Chinese designers were already facing unique challenges when it came to international sales, thanks to the country’s isolationist policy post-pandemic, slowed economic growth and slipping consumer sentiment. Then came the US’s tariffs.
The addition of prohibitive and unexpected tariffs has upended these brands’ one advantage: proximity to supply chains. A new tariff rate of 145 per cent on Chinese imported goods to the US is impacting Chinese brands at multiple levels, according to Louis Houdart, managing partner at consulting firm Mad, who works with leading global luxury groups. He says that not only has the local market been tough, but that many brands that had plans to expand overseas are now in “wait and see” mode. What can they do from here?
Vogue Business spoke to six independent Chinese designers and brand founders who say they are looking into alternative sourcing opportunities and new potential markets for growth. Some say they have seen a reduction in orders from US retailers unwilling to take on a risk as the tariff situation unfolds, while others have doubled down on local clients. For many, the only answer is to source alternative means of manufacturing — at least in the short term.
Grappling with a new reality
Shushu/Tong has a number of US stockists, including Nordstrom and Neiman Marcus (online) as well as Atelier in New York, LA’s Dover Street Market and Ikram in Chicago. Co-founder Liushu Lei says the brand is looking for opportunities to produce in other countries outside of China, such as Korea or Japan. “For Autumn/Winter 2025, we are going to work with an overseas factory for international orders — which is cheaper than 145 per cent tariffs. That’s what I can only do to avoid them,” Lei explains.
Designer Mark Gong is facing a similar choice. Gong, who has dressed stars like Rihanna and K-pop star Jennie, says that US retailers have been asking for trade discounts, which would cut into brand margins. “We don’t have many sales channels in the US, but we’re still struggling with that. We are also trying to find new factories outside of China to produce all the products for them,” says Gong.
For Jacques Wei, it makes little difference, as his main customers are in Europe and the Middle East, while its domestic consumers, he says, are stable. Co-founder Donghui Wei says that target customers from the US mainly consist of small or medium-sized groups that often have limited or specific budgets for overseas or new names. “Nowadays, it’s just killing all the possibilities to work with them. Who can afford these costs? Instead, they just back off,” says Wei. But he says he is unperturbed, and instead is “absolutely focused on expanding more especially into Europe and the Middle East”.
The head of buying and business development at the concept store ENG, Laura Darmon, says the timing — just after the orders season — will further impact smaller brands. These will be the most impacted as they rely on wholesale. “We are all worried and margins are going up. Emerging brands are in danger and some will go out of business. But at the same time, if they strengthen their local market, it can be a plus.”
New designer brands that launched in China during the pandemic have been unable to export to the West; now, as prospects look even more grim, brands are wondering what their path is to growth.
A spokesperson for Shanghai-based direct-to-consumer brand Long Yi W says that the domestic market is not making up for the loss of potential international sales. “China’s current economic situation is not particularly optimistic, while the international situation and the issue of tariffs have had an impact on our economy as a whole. As a result, many people’s incomes are not as stable as before and they are losing their incentive to spend. That means that the whole value chain is looking for more ways to survive and thrive.”
When Shenzhen-based Linghe started, it focused on growing as a global brand, but now only a quarter of its business relies on international markets. “Due to the ongoing trade issues, we began to focus on diversifying our business several years ago,” founder Li Aishu explains. Because the brand owns its factory, it can produce good quality products with prices which are “friendly to domestic consumers”, Aishu says.
In the current climate, Aishu says “everyone is comparing prices”, and profit margins are limited given the top-quality materials such as expensive cashmere. Plus, since the introduction of the levies, Linghe, like Mark Gong, has had international clients asking for lower prices. Aishu’s philosophy? “It’s better to lose some clients than downgrade products.”
Refocusing priorities
Houdart agrees that the mood among consumers at home in China is still subdued. Houdart points out some key phrases that have emerged on Chinese social networks capture the mood of consumers at this time, such as qu pin pai hua (去品牌化). “Here, younger consumers are moving away from blindly chasing established brand names. Instead, they are focusing on product quality, functionality, and personalisation.” This trend reflects a growing interest in domestic and niche brands offering better cost-performance ratios, often with a more customised approach. The scenario could be “a win for local brands because they’re Made in China and fit for the local market,” Darmon adds.
As for whether this will impact US brands going into China, Chris Pereira, CEO of iMpac, which helps Chinese brands expand, says that there are “no boycotts per se”, but there is growing anti-American sentiment more broadly. “We can see some nationalist tendencies from the media and online. The view here is that the US is a bully and that the reaction is arbitrary and unfair. But from a US perspective, higher-end brands will be able to survive the price increases that tariffs bring.”
International retailers are spooked and domestic multi-brands are shifting budgets. Production and material costs are already spiking. Initial tariff impact has been major, and it’s hitting indie brands the hardest.
Darmon agrees that consumers will drop some overseas products and brands, but not all of them. Plus, daigou and resellers will also be sure to “step in and fill any gaps”.
Overall, despite the difficulties, there exists an overriding sense of optimism amid the confusion. Darmon points out the ability of big tech companies to engineer a deal, which she sees as a positive. “I’m sure it will be resolved.”
For many brands, the uncertainty of a trade war is likely to push them into new markets that they otherwise might not have prioritised. Pereira, who is based in Singapore, says to “look out for more local and regional trade agreements [within Southeast Asia] incoming very soon”.
For Shushu/Tong’s Lei, it’s simple: “The world is big enough. There are definitely more opportunities outside of the US,” he adds.
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