Why China Changed its Mind on “Made-in-China”

Socrates says , “Know yourself”. Sun Tze says, “Know yourself and your enemy” But ancient wisdom seems to always evade US President Trump, based on his decision to initiate a trade war against China-a decision that will shift the power dynamic in favor of US’ rival.

China has long moved on from “world factory” benefiting from cheap labor, to a country capable of producing essentially anything, thanks to its comprehensive industrial chain. Since 2010, China has maintained its global leadership, contributing 30% of global manufacturing value added. What Trump provides is an once-in-a-life-time chance for China to showcase its manufacturing clout to the world.

Chinese Manufacturers’ Counterattack

One recent viral video on Tiktok featured a Chinese manufacturer declaring, “80% of luxury bags are made in China, though brands never admit it,” garnering millions of likes. When this video was shown to luxury experts, some had to concede vaguely: ” Many luxury brands do preassemble in China before their final assembly in France and Italy.”

Consumers reacted strongly, with the top comment saying: “they called it fake because it’s made in China – turns out the real fake is when the same item gets a foreign label and a higher price.”

Let people pay, not for the craftsmanship or the quality of the product, but for the imagined glamour of a brand carefully manufactured—arguably the only thing it actually produces. Capitalism at its finest.

But not all consumers are luxury disciples. While Hermès was busy raising prices, many American shoppers have been turning to Chinese e-commerce platforms. Chinese international e-commerce platform DHgate is now ranked #2 on the U.S. App Store. Who wouldn’t want bypass the middlemen and source directly from cost-efficient Chinese manufacturers?

Trump’s “tariff wall” appears fragile in the face of the tide of Chinese manufacturing.

Some creative examples of how Chinese exporters are tearing down the tariff wall at the US customs: Shenzhen furniture makers are registering their beds as “North American oak + mortise-tenon design fees + carving labor,” reclassifying 60% of costs as low-tariff “parts + services.” Entrepreneurs from Yiwu, a city known for manufacutring everyday goods, are now registering their power banks as “battery cells + casings + safety certification,” boosting profits by 37%. As the Chinese adage: “For every policy, there’s a countermeasure.”

China’s Manufacturing Web

The Global Value Chain Reconfiguration Theory observes China’s transition from “assembly hub” to “network orchestrator.” Unlike traditional sequential chains (raw materials→components→assembly), China now controls critical nodes while outsourcing non-core segments, creating spiderweb-like interdependencies.

Vietname serves as the best example. By 2024, China’s exports to Vietnam hit $160 billion (70% intermediate products), which Vietnam processes for re-export to the West. For instance, Chinese TV components undergo final 10% assembly in Vietnam to gain “Made in Vietnam” status—tripling Vietnam’s U.S. trade surplus since 2017.

Mexico has also been integrated into China’s supply chain. Chinese investment in Mexico has surged significantly, growing from $38 million in 2011 to $386 million in 2021.

A popular term among acadmia refers to China’s practice the “twin-factory” model where a comapny keeps its “brain” in China while expanding its “body” overseas. For example, the Chinese company Hisense, which bases its R&D centers in Shenzhen, has paired itself with production sites in Mexico, including a battery factory in Coahuila that operates with 65% Chinese-made electrodes.

Strategic Industries

Beyond these, Chinese manufacturing is branching into fields that are beginning to unnerve U.S. elites:

Deutsche Bank, in its report titled China Eats the World, stated: “China has unexpectedly dominated industries such as complex telecommunications equipment, nuclear power, national defense, and high-speed rail… In the electric vehicle sector, China holds about 70% of patents, and is similarly positioned in 5G and 6G telecommunications equipment.”

China recently implemented export controls on seven categories of medium-heavy rare earth elements. With command over 99% of global heavy rare earth supplies and 85% of worldwide processing capacity, China holds a quasi-monopoly position in critical sectors such as modern defense systems, green tech supply chains (particularly EVs), and advanced semiconductor manufacturing.

Conclusion

Chinese people’s perception of “Made in China” can vary greatly depending on the industry they are in:

Yet, for all facets of Made in China, trade wars are but a passing drizzle of summer rain—intense but fleeting.

Editor: huyueyue