Chinese producers are responding to an increasingly difficult economic environment as U.S. tariffs continue to increase. Firms such as Woodswool had traditionally depended a lot on exporting to the USA. Today, they’re on a mission to find new markets and using creative selling techniques. The U.S. has hit the Chinese with tariffs over 100%. Consequently, companies throughout the industry are deeply recalibrating their approaches.
Woodswool’s Adaptation to the E-commerce Trend
All U.S. orders have been canceled, Li Yan, Woodswool’s factory manager and brand director, informed me just a few weeks ago. The company had previously sent more than 50 percent of its output to the U.S. Now, dogged by two to three months of laid-up capacity while it looks for greener pastures overseas. To recoup some of those losses, Woodswool has made a rapid shift to ecommerce using China’s rapidly growing livestreaming e-commerce trend.
The decision to utilize a virtual human livestreaming option allowed Li to launch the new sales channel within two weeks, avoiding the lengthy and costly process of studio renovations and team hiring. This new approach is already moving the needle with amazing outcomes! Just a week after launching, Woodswool received more than 30 orders – equating to over 5,000 yuan (about $690) in gross merchandise value.
China’s broader export landscape is shifting dramatically too. Liu Xu owns an e-commerce company — Beijing Mingyuchu — that sells bathroom goods to Brazil. He’s moved quickly to capitalize on what’s surely been the biggest market shift in a generation. Exports from China to most African countries have more than doubled from 2018 to 2024 as seen in trade with Ghana. This trend indicates that the nature of Chinese exports is becoming more diverse. Companies are already taking significant, proactive steps to reduce their reliance on the U.S. market.
Countless industry leaders continue to tell us that the tariffs are still unfairly hurting their ability to operate and thrive. These all come as the American Chamber of Commerce in China issued a particularly dire report. Others claim their business models have become unworkable under the new tariff regime. Cameron Johnson noted that for small businesses with limited resources, the sudden increase in tariffs could be devastating and potentially lead to closures.
The reality is extremely bleak for most workers in China. Goldman Sachs further estimates that between 10 million and 20 million of them are active in businesses exporting to the U.S. The recent doubling of tariffs deployed haphazardly across thousands of industries and imports has produced an environment where companies are becoming completely overwhelmed. Ash Monga, founder and CEO of Imex Sourcing Services, said the recent increases in tariffs are the most serious we’ve seen. Their effect is “way bigger” than that of the Covid-19 pandemic, he said.
Challenges for Logistics and Manufacturers
From local to national shipping players, logistics companies such as Cotrie Logistics have risen to the challenges. Businesses, particularly with the complex task of coordinating source and shipment during a time of continued port delays. Manufacturers want this sort of project-induced certainty, as they can take years to establish reliable logistics routes. It helps them to pivot to new markets with greater success.
Woodswool is delving into the universe of livestreaming. This latest move is part of a broader push by China’s leading technology companies, encouraged by Beijing, to assist exporters in conducting commerce with China’s domestic consumers. This strategy not only aims to reduce reliance on foreign markets but helps stimulate local consumption amidst mounting economic pressures.
As manufacturers like Woodswool change their game plans, it’s all still up in the air as to what happens next. The urgency to innovate and be agile in the face of tariff pressures has never been more critical. Private sector firms need to keep investing in developing new market opportunities and new sales channels, all the while dealing with operational disruptions driven by dynamic trade policy.
Author’s Opinion
The shifting landscape for Chinese producers due to escalating U.S. tariffs underscores the importance of adaptability in global trade. While livestreaming e-commerce offers a potential growth avenue, it is not without risks. With businesses already reeling from mounting financial pressures, the need for innovation and diversification is crucial to ensuring future stability in an increasingly uncertain trade environment.
