The recent escalation of trade tensions between the U.S. and China has presented a significant hurdle for Quinn Lai, the founder of DIY Watch Club, a brand known for its self-assembly watchmaking kits. The company, which has built a strong international presence, now faces the financial strain of heightened U.S. tariffs and changes to the de minimis rule that previously allowed small-value packages from Hong Kong and mainland China to enter the U.S. duty-free.
As of May 2nd, shipments originating from China and Hong Kong are subject to a 90% tariff or a flat fee of $75 on small-value packages, a move that has escalated the ongoing trade conflict between the two nations. Lai, whose business relies heavily on U.S. customers, anticipates that the new tariffs could result in a revenue drop of 20% to 30%.
Lai expressed his concerns: “If the situation doesn’t improve, we may need to consider downsizing operations or, in the worst-case scenario, even shutting down,” he said, underscoring the gravity of the situation.
In response to the new tariffs, Lai quickly pivoted his strategy, redirecting the company’s focus toward Europe. He ramped up marketing efforts, utilizing social media platforms and collaborating with online influencers for unboxing campaigns. Although Southeast Asia was an option, Lai chose Europe for its stronger e-commerce performance. He described the process as one of constant experimentation, with the company continuously adjusting its strategy on an hourly basis to best suit the European market.
The decision has proven successful, with DIY Watch Club’s market share in Europe skyrocketing from around 6% to 30%. While the U.S. remains a crucial source of income, contributing to half of the brand’s revenue, the company has made notable strides in diversifying its income streams, lessening its dependency on the American market.
Looking ahead, Lai is focused on expanding his European customer base and exploring potential growth opportunities in emerging markets, including Japan.
Kennedy Wong, honorary president of the Hong Kong Chinese Importers’ and Exporters’ Association, spoke on the broader implications of the tariffs, emphasizing the challenges posed to cross-border e-commerce. He noted that products like those from DIY Watch Club are typically shipped in small parcels, making it difficult for other markets to fully compensate for the loss of U.S. business. As the trade war continues to shape global commerce, companies like DIY Watch Club are forced to adapt to an increasingly unpredictable environment.
