In Depth: Chinese Exporters Pivot to Domestic Consumers in Trade War Hedge
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The recent 90-day truce in the U.S.-China tariff war has prompted a flurry of activity among Chinese exporters, with traders rushing to ship goods overseas before tensions escalate again. But at the same time a major shift is underway among exporters — many are now trying to sell those same goods at home, as they scramble to hedge their bets against future global instability.
In April, as Beijing and Washington went to toe-to-toe with tariffs, foreign trade manufacturers turned to domestic consumers, launching high-profile “export-to-domestic sales” exhibitions and campaigns in supermarkets, department stores and shopping malls. Manufacturing areas held investment promotion conferences and e-commerce platforms tilted traffic toward “repatriated” foreign trade products.
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- DIGEST HUB
- Chinese exporters are shifting towards domestic sales due to global instability and U.S. tariffs, despite challenges like consumer preferences and intense competition.
- Beijing is supporting this shift with policies like tax breaks and credit support, while major retailers and e-commerce platforms like JD.com and Alibaba are offering assistance.
- Challenges persist for exporters, including difficulties in brand building for the domestic market and slow payment cycles, which impact cash flow.
Summary:
Following a 90-day truce in the U.S.-China tariff war, Chinese exporters have been shipping goods overseas at a brisk pace to beat any resumption of tariffs. Simultaneously, many are shifting strategy by refocusing on the Chinese domestic market, aiming to mitigate risks from future international instability[para. 1]. In April, as tariff tensions intensified between Beijing and Washington, manufacturers initiated high-profile campaigns to transition export goods to domestic sales, including exhibitions in supermarkets, malls, and increased promotion on e-commerce platforms. Policymakers and local administrations also organized investment promotion events and guided e-commerce traffic to these transitioning products[para. 2].
Despite these efforts, building a sustainable domestic presence is challenging. Exporters face hurdles such as different local consumer preferences, fragmented retail channels, tougher pricing competition, and longer payment cycles compared to predictable and bulk overseas orders[para. 3]. However, the policy environment has grown more supportive since 2021, with Beijing offering tax breaks, rent reductions, and expanded credit and insurance to encourage exporters’ domestic expansion. China’s largest e-commerce and retail platforms have pledged to boost traffic and shelf space for such products[para. 4].
Yet, this transition’s success is limited by sluggish consumer demand. Although retail sales saw some recovery in early 2025 due to stimulus policies, including "trade-in" subsidies, overall domestic retail growth remains modest[para. 5]. Chinese authorities have responded to these economic headwinds by aggressively supporting exporters’ pivot. The Ministry of Commerce launched a nationwide program in March 2025, with events in 10 regions attracting over 2,400 companies and 6,500 domestic buyers, generating purchasing intentions valued at 16.8 billion yuan ($2.3 billion). Major cities like Shanghai and Beijing provided funding and logistical support, including subsidies for online marketing systems[para. 6][para. 7][para. 8].
Retail giants such as Yonghui Superstores streamlined onboarding of exporters’ inventory, while e-commerce leaders—JD.com, Alibaba, and Douyin—introduced dedicated channels, quick certification processes, and committed to large-sum purchases from foreign trade companies for the domestic market. JD.com notably vowed to buy at least 200 billion yuan of redirected goods in the next year, simplifying domestic sales for smaller manufacturers through end-to-end operational services. Alibaba’s programs aim to help tens of thousands of merchants and hundreds of thousands of products shift domestically[para. 10][para. 11][para. 12].
Nevertheless, actual sales remain a challenge, with pilot store experiences revealing that domestic consumers often overlook repatriated foreign trade products, underlining the need for effective consumer targeting rather than simply shelf placement[para. 16][para. 17]. Building sustainable brands domestically is a further obstacle—companies face costly and uncertain branding efforts, highlighted by shoe exporters selling at a loss due to product mismatches with Chinese tastes. Some firms, such as Qianhuan Trading, have successfully leveraged Douyin e-commerce, with domestic revenue rising to about 30% by tailoring products for Chinese consumers and reorganizing supply chains for speed and responsiveness[para. 19][para. 21][para. 22][para. 23][para. 24]. Still, others struggle to gain traction due to differences in online marketing and consumer demand[para. 25].
Financial hurdles are significant. Slow and unpredictable payment cycles are major bottlenecks for former exporters, as domestic settlements can face 60–180 day delays, whereas foreign trade enjoyed faster and more reliable payments. China’s crowded and competitive retail market exacerbates buyer power over sellers[para. 27][para. 28][para. 29]. The central government has promoted domestic trade insurance and financing solutions, and issued new guidelines to support the transition, though uptake remains limited and problems with market knowledge and regional protectionism persist[para. 31][para. 33][para. 34]. Experts argue China must build a more unified, integrated domestic market to make this pivot viable long-term[para. 35][para. 36].
- Yonghui Superstores Co. Ltd.
- Yonghui Superstores Co. Ltd. (601933.SH) is a major Chinese retailer. It offers a 15-day fast-track process for onboarding exporters' surplus inventory and provides promotion support. The company is evolving into a hybrid brand retailer, viewing the surge in supply as a strategic opportunity to bolster its supply chain and deepen internal reforms.
- Miniso Group Holding Ltd.
- Miniso Group Holding Ltd. acquired Yonghui Superstores Co. Ltd. After this acquisition, Yonghui is transforming into a hybrid brand retailer with its own product lines. Miniso views the surge in surplus inventory from exporters as a chance to strengthen its supply chain and implement internal reforms.
- Alibaba Group Holding Ltd.
- Alibaba Group Holding Ltd.'s offline grocery business, Freshippo, has introduced a 24-hour fast-track certification channel and a "foreign trade section." This initiative is part of a broader effort by major Chinese retailers and e-commerce platforms to help foreign trade companies expand into the domestic market. Alibaba's Taobao and Tmall marketplaces are also supporting this transition through their "Foreign Trade Selection" program.
- JD.com Inc.
- JD.com Inc. is a major Chinese online retailer. In response to U.S. tariffs, JD.com pledged to purchase at least 200 billion yuan of foreign trade goods redirected to the domestic market over the following year. They also offer a full-service model for smaller manufacturers to help them transition to online domestic sales.
- Qianhuan Trading Co. Ltd.
- Qianhuan Trading Co. Ltd. is a Bluetooth-headset manufacturer based in Shenzhen. Previously, it operated solely as an OEM for international brands. In 2023, Qianhuan launched its own consumer brand in China, with domestic sales now accounting for 30% of its revenue, primarily through Douyin. The company adapted its strategy for the domestic market by focusing on speed, responsiveness, and customer service.
- Xinxuan Group
- Xinxuan Group is a major multi-channel network (MCN) on Kuaishou, a Chinese video-sharing mobile app. The company is actively building a foreign trade supply chain evaluation system and has partnered with several exporters to help them transition to the domestic market. Founder and chairman Xin Youzhi noted their ability to list food and clothing products immediately, while home furnishings often require customization for domestic consumers.
- Since 2021:
- Beijing has rolled out measures to encourage foreign trade enterprises to expand domestically, including tax breaks, rent reductions, and increased credit and insurance support.
- 2023:
- Qianhuan Trading Co. Ltd launched its own consumer-facing brand in China using Douyin e-commerce, shifting from pure OEM operations.
- Since 2023:
- The central government has issued multiple policy directives encouraging insurers to expand domestic trade insurance offerings and for banks to offer financing based on collateral such as accounts receivable, inventory, and purchase orders.
- End of 2024:
- The National Development and Reform Commission and seven other departments released new guidelines emphasizing the role of domestic trade insurance in integrating domestic and foreign trade.
- Late March 2025:
- The Ministry of Commerce kicked off the year-round Foreign Trade Quality Products Tour of China.
- April 7, 2025:
- Yonghui Superstores Co. Ltd. announced a 15-day fast-track process for onboarding exporters’ surplus inventory and offering promotion support.
- April 11, 2025:
- JD.com Inc. pledged to purchase at least 200 billion yuan of foreign trade goods being redirected to the domestic market over the next year.
- April 15, 2025:
- Alibaba marketplaces Taobao and Tmall launched their Foreign Trade Selection program.
- April 16, 2025:
- Douyin launched a support plan for foreign trade products, integrating its e-commerce and lifestyle services to help exporters enter the local market.
- April 18, 2025:
- The Shanghai Municipal Commission of Commerce and the Beijing Municipal Commerce Bureau each held meetings focused on helping foreign trade enterprises expand domestic sales, with proposals for online store support and funding.
- April 2025:
- With escalating U.S.-China tariffs, Chinese exporters increasingly pivoted to domestic markets, launching ‘export-to-domestic sales’ campaigns.
- As of April 23, 2025:
- Nearly 10,000 suppliers had begun negotiations with JD.com, covering about 200,000 products.
- By early May 2025:
- The Foreign Trade Quality Products Tour of China had held events in 10 regions, attracting over 2,400 foreign trade companies and 6,500 domestic buyers.
- May 9, 2025:
- Guangdong province held a symposium emphasizing e-commerce for integrating domestic and foreign trade.
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Jun. 6, 2025, Issue 21
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