Diversification Becomes Key Strategy Amid Temporary Tariff Relief
The recent Sino-US tariff truce has brought temporary relief to Chinese exporters, but the underlying challenges remain substantial. Since 2018, forward-thinking companies have been preparing for various uncertainties in global trade.
“We recognized early that concentrated orders meant concentrated risks,” said Zhang Wenjie, general manager of Desai Group, a footwear manufacturer based in Wenzhou, Zhejiang province. “Diversification became our strategic imperative.”
The 90-Day Window: Rush and Caution
On May 12, 2025, the Geneva Trade Talks Joint Statement announced a 90-day suspension of certain tariffs between China and the United States, triggering immediate reactions across the Pacific.
“Nearly half of our products are exported to the U.S.,” revealed Huang Weiguang, sales manager at a Foshan-based lighting company. “We had about two million yuan worth of goods stranded due to previous tariffs. The agreement allowed us to finally ship these orders.”
Trade data reflects this sudden surge. Vizion, a trade tracking agency, reported a 277% increase in container bookings from China to the U.S. following the tariff reduction. The seven-day average jumped from 5,709 TEUs to 21,530 TEUs between early and mid-May.
However, beneath the surface optimism lies pragmatic calculation. “This only removes the latest 91% tariffs,” noted an industry insider. “The 20% tariffs imposed since February remain, keeping effective rates around 40%—still significant pressure for businesses.”
Global Expansion: Beyond the American Market
Exporters are actively expanding their international presence to mitigate single-market risks. Desai Group has established subsidiaries in Dubai and Russia while deepening partnerships with European and South African markets.
“Our European exports are growing fastest this year,” Zhang noted. “Though starting from a smaller base, we expect this market to expand further.”
A Guangdong-based exporter surnamed Meng echoed this strategy: “The U.S. remains important for its volume and purchasing power, but we can’t put all eggs in one basket. We’re now focusing on Europe, the Middle East, and South America through trade shows and local partnerships.”
Domestic Turn: The Allure of 1.4 Billion Consumers
Parallel to international diversification, exporters are increasingly turning inward. Since late 2023, China has implemented policies to accelerate integration between domestic and foreign trade, including inclusion of export-quality products in the national “trade-in” program and specialized marketing campaigns.
E-commerce platforms are joining the effort. In April 2025, JD.com announced a 200 billion yuan support plan to help exporters penetrate the domestic market through direct procurement and dedicated sales channels.
“China’s vast consumer base presents tremendous opportunities,” an analyst noted. “Even marginal increases in consumption create significant space for growth.”
However, challenges persist. Product specifications, consumer preferences, and cultural differences require adaptation, while certain segments face oversupply in the competitive domestic market.
Brand Building: From OEM to OBM
For Desai Group, the domestic shift represents fundamental transformation. “Manufacturing and branding operate on completely different logics,” Zhang explained. “Building brands means starting anew—it demands organizational changes and long-term commitment.”
The company began live-streaming production in 2020 and has since grown its flagship store to over two million followers. Its first physical retail outlet recently opened in Rui’an, Zhejiang.
“The coming decade presents the best timing for brand development,” Zhang asserted, citing growing consumer recognition of domestic brands.
Climbing the Value Chain: The Smile Curve Strategy
Industry observers note Chinese exporters are ascending both ends of the “smile curve”—enhancing both R&D capabilities and brand value.
“Chinese manufacturing maintains strong competitiveness,” Zhang stated. “Products with technological differentiation command premium pricing because they’re irreplaceable.”
Desai’s 300-strong R&D team has developed multi-functional safety shoes using specialized materials, achieving $40+ wholesale prices for customized orders—a testament to value-added manufacturing.
The industry landscape continues evolving as some low-end production migrates to Southeast Asia. “What remains are medium-high-end lines that are harder to relocate—especially technology-intensive processes,” Meng observed. “Some early movers have transitioned into service providers, assisting newcomers with overseas market entry.”
Future Frontiers: From Factory Exodus to Brand Exodus
Following the initial wave of factory relocations, brand globalization emerges as the next frontier. “Our manufacturing quality is world-class for many categories,” an industry veteran noted. “The missing piece is brand influence, which requires long-term cultivation.”
Desai Group exemplifies this transition. “Southeast Asia’s developing economies present opportunities,” Zhang revealed. “We’re considering leveraging Yunnan’s geographical advantage for future brand expansion into the region.”
As the 90-day tariff window progresses, Chinese exporters demonstrate resilience through multi-pronged strategies—geographical diversification, domestic market development, and value chain elevation—charting their course through the unpredictable waters of global trade.
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