16-12-2024 (BEIJING) A burgeoning lingerie manufacturing hub in eastern China’s Guanyun county faces mounting challenges as potential changes to US trade policies threaten its remarkable growth story.
In the newly constructed WeMet Industrial Park, colloquially known as ‘Victoria’s Secret Town’, entrepreneur Lei Congrui showcases his latest collection of intimate apparel. The industrial complex, backed by $3 billion in local government investment, stands as a testament to the region’s transformation from farmland to a flourishing manufacturing centre.
The industry’s meteoric rise has largely benefited from America’s ‘de minimis’ provision, which waives tariffs on individual overseas packages valued under $800. This rule has proven particularly advantageous for Chinese e-commerce giants like Shein and Temu, alongside their numerous suppliers.
However, the sector now stands at a crossroads. With both US President Joe Biden seeking to restrict the provision and presidential candidate Donald Trump pledging increased tariffs on Chinese goods, Guanyun’s 1,400 lingerie manufacturers face an uncertain future.
“Any changes to the current trade arrangements will significantly impact our operations,” says Lei, whose Midnight Charm Garment Co. derives 70% of its revenue from US sales. The company, which began as a modest family workshop in 2006, now generates annual revenues exceeding $1.3 million.
The potential economic ramifications extend beyond individual businesses. According to Nomura, Chinese exports benefiting from the de minimis rule could reach £188 billion this year, representing 7% of the country’s overseas sales.
The transformation has brought unprecedented prosperity to this rural community of one million residents. Average annual disposable income has quadrupled since 2008, reaching 21,000 yuan ($2,900) in 2022. Local workers like Zhang Lan Lan earn competitive wages comparable to those in China’s booming electric vehicle sector.
Some manufacturers are already exploring contingency plans. Lei considers establishing US warehouses and diversifying into South American and Middle Eastern markets. Others, like Xu Yan of Gummy Park, maintain optimism about growth potential beyond US borders.
Yet, concerns persist about the industrial park’s future viability. Much of the planned research and logistics facilities remain unrealised, reflecting broader questions about systemic overinvestment in China’s industrial zones.
