Amid escalating trade tensions between the United States and China due to US trade barriers, many Chinese firms have turned to Indian exporters to fulfil their demands. This strategic pivot aims to circumvent the hefty 145% tariffs imposed by the US on Chinese goods and to retain the international customers.
The Co-branding & Commissions
At the Canton Fair (April 15–May 5, 2025) in Guangzhou, the world’s largest trade exhibition, numerous Chinese firms have approached Indian exporters to source products bound for the US market.
The sectors witnessing the most interest include hand tools, electronics, and home appliances. For instance, Jalandhar-based OayKay Tools, known for its drop forge hammers and cold stamp machines, has reported engagement with multiple Chinese firms seeking to maintain their US market presence.
Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO), stated in a recent interview that these collaborations involve Indian companies manufacturing goods under Chinese brand names or co-branding arrangements. In return, Chinese firms receive a commission for facilitating these deals.
US Trade Barriers and the South Asian Shift
As the world economy is jolted by the recent trade tariff shockwaves given by the US, China is the one most impacted country, with an imposition of 145 percent. In comparison, goods exported from India to the US face a 10 percent duty, which could rise to 26 percent in July if President Donald Trump implements his planned reciprocal tariffs once the 90-day pause concludes.
However, to counter this, many Chinese businesses have turned towards South Asian countries like Vietnam, Thailand, India, and others to set up their factories and ship their products, which are further exported to the US.
A Surge in Diverted Orders to India
However, as Washington tightens scrutiny on supply chains from Vietnam and Thailand, once seen as safer alternatives, India is emerging as a particularly attractive option for Chinese firms. This evolving dynamic positions India to capture a growing share of diverted export orders, strengthening its role in the reshaped global supply chain.
US-India Trade Deal Progress Spurs Export Growth
The surge in export orders also coincides with India’s advancing negotiations with the Trump administration on a new trade agreement, an effort New Delhi hopes will shield its goods from higher US tariffs. During a visit to India last week, US Vice President JD Vance emphasized the beginning of a “new era of collaboration” between the two nations. He highlighted the steady progress toward finalizing a bilateral trade deal, which both sides aim to conclude by the fall of this year.
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