Chinese manufacturers are competing to find buyers both domestically and internationally, as trade tensions with the US threaten their biggest export markets.
China’s trade data released after US President Donald Trump announced high tariffs in April shows that an increase in exports to alternative markets partially offset a sharp drop in U.S. freight.
The value of exports to Europe in May rose 12% from the previous year, while shipments to Germany increased 22%. Exports to Southeast Asian countries increased by 15%.
According to analysts, Chinese manufacturers say that at least some sales can be compensated for in other markets with some of the lost sales due to US tariffs, ensuring that exports will remain a pillar of the national economy, which is still struggling with the real estate sector and weak consumer trust.
“Consumption is weak and there is little economic promotion in that respect,” said Leah Fahe, Chinese economist at Capital Economics. “China still needs to export all of these things, so they will have to go to other countries and face a surge in Chinese imports.”
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The manufacturer’s efforts are on display in Zhijiang, China’s second largest export state. Many factory owners are urgently shifting their focus to a more stable or larger but heavily contested domestic market than the US.
“We want to find new customers in a market like Europe,” said Xia Shukun, manager of Shaoxing Sulong Outdoor Technology.
Xia said Norwegian buyers had recently toured the factory. There, the screams of blades sliced metal for the camp stove echoed on the third floor, hoping that the company will win its first customer in Europe. “We’re very enthusiastic. We can do anything,” Xia said.
The average US tariff rate for Chinese products is still above 50%, and the factory owners and managers said they are looking for new markets up and down the Zejiang coast as Trump could reimpose air speeds that make most trade unfeasible.
Chen Zebin, who runs nail lamp maker Shaoxing Shangyu Lihua Electronic Technology, said the percentage of production going to the US in 2024 fell to about 30% this year, urging them to move to domestic sales where margins are thinner.
Chen said the orders from the US were slow despite the ceasefire in the trade war between Washington and Beijing. “That road is not working, so we need to find new roads,” he said, adding that the company is exploring online sales channels such as Temu and looking for customers in new markets, including the Middle East and Europe.
Doris Xia, manager of Zhijiang-based Kimo, said Trump only charged 20% of the fees at the Las Vegas event in March, prioritizing expansion in Europe, Russia and Southeast Asia.
“Basically, customers didn’t come to us,” Xia said.
After the US, the EU was the top destination for China’s exports by value last year, followed by Vietnam. There, many goods are processed for re-export – Japan and Korea.
The European Commission is trying to track and counter the surge in China’s imports. That first surveillance report shows that China is the biggest source of surges as the imports of products ranging from guitars to industrial robots is suddenly rising.
“We are seeing a new ‘Chinese shock’,” said Chairman Ursula von Der Leyen at G7 Gathering in Canada this month. “As China’s economy slows, Beijing is flooding global markets with an overpowered subsidies that its country’s markets can’t absorb.”
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Pencil Chew, who works with companies exporting through Chinese e-commerce giant Alibaba, said factories that rely on the US on a relatively small part of their business simply “cut it off.”
“They want stability and look bad in the long run,” Chu said. “Many factories are concentrated in Europe.”
Even in front of Trump’s tariff blitz, Ewing Tourism products, a beach umbrella manufacturer that sells most of its products to stores such as Riddle and IKEA in Europe, are beginning to suffer floods of products previously offered by Chinese rivals, focused on the US.
“European buyers are cutting prices down as much as they can choose more factories,” said Vera Wu, the company’s 45-year-old founder. “This is the toughest year ever.”
Zhijiang’s annual exports amount to around $5500 billion, and after the second Guangdong province, the provincial leader is eager to help 100,000 manufacturers survive the tariff disruption.
The state government has begun to cover the costs of attending overseas fairs, deploying language programs to nurture 100,000 new cross-border e-commerce sellers, increasing export credit insurance subsidies.
Zhijiang City of Cixi, known as China’s “bearing home,” offers some comfort to the factory currently attempting to pivot from the US.
Cixi locals say some bearing plants were closed after Trump hit them with a 25% tariff in his first term. China’s customs data shows that bearing exports to the US have fallen by 25% since 2017.
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However, there are still bearing factories lined up on the streets of the city. Wang, the factory manager for 40 workers bearings, asked to be identified only by last name, said in 2018 that he followed trade news in Beijing and Washington.
The king isn’t too worried now, as boxes full of bearings doomed for Indonesia and the Philippines stack up on the doors of his factory.
“The signal was clear and US-China relations were mixed. We found new buyers in Southeast Asia,” he said. “This time, I’m not paying attention.”
