Since US President Trump launched a tariff trade war, many Chinese foreign trade manufacturers have launched so-called "factory direct sales" products on cross-border e-commerce platforms, under the guise of contract manufacturing for famous brands, in an attempt to circumvent tariff penalties. However, this has also drawn widespread criticism as a platform for selling counterfeit goods. Some analysts have questioned whether the Chinese government is passively weakening intellectual property protections.
Chinese foreign trade manufacturers, frustrated by the tariff war, are turning to social media platforms like TikTok to sell their products. The TikTok account "@chinesefactorybuyer" circumvents the issue by writing, "Semi-finished products from the 'Chancery xx' OEM factory..." While not mentioning the brand name, the title explicitly mentions Chanel's name, "Channel OEM," with Chinese and English subtitles, claiming to have directly purchased hundreds of sets of semi-finished products. "How can they be produced? The OEM factory is closed, and 'Chancery xx' doesn't want these products anymore. I'm drooling over this! They even gave me all the accessories. And some secret items, the original cardboard... complete sets."
Another content producer using the account "@wengzteehfp8" held a Hermès Birkin bag that looked very similar to the original, using the Birkin bag carried by Hong Kong star Michelle Reis as a publicity stunt, declaring, "What I'm making today is a modified version of the 'Birkin' bag she often carries, and it can be customized to the same style." The operator also claimed to be using the double wave technique of "爱x士" (same pronunciation to avoid the brand's full name).
As more and more TikTok short videos claiming to be directly sold by Chinese factories are reposted, more consumers are attracted and directed to cross-border platforms such as Temu and Dunhuang.com to search for these "OEM factory source shipments" that claim to be top brands.
Only when they are mixed with fakes can they dare to publicize it
Jiang Yaqi, a professor at the College of Law and Politics at National Taiwan Ocean University specializing in technology and intellectual property law, told RT-Mart that while some products on cross-border platforms may indeed be sourced from OEM factories commissioned by international brands, even these are typically subject to confidentiality agreements or other contractual clauses. "Real OEMs typically avoid high-profile advertising due to legal risks. Counterfeit manufacturers, on the other hand, are known to advertise aggressively, leading to a widespread mix of genuine and counterfeit goods in the market."
She believes that platforms have a natural responsibility to strengthen content review and management. Complaints and even lawsuits from American consumers are valuable in themselves and can highlight the severity of the problem. However, cross-border platforms like DHgate, headquartered in China, face significant challenges in holding them accountable amid the current "politically correct" atmosphere of China's tariff war and trade war, and legal action is unlikely to proceed smoothly.
Data shows that on April 13th, DHgate downloads soared to 117,500. On iOS alone, 65,100 downloads were received in the US, a 940% monthly increase. Affected by the US's 145% tariff increase on Chinese products, Chinese exporters have exploited the "tariff-free" status of goods under $800 to flood the US consumer market. To close this loophole, the US will no longer exempt small packages from China and Hong Kong from tariffs starting May 2nd.
The sudden surge in popularity of Dunhuang.com has drawn significant attention and scrutiny from international media. TechCrunch, a tech news website, reported that these videos highlight how clothing, handbags, and other accessories, often perceived as European, are actually manufactured in Chinese factories. This makes it difficult for consumers to distinguish between genuine luxury brand factories and counterfeit goods (so-called "substitutes").
While Chinese media are nationalistically praising Dunhuang.com, the Chinese cross-border e-commerce site Blue Ocean Yiguan.com points out that the surge in traffic has led to Dunhuang.com being labeled a "brand-name substitute sales platform." The report notes that while some sellers on Dunhuang.com may be selling counterfeit goods, "the factory owners' desperate attempts to find a solution have put Dunhuang.com under immense pressure." "It's possible that US authorities will target Dunhuang.com and make a big fuss about this issue."
Factory direct video circulates, raising questions about the Chinese government's role
Matt Pearl, director of technology at the Center for Strategic and International Studies, told The New York Times that the Chinese government may be allowing the videos to circulate widely because it has previously prevented its citizens from posting videos that infringe on Western product trademarks.
"Which e-commerce platform in mainland China isn't selling counterfeit goods?" Wang Guochen, a full-time assistant researcher at the First Research Institute of the Chinese-American Institution for Economic Research, asked in an interview. The official Chinese WeChat account "Niu Tan Qin" proposed six countermeasures against the United States following the tariff war. These included halting imports of American agricultural products and suspending imports of American films, and Beijing has already begun implementing them.
In addition, regarding the fourth point, the US's services trade deficit with China is too high. Wang Guochen added, "This implies that China will weaken its emphasis on intellectual property rights, meaning that China refuses to strengthen the protection of intellectual property rights and patents. If the Chinese government takes the lead in this regard, the counterfeiting problem will be further exacerbated. Coupled with the serious internal competition among mainland Chinese companies, illegal activities are likely to become even more rampant."
Wang Guochen believes that if American consumers file lawsuits overseas, they can often only request the removal of infringing products from shelves, rather than actual punishment. This puts genuine companies at a disadvantage. In the past, for example, in the case of the Japanese brand MUJI, a knockoff even won a lawsuit against the genuine MUJI, highlighting the Chinese government's tolerance of such behavior.
In response to this, the head of the E-Commerce Department of the Ministry of Commerce of China recently responded in a Q&A session. After consulting with relevant industry associations, it was learned that Chinese brand-authorized processing companies attach great importance to intellectual property protection and will produce and ship according to the requirements of the order contract to maintain the international brand image. Regarding clues of false marketing, infringement and counterfeiting, and other illegal and irregular activities under the guise of so-called "OEM factories," the Ministry of Commerce of China stated that it "will promptly transfer them to administrative law enforcement departments for investigation and punishment in accordance with the law."
Dunhuang.com cannot circumvent tariffs by opening a store
Regarding manufacturers' attempts to circumvent tariffs through small-volume trade, Lanhai Yiguan believes that, fundamentally, opening stores on DHgate does not circumvent Trump's tariffs. Some manufacturers, like some B2C cross-border e-commerce sellers, may employ a "double-clearance and tax package + low declaration" approach to circumvent some tariffs, but this approach is shady and carries significant legal and economic risks.
Wang Guochen explained that the Trump administration will impose high taxes on small-value parcels from China and Hong Kong starting in May. According to their understanding, in addition to the increased financial costs, the most significant increase in time costs is the increased inspection time. Even if a package from China is broken down into smaller pieces, all parcels originating from China will still require inspection. "So, if we have to distinguish between small and large items, the inspection time will be extended. This will reduce consumer purchasing intention. Therefore, the US approach not only increases the financial cost, but also the implementation costs," he said.
China's small trade volume cannot withstand the heavy blow of tariffs in the US market
Mr. Hao, a Taiwanese businessman in China (who requested anonymity), told this station that the US's previous tariff exemptions for small-value goods under $800 encouraged a surge in consumer orders through e-commerce platforms. After the US imposed high tariffs on Chinese products, while some consumers still find the prices attractive even after the tariffs, overall demand has decreased. "According to feedback from some small commodity manufacturers in Zhejiang and Jiangsu provinces, current order volumes are down an average of 30% to 40% compared to before the tariffs," he said.
In his experience, operating in the US market is currently very difficult due to the tightening of US regulations. Chinese manufacturers are currently trying various methods, but since the US customs logistics system may not have fully caught up, there are still some gaps.
"There are policies from above and countermeasures from below, and some Chinese businesses are still trying to find workarounds, but these are not formal methods. China's e-commerce supply chain has been hit to a certain extent, resulting in a decline in order volumes. Currently, some Chinese manufacturers have shifted their focus to the Southeast Asian and European markets, and the US market is no longer their main sales target," said Mr. Hao.
Chen Songxing, adjunct professor at the Institute of National and Mainland Development at Chinese Culture University, analyzed that some Chinese micro-enterprises in foreign trade circumvent U.S. trade restrictions through methods such as manual purchasing or live streaming. However, due to the small transaction volume and limited profit margins, the impact on overall exports is limited. This model cannot compare with the distribution scale of large channels such as Walmart. It can only temporarily alleviate the financial pressure of some exporters or small and micro enterprises, and at most help export manufacturers to exchange some cash. It does not have a long-term substitution effect. "This type of sales is completely different from the traditional bulk order exports with upstream wholesalers."
China's small parcels are flocking to Europe for sale
The United States' imposition of tariffs on small parcels has triggered a spillover effect. According to a report from Central News Agency in Paris, more than 4.6 billion small parcels were mailed to Europe last year, 91% of which came from China. This means that 145 Chinese parcels are imported into Europe every second, and all of them enjoy tariff exemptions.
TikTok is flooded with sellers soliciting and luring Chinese manufacturers to sell in Europe. A Chinese user named "Xiaoya" recorded a video in the UK offering high bonuses to attract manufacturers to sell in Europe. "If you want a side hustle, I'll give you 500 euros a day to help me sell products on TikTok, and every profit from your sale will be yours."
Another Chinese seller, Yifan, is using the current advantage of no deposit required to enter TikTok's European market to attract new customers. "TikTok is now open in the EU, Germany, France, Italy, and Spain. All you need is a business license."
Regarding the influx of small packages from these ant armies, reports say that the French Ministry of Finance will announce "concrete measures" on the 29th to curb the invasion of Chinese packages.
