years of沉淀, the label of Chinese goods in the US has changed to become cost-effective products.
For example, the same product might cost $50 in the US, but if made in China, it might only cost $20. Such cost-effectiveness indicates that the world is currently dependent on "Made in China."
Many people worry that tariffs will affect order volume, but we must also consider that demand will not be severed. It may shift from many places, such as re-purchasing from Europe. However, actual purchases from Europe still return to China's supply chain, so China's supply chain is irreplaceable for the global market at this stage.
Many company owners have said they want to open factories in Vietnam or Southeast Asia, but this is still challenging for them. China's supply chain is not just one supply chain; a product may be supported by thousands of supply chains.
For example, when we want to install a fan today, components may involve motor factories, wire factories, control switch factories, and even smart device factories. All involved items are on one line, and overseas markets cannot yet support this industrial chain. Most materials and parts still need to be imported from China, only with a different packaging, changing from "Made in China" to Malaysia, Indonesia, Vietnam, etc.
Observer Network: What kind of help has the platform provided so far?
Xiong Weiping: For cross-border enterprises, the platform provides a lot of assistance.
For instance, everyone now believes that the Trump administration has imposed tariffs of 145% and 245% on China, but specifically, it is not every product that reaches these rates, although many merchants might think so.
I discussed a product with a friend, and we always thought the tariff was 245%, but upon checking their specific products, the actual tariff was only 75%. If the tariff is 75%, the product will have a strong advantage, but we mistakenly thought it was 245%.
To address this, the platform has launched multiple solutions: on one hand, tilting traffic towards the European market, and on the other hand, providing merchants with a backend query function - specifically, merchants just need to enter the HS code of their goods in the backend to know what the tariff will be when the goods reach the US and Europe, which saves merchants both time and effort.
Moreover, the platform is increasing its use of AI tools. After the US government issued the tariff policy, we might develop business more in Europe or South America. These local languages might not have been a focus before, but now with market expansion, communication becomes difficult. Although English is a universal language, not all clients speak excellent English. Therefore, the platform is currently working on AI reception for different languages.
Observer Network: Which regions do you plan to focus on for your exports in the future? Will you continue to invest in the US market?
Xiong Weiping: In terms of regional development, we estimate that the proportion of our business in the US market will be reduced to less than 50% this year, but the US remains our first market.
There is also a situation here: for example, if ten factories in a track collectively exit the US market, it means that the US market no longer has room for development.
Many see crises, but I see more opportunities: if four out of ten factories in a track exit, then the remaining six can eat up the share of the previous ten.
The situation in the European market is the same; we need to constantly create multiple channels, meaning we should not put all our eggs in one basket, so we need to develop the European market.
From the perspective of trade relations, Americans tend to be straightforward; once they agree, they will pay and settle everything. But Europeans are very detail-oriented, from craftsmanship to products, they can raise numerous questions. Therefore, Europeans are cautious.
This year, we might increase our business volume in the European market to around 35%, and we may also release some business ratios into other markets like the Middle East and Australia, roughly speaking.
Observer Network: What are your current expectations for the future?
Xiong Weiping: I used to work in domestic B2C, then moved to exports.
When working in domestic B2C, we targeted a market of 1.4 billion people, but when choosing to do B2B or directly engage in overseas business, we faced a project involving 6 billion people. In this market, besides 1.4 billion Chinese consumers and 300 million Americans, the remaining market is still very large.
Also, we noticed a situation: many products that China has eliminated domestically are still very cost-effective in Southeast Asia or Africa.
Therefore, we will definitely continue to pursue this overseas business.
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