As the U.S.-China trade war heats up, businesses in major export hubs in southeastern China are announcing factory “holidays” – halting production and slashing employee wages and work hours – while turning to social commerce platforms to sell stockpiled goods, as they grapple with a sharp drop in overseas orders.
It’s a phenomenon sweeping across China’s export-driven provinces like Zhejiang, Guangdong, and Jiangsu, where manufacturers – weighed down by a large backlog of unsold merchandise – are issuing a flurry of “holiday notices” to announce they are suspending operations at factories.
To clear large piles of inventory, companies are now resorting to selling the leftover export goods through social commerce platforms, such as TikTok and Taobao, at heavily marked-down rates.
Merchandise ranging from yoga pants and footwear to home appliances and blankets — originally intended to be exported to the U.S. — are now being sold online by Chinese export companies or their employees at bargain prices, multiple videos reviewed by RFA on Douyin, the Chinese version of TikTok, show.
The world’s two largest economies have been engaged in an escalating tariff war that threatens to roil global trade and upend supply chains, while sparking growing concerns over a full U.S.-China decoupling.
U.S. President Donald Trump has levied duties of 145% on imports from China – and up to 245% on some products. Beijing has retaliated with a 125% tariff on U.S. goods.
On Thursday, Trump struck a more conciliatory tone, expressing confidence that Washington and Beijing could reach a deal on tariffs “over the next three to four weeks.”
This follows the U.S. administration’s move to exempt certain products, including smartphones and laptops, from the recently announced duties.
But in China’s top tech-oriented export strongholds like Dongguan city in Guangdong province, Suzhou in Jiangsu, and Jiaxing in Zhejiang, the immediate fallout of the trade dispute is apparent in factory floors filled with towering stockpiles of unshipped goods.
Stockpiles of unsold goods
In a sprawling 20,000-square-meter warehouse in Jiaxing – a prefecture-level city where exports made up 75% of the total trade volume of 481.84 billion yuan (US$66.51 billion) in 2024 – heaps of merchandise originally meant to be exported now lie abandoned, according to a video posted by an unnamed Douyin user.
He noted that products once valued at over US$100 in the U.S. market now struggle to sell even at deeply discounted rates of a few dollars.
“The tariff war has caused a lot of foreign-trade leftover goods,” he said.
“Any piece of clothing here can sell for US$100 dollars (in the U.S.), but now it is being sold by tons, and the average price of one piece is only a few cents, and still no one is buying it … It’s impossible to survive.”
U.S. footwear brand Crocs’ signature rubber clogs – which typically retails for $30-$70 a pair in the U.S. – are now being offloaded for mere pennies in China, the vlogger said.
Crocs has production facilities in China. In February, it projected Chinese imports will account for about 15% of its inventory and that its fiscal 2025 profits could decline by about $11 million due to tariff headwinds.
But even products that have historically been targeted solely for the domestic market have not been spared, as U.S. tariffs threaten China’s slow and still-fragile consumer sentiment recovery, buoyed by a slew of stimulus measures to drive consumption.
Take the case of the iconic 400-year-old traditional Chinese knife brand Zhang Xiaoquan. Exports account for less than one percent of the Hangzhou, Zhejiang-based company’s annual sales, but its knives are being sold by the tons at the price of just a few cents per knife, the vlogger said in a video post on Douyin.
Pivot to social commerce
Further north in Jiangsu’s Suzhou city – where foreign trade volume hit a record 2.62 trillion yuan (US$358.9 billion) in 2024 – one factory is pushing its employees to sell its overstocked blankets online, another video posted on Douyin by an employee showed.
According to the employee of Suzhou Lively Home Textiles Factory who posted the video, a factory manager managed to sell more than 60 blankets by tapping his own relatives, friends, and acquaintances to whom he made half those sales.
At the same factory, which mainly produces blankets, employees were also informed that their working hours will be reduced and that only their basic wages would be paid, due to the challenges in exporting to the U.S.
“We are now facing a trade war, which has affected our orders … If you have a good job outside, you can leave,” the factory manager can be seen telling nearly 100 female employees, in the same video posted on Douyin.
As more people take to selling online, e-commerce companies say they are finding it hard to compete with heavily discounted prices of leftover export goods being sold via social commerce platforms.
“With the new tariffs in the trade war, it is impossible to make a profit. In general, business in all sectors is not good this year,” Zhang, an e-commerce entrepreneur in Yangzhou, Jiangsu, told RFA.
Like the other businessmen and experts RFA interviewed, Zhang provided only his first name for safety reasons.
Reliance on exports
China’s so-called “troika” of consumption, investment, and trade that drives the country’s economic growth actually only has one left: foreign trade, Chen, a Guangdong-based scholar, told RFA.
“China has little domestic demand because the average income of Chinese people accounts for too low a proportion of GDP, so their consumption capacity is not good. China cannot afford to lose the U.S. market,” he added.
To be sure, the intensifying tariff war has put to the test Chinese President Xi Jinping’s “dual circulation” strategy – which designated China’s domestic market as the mainstay of its economy and emphasized a reduction in traditional reliance on export-led growth.
Experts argue that China remains highly reliant on the U.S., its top export market, to which it exported goods worth $438.9 billion in 2024.
“I have worked in the manufacturing industry for more than 10 years and I understand clearly the ratio of China’s population to manufacturing. This economic situation (now) can be said to be unprecedented (and not seen) in decades,” said Chen Xiang, who previously worked as a manager in export factories in Zhejiang, Jiangsu and Guangdong – where many have now issued “holiday notices.”
One clothing export company in Jiangsu province issued a holiday notice announcing a suspension in production from mid-April until end-June.
Meanwhile, an electrical appliances manufacturer in Guangdong’s Dongguan city announced a one-month shutdown citing a lack of orders.
RFA also found that dozens of companies in Zhejiang – where exports accounted for 70% of the province’s gross domestic product in 2024 – had posted holiday notices.
In Zhejiang, more than 50% of its export companies are expected to stop production and take a “long holiday,” after the Labor Day public holiday on May 1.
“It’s like this in Jiangsu, Zhejiang, with even more factories in Guangdong now closed. People in some places can hardly survive. With tariffs increased to this extent, China-U.S. trade is almost decoupled,” Chen told RFA.
In 2024, China’s total manufacturing output reached 40.5 trillion yuan (US$5.65 trillion). Foreign trade volume – exports and imports – was 43.85 trillion yuan (US$6.1 trillion), of which exports accounted for 25.45 trillion yuan (US$3.49 trillion).
Edited by Tenzin Pema and Mat Pennington
rfa.org (Article Sourced Website)
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