9 hours ago
- Business
- South China Morning Post
Small businesses, big tariffs: young Hong Kong entrepreneurs amid US-China trade war
When Hong Kong teen Darren Lee launched his sock company six months ago, he was eager to support the underprivileged artists behind his products' designs.
But after a few roller-coaster months of the US trade war with China, Lee is facing massive hurdles that are causing him to reconsider his target markets.
According to Lee, who is the 19-year-old founder of Sababu Socks, about 30 per cent of his customers are from the United States, meaning he has been dealing with the country's tariffs on Hong Kong goods.
'Our product is a sock, so, obviously, the jump in price can't be too significant,' said Lee, who runs his business while studying at the University of Hong Kong.
Tariffs are taxes imposed on imports, and they are typically used to regulate trade and protect domestic industries.
In April, US President Donald Trump sent companies and governments across the world into a frenzy after proposing increased tariffs on goods from every country. This set off a diplomatic tug of war between the United States and many of its largest trading partners.
The US and China have temporarily agreed to roll back most of the massive hikes in a truce that is set to end in mid-August. Still, US tariffs on many Chinese goods remain higher than they were before April.
The situation remains volatile, and small businesses in Hong Kong – like Lee's Sababu Socks – are just a few of the victims caught in the crosshairs.
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A shift in focus
Amid the instability of the US-China trade war, Lee found that he had to become a more adaptable entrepreneur.
In response to Trump's tariffs, Sababu's original delivery option, the Hongkong Post, stopped taking parcels with goods destined for the United States.
Not only did Lee have to find a new delivery service, but he also adjusted to the tariffs by increasing shipping fees for small US orders and notifying customers that the delivery timing could be unpredictable. But his company has swallowed the cost of free international shipping for bigger orders.
Lee said he had also shifted his company's plans because he expected US-China tensions to affect sales.
'[Americans are] less likely and less inclined to buy Chinese products. So I think definitely there is an impact if I were to [say] everything is made in China,' he said, adding that he had been advised to avoid running ads in the United States for now.
Lee realised the importance of not putting 'all my eggs in one basket'. Now, he is trying to target other markets, such as Europe.
Despite the unstable situation, Lee thinks that many customers continue supporting him because he is a young entrepreneur and his business supports artists in various African countries.
'People want to support small businesses even more,' he said.
Darren Lee is the founder of Sababu Socks. Photo: Handout
Opportunities elsewhere
Sababu is not the only small Hong Kong-based company that has shifted priorities in recent months.
Mir Kash is a vegan bag company founded by 29-year-old Rajul Daga. The business is based in Hong Kong and its products are made on the mainland, but its sales target Western markets, including the US.
'The West was a very lucrative space,' she said. 'I had started putting a lot of money in the US for my ads and Instagram content.'
But her sales have since been threatened by the trade war. If Trump had kept the April tariffs, Daga said this would have hurt Mir Kash's US sales by at least 75 per cent, and shipping costs would have increased threefold.
'If you're buying a handbag, which is US$200 [HK$1,570], why would you pay over US$100 just for shipping?' Daga said. 'It is very unattractive for any consumer.'
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The young entrepreneur is adjusting by focusing on the situation's silver lining.
'I think a lot of my suppliers lost their US clients ... So I have more of their time and more of their energy,' she said.
Now, Daga is in the process of shifting Mir Kash to India, in hopes of targeting the vegan-friendly market there. While the move is for personal reasons, she noted that it posed an 'excellent opportunity' for her business.
This flexibility, she said, was crucial for any entrepreneur.
'As an entrepreneur, you should always be ready for change – whether it's externally something's happened or internally, within the company,' Daga said.
Mir Kash makes vegan luxury bags. Photo: Handout
Weather the storm
Other small businesses that sell entirely to US customers do not have the same flexibility in dealing with the tariffs.
Lang is a clothing shop founded in 2023 by Kayla Wong, who grew up in Hong Kong and is now based in the US city of Los Angeles.
'Lang is a ... self-exploration of my own heritage through fashion and design,' said Wong, 32.
While the company first focused on bringing Hong Kong brands to the North American market, Wong said they expanded to also include Asian-American brands.
Lang, which has a store in the heart of Los Angeles' Chinatown, sells most of its products to US customers. Since most of the shop's goods are from Hong Kong and China, Wong said the tariffs 'affect me directly'.
'There has definitely been a frantic energy among designers and suppliers alike – the most immediate challenge is delays in deliveries. We have taken the strategy of 'wait and see',' Wong said.
The entrepreneur said her shop might have to increase its prices, but she hoped consumers would continue supporting small businesses over fast fashion.
While Wong is worried about the constant changes, she is ready to stay true to her brand's mission.
'I ran a lot of different scenarios of how we could pivot as a business if things don't change,' she said. 'Ultimately, I don't feel like it would be right to abandon my core brands from Hong Kong.'
Kayla Wong hopes to stay loyal to her company's dedication to Hong Kong brands. Photo: Rigo Villordo
Additional reporting by Associated Press
Stop and think: How has the US-China trade war affected Sababu Socks, Mir Kash and Lang?
Why this story matters: The decisions of world leaders have consequences for everyday people. Small businesses have an especially hard time adapting to changes in trade policy because they do not have the resources that international conglomerates do.
