Chinese E-Retailers Back Exporters Turn Inward Amid US Tariff War

Chinese companies became extra prepared for the Trump 2.0 tariff battle after seeing the trade war during Trump’s first term.

Chinese e-commerce companies are joining hands to help export-focused companies shift their focus to the domestic markets as trade tensions between China and the United States escalate.  

Companies like JD.com and Freshippo have launched initiatives to assist trading companies that typically export their goods to sell them domestically. At the same time, many leading national industry associations have promised to open domestic sales pipelines for exporters.

JD.com bought a minimum of 200 billion yuan (US $27.47 billion) in export goods for domestic sales within the upcoming year. The plan involved getting an export purchasing team to collaborate directly with exporters, offering high-quality goods and supporting sales through increased traffic.

They wanted to avoid harmful prices during the process since the domestic market already has intense competition due to overcapacity and weak consumption.

Freshippo, the supermarket chain owned by Alibaba (a competitor of JD.com), opened a fast-track path for export companies looking to enter the domestic market. They promised expedited approvals within 24 hours, simplified certification processes, and would allow these exporters to use its warehouse network.

Many online platforms including Douyin, Kuaishou, and VIP.com have announced similar initiatives along with physical retailers, including Yonghui, CR Vanguard, and Lianhua.

The China General Chamber of Commerce and seven other associations stated that due to the US escalating tariffs, expanding the domestic market, promoting the integration of domestic and foreign trade, and helping the transition of export goods for local consumption have become urgent priorities.

The retail, catering, and hospitality associations promised to create matchmaking channels and sales platforms to ease the urgent pressures for exporters.

The trade war between the two biggest economies has made it commercially impossible to trade goods, especially after a series of back-and-forth reciprocal tariff measures.

This year, Washinton has imposed 145% tariffs on imports from China, bringing the effective tariff rates to about 156%. Meanwhile, the new tax imposed by Beijing on US products has increased to 125%, on top of the earlier tariffs.

However, later United States declared smartphones, laptops, and semiconductors imports would not be subject to the reciprocal tariffs, which some top US officials state to be ‘short-lived.’

Some analysts claim that Chinese companies became extra prepared for the Trump 2.0 tariff battle after seeing the trade war during US President Donald Trump’s first term.

Amid the changing global economy and escalating trade conflicts, many Chinese supply chain companies show a mix of resistance to compromise and strong ambition.

In the middle of uncertainty, Easy Buy, the e-commerce division of private tutoring giant New Oriental Education & Technology Group, initiated a special campaign to present premium export products to Chinese consumers through live-stream shopping.

Chinese exporters could use these support programs to recover some of their losses from decreased international sales by quickly ramping up their domestic sales. However, they will encounter stiff competition in a slowing economy.

Many corporate managers reported that many companies have shifted to non-US markets, focused on domestic consumers, and improved the product value to remove margins.

Before 2018, 70 to 75% of Chinese companies exported to the US, which posed too much risk. But, according to an executive from medical device manufacturer Bluesail Medical, it has now reduced to 40%.

A Sichuan EM Technology executive, whose company produces new materials for optical and electronic products related to consumption, noted that the trade war forced Chinese companies to accelerate this transformation.

Chinese companies followed the motive of ‘when the world says no, we go home.’ When the exporters faced roadblocks, they shifted to domestic sales. As Chinese President Xi Jinping warned, there would be ‘no winners’ in a trade war.