Newscasts - Hong Kong watchmaker looks beyond US after de minimis ends

TT International

06/05/2025 07:36

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Source: 'Reuters - Business videos'

Description: The Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong on Friday in a move aimed at tackling fentanyl shipments to the U.S., and Hong Kong small business owners like as watchmaker Quinn Lai have found themselves in the crosshairs. Ryan Chang has more.

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Video Transcript:

When watchmaker Quinn Lai heard Washington was closing its so-called "de minimis rule", he thought that was the end for his business. His operation in Hong Kong, DIY Watch Club, sells do-it-yourself watchmaking kits overseas, with most of his customers based in the US.

So, when the tariff first hit, it was actually pretty bad. So, we had 80%-plus in the US, right? So, we were literally considering downsizing the company and it was going to be game over.

His kits could enter the US free of import duties thanks to de minimis, which exempted low-value packages. But starting from May 2, if those same packages are coming from Hong Kong or Mainland China, they'll get slapped with a 90% tariff or a flat fee of $75. It's part of a punishing trade war between Washington and Beijing. On the face of it, the rule aimed to target traffickers of fentanyl and other illicit goods. But Lai is caught in the crossfire and he's trying to wean himself off the American market.

But now I think we recently, because of this whole uncertainty in the US market, we're basically shifting our marketing efforts and everything to target Europe and a bunch of other countries. And now I think it's down to it's still a good chunk of our revenue, though. It's still over half. Going forward I'm definitely going to try to grow my customer base in Europe. At the very least I'm going to be localizing my materials, let's say teaching materials, website and I'm going to be designing more watches for the region, and then definitely looking for YouTubers from the region. That's going to help quite a bit in reaching out to the audience. And on top of that, I might explore Japan as another market. So, growing these markets will allow me to rely less on the US market, and hopefully eventually the US would be like, let's say 15% of my portfolio. I think that would be a safer place to be.

Low-value shipments from China to the US reached an estimated $5.1 billion last year, according to US Census Bureau data. That made it the seventh-largest US import category from China, behind video game consoles. Kennedy Wong, honorary president of the Hong Kong Chinese Importers' and Exporters' Association, says it's tough for local business owners to adapt to new tariff rules.

No one single market can replace the US. Probably 20, 30 markets together would have a similar size but that would mean a lot of extra work and also overcoming the various trade regulations and also import regulations. Well, never easy.

He says Hong Kong traders should pivot to emerging markets in Southeast Asia or in Africa, that have a larger young population than in other developed countries.