Hormuz chokes: China’s ‘world supermarket’ Yiwu feels the pain

The Middle East conflict has raged on for nearly a month since the US and Israel launched air strikes on Iran. Far from the frontlines, Yiwu, often dubbed the “world’s supermarket”, in Zhejiang province has also been impacted. 

Its merchants exporting to the region have seen orders plummet as the Strait of Hormuz — a critical global shipping lane — has become nearly impassable, disrupting the flow of goods. Despite suffering substantial losses, interviewed business owners remain confident that the Middle East will continue to be an important market once the war ends.

Lin Dawei, a merchant at the Yiwu International Trade City, has been in the personal protective equipment (PPE) business for nearly two decades. Over the last few years, he started doing business with the Middle East, and it now accounts for a third of his total exports. The month-long conflict has not only led to lost orders but also left a significant portion of his goods stranded in Dubai.

“The period after Lunar New Year is usually the peak buying season for the Middle East. But this year, many clients are hesitant about placing orders. And even if I had orders, I wouldn’t dare to ship the goods.” Lin told Lianhe Zaobao.

More than the loss of orders, Lin’s primary concern now is when his 12 shipping containers of PPE valued at between 4 and 5 million RMB (approximately US$580,000 to $720,000) bound for Iraq will be safely delivered to his clients.

“The 14 containers we shipped to Iraq before the Lunar New Year should have arrived long ago. But since the war broke out, Iraqi ports have shut and 12 of those containers are stuck in Dubai,” he said.

Nevertheless, Lin feels he is more fortunate than fellow merchants who have had to stop trading with the Middle East due to the Strait of Hormuz blockade, as his goods containers are already at the transshipment hub of Dubai. However, his headache now is over how to move his goods from Dubai to Iraq. 

“My clients came up with two overland alternatives, but the costs involved are several times higher — simply unaffordable,” he said. 

Crunching the numbers, Lin shared, “If we pick up the containers from Dubai and reroute them via Turkey, the freight cost per container would jump from US$2,000 to nearly US$18,000. For 12 containers, that adds an extra US$200,000 just in freight. The other option is to go overland through Saudi Arabia. While doing so avoids the war zone, it takes ten days to two weeks, and after factoring in fuel and labour, it still costs over US$10,000 per container.” 

Lin is not alone in feeling the impact of the Middle East conflict. As the world’s largest distribution hub for small commodities, Yiwu’s total exports in 2025 reached 730.7 billion RMB, of which exports to the Middle East accounted for nearly 15%, totalling 109.37 billion RMB.

For many Yiwu merchants who export to the region, the most pressing issue at hand is the disruption to logistics caused by the closure of the Strait of Hormuz, halting freight services to the Middle East and causing shipping costs to skyrocket.

The Strait of Hormuz is a vital passage for Yiwu goods bound for the Middle East. Nearly a month of armed conflict in the region has brought this critical shipping route to the brink of closure.

Citing data from Kpler, a market intelligence firm, Agence France Presse reported on 23 March that the number of merchant vessels transiting the Strait of Hormuz between 1 March and 4:00 pm on 23 March numbered just 144, a 95% reduction when compared to a similar period before the conflict began on 28 February.

This logistics strain has now impacted freight forwarders operating out of Yiwu International Trade City.

Lu Chenxi, a freight forwarder specialising in services to the Middle East, Africa and South America, told Lianhe Zaobao, “Shipping is far from convenient right now. For destinations like Saudi Arabia and the UAE, it’s impossible to send goods there.”

He added, “Shipping channels to Israel are still open, but ships are being rerouted via the Cape of Good Hope, taking at least a month and a half as compared with only about 20 days before the conflict. Freight costs have also surged. A 20-foot container that used to cost between US$1,000 and US$2,000 has tripled in price. Many shipping companies are also demanding war risk surcharges, typically around US$1,500 per container.”

The sharp rise in freight costs has led to a noticeable drop in container volumes handled by forwarders. Lu noted that in a typical year, container volumes would rebound to 70–80% of normal levels within a month of the Lunar New Year. “Now, clients are delaying shipments across the board, so we’ve barely recovered to half the usual volume,” he said.

With no clear sign of de-escalation in the Middle East conflict, even Yiwu merchants with no trade links to the region are indirectly affected.

Ma Yao, a leather clothing trader at Yiwu International Trade City, told Lianhe Zaobao that while he does not have Middle Eastern clients, a small portion of his goods are sold there through his Russian partners. Since the closure of the Strait of Hormuz, his business has also suffered from rising raw material costs driven by higher oil prices.

“When the conflict first began, woven fabric prices jumped by 15% to 20% across the board. As our raw materials, the synthetic fibres used in woven fabric, are largely derived from petrochemicals, rising oil prices mean they now cost more.”

Despite the mounting pressures caused by war in the Middle East, the Yiwu merchants I interviewed were unruffled and believe that the Middle East will remain an important market once the fighting subsides.

As Lin Dawei put it, “Be it people’s livelihood or major infrastructure, war or not, the Middle East will always need Yiwu’s goods.”

This article was first published in Lianhe Zaobao as “战火冲击义乌商户 受访商户仍看好中东市场”.

Related: Yiwu: How a barter town became the heartbeat of global small trade | Hormuz crisis: Should China do more to secure global chokepoints?