Under the backdrop of the US-China trade war, Chinese export companies are facing challenges. On Chinese social media, advertisements about “origin washing” are circulating widely. These ads clearly tell manufacturers that they can help them transport goods to Malaysia for relabelling and issuance of new certificates, disguising them as products from a third country before being sold to the United States. In response, Malaysia promptly tightened its policies, and neighboring countries of China have recently strengthened inspections to prevent themselves from becoming hubs for origin washing.
The Trump administration in the United States initiated retaliatory tariffs on a global scale in early April, with China responding in kind. Currently, the US has imposed tariffs of 145% on most Chinese goods, while China has set tariffs of 125% on imports from the US. The US has also targeted Chinese companies exploiting neighboring countries for origin washing.
Origin washing involves processing domestic goods through a transit country, affixing new labels, and exporting them to the target country.
Chinese exporters are concerned that the high 145% tariff imposed by Trump on Chinese goods will lead to them losing opportunities to enter one of the world’s most important markets. Hence, some are seeking business opportunities by acting as intermediaries for exporters, transferring goods to a third country. The “origin washing” activities within the Chinese industry have become increasingly blatant, with advertisements for “trade intermediary agents” openly soliciting business spreading since early April.
A variety of accounts on Chinese social media platform Douyin, such as “Ruby – Third Country Transshipment,” have been advertising services to assist exporters in shipping goods to countries like Malaysia while providing new certificates of origin before being sent to the United States.
One account, named “Longitude Shipping – Transit Trade Logistics,” released a video on April 7th discussing how “numerous foreign trade companies are entering the field of transit trade, which is an industry trend,” and explaining the operations of reliable trade intermediaries in transit trade.
The company claimed, “At major transit ports around the world, Longitude Shipping possesses abundant transit resources and can provide authentic, effective, and reliable transit documentation. Through our professional transit operations, we can effectively resolve issues related to anti-dumping trade barriers.”
On April 10th, an account named “Tuo Long – US-Canada Express Sam” also posted a competitive transit flowchart, stating that “solutions always outnumber difficulties.”
According to a report from the Financial Times on May 5th, an account on Xiaohongshu named “Ruby – Third Country Transshipment” posted an advertisement saying, “US imposing additional tariffs on Chinese products? Use Malaysia for transit to ‘transform’ into Southeast Asian goods!”
A logistics company’s sales representative mentioned that the so-called “trade intermediary agents” could transport Chinese goods to a Malaysian port, change labels and packaging in local containers, and even help in issuing new origin certificates.
Ms. Sarah Ou, a saleswoman for a lighting export company in Zhongshan City, Guangdong Province, expressed concern about the high tariffs. She stated, “The tariffs are too high. But we can first sell goods to neighboring countries and then have them resell to the US, which reduces tariffs.”
Ms. Ou revealed that like many Chinese manufacturers, her company employs the Free on Board (FOB) shipping method, where once the goods leave the port of export, the buyer assumes responsibility. This method helps reduce legal risks for exporters.
According to U.S. trade laws, goods must undergo substantial transformation in a country, such as significant value-added processing or manufacturing, to be considered originating from that country and eligible for its tariff treatment.
In addition, some Chinese exporters use tactics like mixing high-value and low-value goods in shipments, falsely reporting the average costs of the whole batch to reduce customs valuation.
However, after advertisements claiming to transport goods to Malaysia for “origin washing” gained attention on social media, Malaysia promptly tightened its policies.
On Monday, May 5th, the Malaysian Ministry of Investment, Trade, and Industries (MITI) announced that starting from May 6th, it would be the only agency issuing non-preferential Certificates of Origin (NPCO) for exports to the US, ceasing the authorization of local chambers of commerce, associations, or other MITI-appointed bodies to issue such certificates.
The NPCO is a document used to determine the international origin of goods to meet customs or trade requirements of the importing country.
Blogger “Malaysia Dai Ge” discussed this new regulation announced by the Malaysian government in a video on May 5th, stating, “If you want to transit through Malaysia to go to the US, that opportunity has become very slim now.” He mentioned that previously, while taking this route to the US was a gamble, now even that window of opportunity is closing.
The increase in evasion tactics by Chinese exporters to dodge tariffs has raised concerns among American business partners. The Financial Times reported that a senior executive from one of the top ten independent sellers on Amazon discovered cases of altered origins of goods, putting these products at risk of confiscation by US customs authorities.
The executive mentioned that they were reluctant to accept the assistance offered by Chinese suppliers, such as serving as the “importer of record” in the US and paying tariffs based on manufacturing costs rather than the higher purchasing costs of retailers. American business partners are also concerned about the possibility of suppliers “inflating the value of goods.”
In fact, some neighboring countries of China have already noticed a significant increase in the quantity of goods from China recently. Fearing repercussions from the US for becoming a hub for Chinese-origin washed goods, some countries announced in April that they would rigorously combat trade fraud.
In the previous month, the South Korean customs department reported discovering counterfeit foreign product origin information worth 29.5 billion Korean Won (approximately 21 million US dollars), with the majority originating from China, and nearly all intended for shipment to the US.
The Vietnamese Ministry of Industry and Trade urged local trade associations, exporters, and manufacturers to intensify inspections of the original materials and origins of imported goods to prevent the issuance of forged certificates.
The Thai Department of Foreign Trade announced last month that it would enhance inspections of the origins of products shipped to the US to prevent tariff evasion.