When Washington imposed higher tariffs and ended a de minimis rule that allowed low-value packages from Hong Kong and mainland China to enter the U.S. duty-free, Quinn Lai, founder of DIY Watch Club, feared the worst for his business. His company, which specializes in selling do-it-yourself watchmaking kits, relied heavily on the U.S. market, with over 80% of its shipments destined for American customers. The new tariffs, which came into effect on May 2, imposed a 90% tariff or a flat fee of $75 on low-value packages from China and Hong Kong, marking another chapter in the escalating trade war between Washington and Beijing. Lai estimated that the tariffs could reduce his company’s U.S. revenue by 20% to 30%.
Faced with these challenges, Lai considered the possibility of downsizing or, in the worst case, closing his business if the situation did not improve. However, he quickly shifted strategy, ramping up marketing efforts and targeting the European market. By increasing social media ads and sending their kits to online influencers for unboxing, Lai sought to diversify his customer base and reduce his reliance on the U.S. market. Europe, with its more robust e-commerce performance compared to Southeast Asia, became the focal point of the company’s expansion efforts. This strategy proved successful, with DIY Watch Club growing its market share in Europe from around 6% to 30%.
While the U.S. market still accounts for about half of the company’s revenue, the shift to Europe has made the business less vulnerable to the volatile tariff situation. Looking ahead, Lai plans to continue focusing on Europe while also exploring new markets, such as Japan, to further broaden the company’s global footprint.
However, the impact of the new tariffs has been felt beyond DIY Watch Club. Kennedy Wong, honorary president of the Hong Kong Chinese Importers’ and Exporters’ Association, noted that cross-border e-commerce has been severely affected, particularly for small-package products. With Hongkong Post suspending mail services to the U.S., and other couriers requiring prepayment of U.S. import duties, many businesses in the region are facing significant challenges in maintaining their operations.
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