China’s shoemakers seem more sanguine than its politicians

Some 1,200 miles south of where government officials in Beijing have been breathing retaliatory fire at American tariffs lies the coastal province of Fujian. This is where the rubber of a million running shoes will hit the road as the tariffs take effect.

Fujian exported footwear worth 79bn yuan ($11bn) in 2024, a quarter of China’s total, bound mainly for North America and Europe. The city of Quanzhou is home to some 3,000 footwear firms. Its streets are draped in everything needed to make shoes, from reams of fabrics spilling out of shop fronts, to plastic soles displayed alongside laces of every colour.  Mr Trump’s tariffs are top of workers’ minds, but the mood is surprisingly sanguine.

Many manufacturers had thought ahead, and stopped taking new American orders after Mr Trump was elected in November, says Mr Ding, a shoe-leather supplier in town. They knew tariffs might be coming and did not want to be locked into contracts that would result in losses.

Mr Ding’s sales are down as a result, at least 70% this year, largely owing to the loss of his customers’ American orders. While the burden of lower tariffs in the past could be shared along the supply chain, he says, the American tariff wall is now far too high to scale. “You have to endure this period of pain and see who can persevere to the end.” It is likely that many will not make it.

Tariffs imposed by Mr Trump in his first term led Chinese manufacturers to move some production to South-East Asia, sending materials from Quanzhou for final processing. That loophole looked set to close, with 46% American tariffs placed on Vietnam, but Mr Trump paused those on April 9th. Ms Wu, an insole maker, said she recently made a sample for a friend in Vietnam who expected an order of 60,000, but the deal disappeared after the announcement of the high tariff. Co-operation may now continue, but so will uncertainty.

With few other export options available, some are looking within China’s own borders. Only about a quarter of the shoemakers Mr Ding serves sell to Chinese consumers, and the domestic market is saturated. “We have to see whether domestic demand can take off,” he says. “No one has any business or any money, so they dare not consume.”

The same price wars that afflict many competitive industries mean that margins are razor thin. By the end of last year’s third quarter, nearly a quarter of China’s listed firms were losing money, more than double the number five years ago. Mr Zhang, who makes a few million shoes in a good year in Quanzhou, is not in the red yet. But since entering the industry eight years ago, he has seen the profit on a pair of shoes drop from 30 yuan to less than ten yuan.

State media’s projection of confidence has persuaded some. “The Chinese government will find a way forward,” says Ms Wu. “I believe in them.” Even those not looking to the government are surprisingly upbeat. Many have weathered storms before, including during Mr Trump’s first term and the pandemic. Mr Ding offers the advice of a veteran who has seen a few business cycles. “If you don’t have any orders, you should basically consider taking a holiday in the second half of the year.”

Some will do exactly that. They can only drop their prices by one yuan at most if they are to pay workers and rent, says Mr Zhang. “I’m still confused and not sure what to do.” ■