Despite The Heavy Burden Of Tariffs, There Has Been A Positive Growth in China's Cross-border E-commerce Of Shoes And Clothing.

 

Despite the heavy burden of tariffs, there has been a positive growth in China's cross-border e-commerce of shoes and clothing.

 

The United States is going to completely abolish the tax exemption policy for small-sized packages (those priced at $800 or less). The new policy will come into effect on August 29th. This means that Chinese cross-border e-commerce merchants will have to start a new adjustment process again.

However, based on the performance of these Chinese e-commerce companies selling clothing overseas in the first half of this year, they have demonstrated a certain ability to cope with the turbulent tariff situation.

 

The latest financial report released by the B2C footwear and apparel cross-border e-commerce enterprise Ziben Yu shows that in the first half of 2025, the company's revenue increased by 34.1% year-on-year to 1.961 billion yuan, which was the highest growth rate in the same period since its listing in 2022; the net profit attributable to the parent company increased by 15.9% to 106 million yuan. At the same time, due to the optimization of inventory structure and the reduction of inventory provisions, the gross profit margin also increased by 1.3 percentage points year-on-year, reaching 75.2%.

As the "first shoe and clothing cross-border listed company", Zizuyu's main business is to sell clothing and footwear products to overseas markets through third-party e-commerce platforms and its own websites. Its products are independently developed and manufactured by OEM suppliers on its behalf.

The main sales channels of Zizhiyu include Amazon, as well as platforms such as Wish, TikTok, Temu, and its own website. The main market is in North America. In the first half of 2025, the Amazon channel and the North American market accounted for 93% and 98% of the total revenue respectively. They also contributed the majority of the growth, with growth rates reaching 32% and 38% respectively.

 

One significant backdrop that cannot be ignored in the first half of 2025 is the adjustment of the US tariff policy towards China. Starting from April, the US has repeatedly changed the tariffs imposed on Chinese goods exported to the US; on May 2nd, it also revoked the duty-free treatment for small packages from the Chinese mainland and Hong Kong, and this policy is closely related to China's cross-border e-commerce. In the past few months, small packages exported from China to the US have been subject to a 54% ad valorem tax or a $100 per-piece specific tax.

However, Zizuo did not mention in the financial report the specific impact of tariffs on the company's business and the corresponding measures. NetEase News attempted to contact Zizuo for an explanation, but no response was received by the time of publication.

 

Image source: Zizuyu Official Website

However, it is not difficult to find the manifestation of Son Buoy's impact from tariffs on the financial reports.

In the first half of 2025, Zizhongyu's sales expenses and distribution costs increased by 40.4% to 1.322 billion yuan, with the growth rate being higher than that of the revenue. Zizhongyu stated that the reasons for this change were two-fold: Firstly, the increase in sales volume and the rise in the unit price of shipping led to an increase in freight and insurance costs; secondly, the increase in marketing and advertising expenses.

The key point is "increase in shipping unit price". According to the prospectus of Subi Noi, the company's customs declaration and payment are all handled by the logistics service provider, so the related costs are included in the logistics service fee.

 

As for the company's approach to dealing with the increase in tariffs, although it was not specifically mentioned in the financial report, some clues can still be found from the company's past practices and its operational strategy in the first half of the year.

First of all, it should be noted that the "sons do not speak" approach is not without experience in dealing with the increase in tariff costs; its core strategy is to raise prices.

 

The company mentioned in its prospectus that since 2018, all its products sold to the United States were subject to additional tariffs. The tax rate for most products was 7.5%, while for the remaining products it was 25%. The approach of Subnoi mainly involved "increasing the selling prices of products to transfer additional costs to customers in order to maintain profitability". This approach supported the continuous growth of Subnoi's performance and did not suffer from the adverse impact of "the imposition of additional tariffs".

To some extent, price hikes mean losing the price advantage. The brand's value is needed to convince consumers to make the purchase and to maintain the premium margin.

 

And enhancing brand strength is a strategic priority for Zizhiyu in 2025. The company stated in its financial report that in the first half of the year, it adjusted its organizational structure to restructure departments based on the brand; at the same time, it upgraded the visual system of its core brand; in the marketing aspect, it first established a brand book, clearly defined the user profile, and collaborated with overseas KOLs to conduct social media promotion, as well as layout brand narratives on content platforms.

Currently, in the brand matrix of Ziben Yu, apart from several core brands mainly targeting Amazon, there is also a high-end women's clothing brand named Rich Radi Q'S, which has established its own online store. This brand embodies Ziben Yu's ambition to enter the high-end market. The website of this brand was seen by The Interface News. Rich Radi Q'S is positioned as a light luxury brand, with its price range mainly falling between 200 US dollars and 1,000 US dollars (approximately 1,432 yuan to 7,160 yuan in RMB). In the first half of 2025, the revenue of Rich Radi Q'S reached 40 million yuan.

Focusing on brand building is actually a strategy that other clothing e-commerce companies have already adopted. For instance, Saver Era completed its brand transformation around 2018 and established a differentiated operation model for top brands and mid-range brands.

Zhang Yi, the CEO and chief analyst of iimedia Research, told The Paper, "The quality of Chinese products is still competitive in the global market, and their prices also have considerable flexibility. Combining these two factors to leverage their advantages will provide a very high degree of flexibility for strengthening brand building."

Image source: Zizhiyu Financial Report

Apart from brand building, Ziben Yu is also promoting the globalization of its supply chain. The financial report shows that Ziben Yu "achieved its first overseas production capacity breakthrough" in the first half of 2025. It has focused on establishing a supply chain in Vietnam and is also gradually expanding production capacity in Myanmar, Malaysia, Cambodia and other Southeast Asian countries. According to previous financial reports, Ziben Yu established a subsidiary in Vietnam at the end of 2024. The main business of the subsidiary is "procurement of products".

However, with the continuous changes in the US tariff policies and the global trade environment, even when establishing supply chains overseas, particularly in Southeast Asia, one still has to face potential trade risks.

 

Take the upcoming new tariff policy for small packages in the United States as an example. This policy stipulates that starting from August 29th, all small packages sent from any country or region to the United States via the international postal network will be subject to customs duties. You can choose either ad valorem tax or specific duty.

The ad valorem tax rate is the valid IEEPA tariff rate applicable to the country of origin of the product. Currently, it is 30% in China and 20% in Vietnam. The specific duty system is divided into multiple brackets based on the valid IEEPA tariff rate applicable to the country of origin. For items with a tax rate lower than 16%, a levy of $80 is imposed per item; for those between 16% and 25%, $160 is imposed; and for those above 25%, $200 is imposed. Therefore, the specific duty applicable to Chinese goods is $200 per item, while for Vietnamese goods, it is $160 per item.

 

Zhang Yi told 21st Century Business Herald that the current trade environment and tariff policies between China and the US are subject to change, forcing cross-border e-commerce in the clothing industry to shift from exporting products to exporting brands. This also places greater demands on enterprises, including brand building, diversified market layout, digital operation, supply chain management, and local operation.

Furthermore, compliance capabilities are also crucial. "The quality inspection and intellectual property review of American goods targeting China have significantly increased. Companies need to avoid these risks," Zhang Yi told The Paper.

 

It is worth mentioning that Zizhongyu once suffered a lesson in terms of tariff compliance. The company's prospectus previously disclosed that due to unfamiliarity with the local tax laws, Zizhongyu did not pay sales and usage taxes for the sales on its own website from March 2021 until approximately three years earlier. Subsequently, Zizhongyu took corresponding internal control measures. However, considering that tariff declaration is mainly handled by third-party logistics service providers, Zizhongyu still included tariff declaration compliance as a risk factor in its business operations.

Original design will also be a key investment focus for Zizhongyu in the next 3 to 5 years, as revealed by Chen Caixiong, the CEO of Zizhongyu, at the 2025 annual strategy release event. The other key points include AI empowerment, global supply chain integration, and global talent deployment.

However, in terms of exploring new markets, Ziben Yu has not made any significant breakthroughs yet. Instead, it has become more reliant on the North American market. In the first half of 2025, Ziben Yu's revenue in Asia, Europe, and other markets all dropped significantly, and the proportion of non-North American markets continued to decline.