Urban Revivo also has plans to expand in the US this year, and for many retailers like it – those that directly ship finished goods from China rather than sourcing locally – tariffs present a major problem.
According to a January report from Boston Consulting Group (BCG), fashion-related items will be among the Chinese exports “most affected” by a potential 60 per cent tariff surge from the US, with incremental costs expected to reach US$16 billion by 2033.
Together with consumer electronics and electrical machinery, the three categories would need to absorb more than US$99 billion in added tariffs, the group said.
“Although Chinese companies have experience managing US tariff costs, tariffs of this magnitude will have a material impact on business operations,” said Aparna Bharadwaj, managing director and partner at BCG.
She added that an estimated reduction of up to 14 percentage points in companies’ margins on earnings before interest, taxes, depreciation and amortisation could hurt their ability to absorb additional costs, making it more likely that they will pass them on to consumers.
Urban Revivo plans to do just that.
“Our positioning is more ‘mass-market’ at home, but in the future, I’m thinking if the taxes were to increase [in America], we could just raise prices,” founder Li told the Post. “Other brands would do the same.”
Whether the company can pass on additional costs to American consumers without hurting its sales is a big question mark.
Urban Revivo plans to open its first US store in New York this year, and the most immediate challenge for the company is whether it can make a name for itself in this competitive market, head-to-head with well-known giants like Zara, H&M and Ralph Lauren.
“The majority of Chinese retailers that have set foot in the US are targeting the East and West Coasts, where there are large Chinese communities,” said Bain’s Yang. “So if you were to ask me whether any brands have truly won over the hearts of European and American consumers en masse, I’d say we’re not quite there yet.”
