Azra Hoosen | ah@radioislam.co.za
2 May 2025 | 13:00 CAT
3 min read

In a world increasingly shaped by digital platforms and fast-changing global dynamics, viral TikTok videos are showing Chinese factories selling high-end goods directly to consumers at a fraction of the usual price. What may seem like a trend is actually a sign of much bigger changes in global retail and trade.

Professor Adrian Saville, who holds a professorship in economics, finance, and strategy at the Gordon Institute of Business Science (GIBS) and is founding director of the Centre for African Management and Markets, says what we are witnessing is nothing short of a “full frontal assault” in retaliation to ongoing trade friction between China and the United States.

He explained that after the United States scrapped the $800 de Minimis duty-free threshold and imposed high tariffs, up to 145%, factories in China responded by launching English-language TikTok shops aimed directly at U.S. consumers. “These clips tout factory direct pricing using very quick delivery times… orders will be rerouted through fulfilment partners who allow the exporter to tiptoe through the tariff regime,” he said.

This tactic allows sellers to avoid the high costs associated with container-sized shipments, using airfreight and smaller packaging to get around trade barriers. According to Professor Saville: “TikTok has morphed into a parallel retail light export channel… well beyond America’s tariff dragnet.”

The now-removed $800 import exemption in the U.S.—known as the de Minimis—previously allowed items under that value to be imported duty-free. “You were able to break a container up into small parcels, each of those parcels would have a price under $800 and therefore effectively come in duty-free,” he said. Without it, all items entering the U.S. face tariffs, changing the cost structure for online retailers and consumers.

Videos also claim that these discounted products are made in the same factories as luxury brands. But Professor Saville cautions viewers to read between the lines. “The language that’s being used says things like ‘made by the same production’ or ‘made by the same labourers’. What I won’t put in are the words in brackets: historically. This is playing with words,” he explained.

He noted that major brands have strict supplier agreements, and many of these claims are marketing tactics. Still, the rapid rise of such direct-to-consumer sales will create problems for luxury brands. “It is the game of whack-a-mole, no sooner have you hit that one supplier on the head, another one’s going to pop up,” he added.

When asked if tariffs are working to protect U.S. industries, Professor Saville was direct. “Absolutely no protection whatsoever. This is the naivety of the policies,” he said.

He argued that President Trump’s tariff strategy shows a misunderstanding of how trade and tariffs work. He noted that Trump displays his economic illiteracy that tariffs are paid by the consumer, not the producers. “Tariffs are paid by the consumer. It leaves China at $8, it arrives for $8 and when it crosses over into the U.S., it’s now $16. That additional $8 is paid by you, the buyer.”

Prof Saville anticipates that the rise in prices can add between 1 – 2 % to inflation, which he said could “confiscate $400 billion from the pockets of U.S. consumers.”

While many shoppers may not fully understand trade policy, they feel the impact. “You’re not looking at the tariff, but suddenly you see you’re paying much more,” he said.

The younger demographic, those most likely to use TikTok, are also the most price-conscious. “They’re going to be far keener in shopping for price and far more sensitive… to thrift and transparency. They’re going to sit up very quickly when these options are available. They are far more interested in getting the thing that they want at the price that they can afford in the time that they desire it,” he said.

Platforms like TikTok are not just changing how people shop; they are reshaping global trade and business strategy. Professor Saville believes any business not paying attention is “asleep at the wheel.”

He pointed to Time Bank in South Africa, which onboarded over 10 million customers in five years without a single branch and then reached 5 million customers in the Philippines in two years. “Standard Bank took 150 years to do that. So business models evolve, business models iterate,” he said.

On the policy side, however, Professor Saville believes U.S. leaders have been caught off guard. “From a U.S. perspective, policymakers here have been revealed to be fast asleep at the wheel.”

As for whether this marks the start of a new economic era, Saville believes we have been there for a while. He pointed to the opening up of China and Southeast Asia in the 1990s, the rise of digital platforms like Alibaba and TikTok, and the affordability and speed they offer to consumers. “My son says to me, can we go clothes shopping? I said absolutely… He said, ‘No, no, I’ve got everything, you just have to press pay’,” he said.

Professor Saville stressed that the shift in mindset from malls to mobile phones is what today’s retailers and trade policymakers must now catch up with.

LISTEN to the full interview with Muallimah Annisa Essack and Economics Professor Adrian Saville, here.