Overview

In response to tariffs imposed by former President Donald Trump, Chinese exporters are increasingly utilizing third-party countries to ship goods in an effort to disguise their true origins. This tactic, often referred to as “place-of-origin washing,” has gained traction, particularly on social media platforms in China.

The Growing Concern

The initiative arises from fears surrounding the substantial tariffs that could reach up to 145% on Chinese goods, jeopardizing access to crucial markets like the United States. Sarah Ou, a salesperson for Baitai Lighting in Zhongshan, articulated the dilemma: “The tariff is too high. We can sell the goods to neighboring countries, and then those countries can sell them to the United States, which reduces our liability.”

A Tactic on the Rise

Advertised services on platforms like Xiaohongshu promote shipping to countries such as Malaysia that can issue new certificates of origin, facilitating a smoother entry into the U.S. market. One advertisement asserted, “The US has imposed tariffs on Chinese products? Transit through Malaysia to ‘transform’ into Southeast Asian goods!”

Regional Impacts

Concerns regarding these practices have spread beyond China. For instance, South Korea’s customs officials recently reported finding foreign goods valued at approximately Won29.5 billion ($21 million) with falsified origins, predominantly from China and intended for the US market. The agency noted a significant increase in attempts to use South Korea as a transit point to avoid US tariffs.

Vietnam’s trade ministry has called on local associations to enhance checks on the origin of goods, aiming to prevent counterfeit certificates. Similarly, Thailand’s foreign trade department has initiated measures to tighten controls on products destined for the United States.

Shipping Methods

Many Chinese manufacturers are opting to ship goods as “free on board,” transferring liability to buyers once products leave Chinese ports. As one exporter suggested, once goods arrive at ports like Guangzhou or Shenzhen, their responsibilities cease.

Logistics representatives have indicated capabilities to channel products through Port Klang in Malaysia, where they can modify packaging and tags to align with different origin claims.

Industry Perspectives

Experts warn that the proliferation of origin-altering schemes poses risks, particularly to US companies. A senior executive from a leading independent seller on Amazon highlighted the dangers of altered shipment origins, stating that such practices could invite scrutiny from US customs. “You’re putting a lot of trust in a Chinese supplier,” they noted, indicating the complexities involved in international trade.

Conclusion

The emergence of companies engaging in “origin-washing” underscores the ongoing challenges and strategies occurring in global trade as businesses adapt to new tariffs. While many are exploring gray areas to mitigate tariff impacts, the long-term implications for both exporters and importers remain to be seen.