US Trade Wars Won: China's Intimate Apparel Supply Chain Adaptation Blueprint

In recent years, China's lingerie manufacturing hub in Guanyun County has become a vital part of the country's export landscape, particularly in the realm of e-commerce. However, the looming threat of increased U.S. tariffs and tightening e-commerce regulations is forcing local businesses to adapt quickly. As 2024 unfolds, manufacturers who rely heavily on U.S. sales are exploring new strategies to stay competitive and ensure sustainable growth.

The Growing Concerns Over U.S. Tariffs and E-Commerce Regulation

On December 16, 2024, Reuters reported that manufacturers in Guanyun County, known for producing intimate apparel, are expressing growing concerns about potential changes to U.S. tariffs. A large portion of their business, about 70% of their revenue, comes from selling products through platforms like Shein and Temu, with the bulk of these sales directed toward U.S. consumers. However, proposed changes to tariff regulations, particularly the potential tightening of U.S. tax exemptions on small-value shipments, have raised alarms across the region.

The U.S. "de minimis" rule currently allows tax-free shipments valued under $800, which has significantly benefited Chinese e-commerce companies by enabling them to ship directly to U.S. consumers without customs duties. This rule has been a driving force behind the growth of platforms like Shein and Temu, as well as the rapid expansion of small factories in Guanyun. However, the Biden administration and incoming political leadership, including Donald Trump’s campaign promises to raise tariffs on Chinese goods, could alter this landscape, creating new risks for the region’s economy.

E-Commerce’s Role in Guanyun's Economic Growth

Guanyun County, located 180 miles from Nanjing, has seen a boom in the lingerie industry, largely fueled by the "de minimis" rule. The area's industrial park, built with government support, has become a central hub for lingerie production, with local manufacturers like Lei Congrui’s Midnight Charm Clothing serving customers across multiple e-commerce platforms. Lei's company, which specializes in intimate apparel, has benefited immensely from the relaxed U.S. tariff rules, helping his business grow exponentially.

But now, with the potential tightening of the "de minimis" rule, Lei and other local manufacturers are reevaluating their business strategies. If U.S. tariffs increase, the cost of shipping directly to U.S. consumers would rise, potentially reducing sales volume and forcing American customers to pay higher prices.

Adapting to New Market Conditions: Exploring Warehousing and New Markets

To mitigate these risks, manufacturers are considering several strategies, including establishing warehouses in the U.S. and exploring alternative markets like South America, the Middle East, and Central Asia. Lei, for instance, is looking into warehousing options in the U.S. and shifting toward bulk shipping, a model that could reduce costs compared to air freight.

Manufacturers like Xu Yan, founder of the lingerie company Gummy Park, are also optimistic about diversifying their export markets. Xu notes that while a third of her exports go to the U.S., she believes that growth in other regions will make up for any potential losses in American sales.

The Impact on Local Workers and the Community

For Guanyun’s workers, the lingerie industry has been a source of economic stability. According to government data, the average disposable income in Guanyun surpassed 21,000 yuan in 2022, a significant increase from around 5,000 yuan in 2008. Many workers, like Zhang Lanlan, a seamstress at Midnight Charm, earn up to 7,000 yuan per month—comparable to the wages of workers in the booming electric vehicle sector.

Older workers, like 72-year-old Zhou Ayi, pack products in nearby warehouses, earning up to 3,000 yuan per month. For many, these jobs are a lifeline, allowing them to stay in their hometowns and avoid the need to migrate to larger cities for work. As Zhou notes, "It’s much better than working the land. Life is much easier now."

As the pressure mounts on Guanyun’s manufacturers to adapt to shifting e-commerce and tariff landscapes, the community is closely watching how these businesses pivot. The future of the lingerie sector, and its vital role in local livelihoods, depends on how quickly these manufacturers can respond to evolving global market conditions.

Looking Ahead: Resilience Amid Challenges

While the e-commerce landscape faces regulatory changes, Guanyun County’s intimate apparel manufacturers have shown remarkable resilience. Whether they will continue to thrive will depend largely on how effectively they can adapt to rising costs and shifting consumer demands in an increasingly complex global market.

For now, the priority is clear: diversify, innovate, and continue serving global customers through effective logistics, marketing, and product development strategies. The story of Guanyun's lingerie industry is far from over, and its response to these external challenges will determine its long-term success.