Can American Companies Still Compete With China? Why Selling Physical Products in the U.S. Has Become So Difficult

For decades, starting a business in America often meant making or buying a product and selling it for more than it cost.

Today, that simple business model has become much harder.

American sellers are competing against factories and manufacturers located in China, Vietnam, India, Bangladesh and other lower-cost countries. In many cases, those manufacturers can now sell directly to American consumers through online marketplaces.

The surprising part is that this is not only a problem for small businesses.

Some of the biggest American brands in the world decided years ago that producing everything in the United States was simply too expensive.

Nike, Levi Strauss, Hasbro and Mattel are examples.

They still design, market and sell billions of dollars worth of products. But much of the actual manufacturing happens outside the United States.

That raises an important question:

Does selling physical products in America still make sense?

The answer is yes—but the economics have changed dramatically.

Levi Strauss: An American Icon That Closed Its U.S. Factories

Few products are more closely associated with America than Levi’s jeans.

But in 2003, Levi Strauss announced that it would close its remaining manufacturing and finishing plants in the United States and Canada.

The company said approximately 2,000 workers would be affected.

Its own SEC filing explained that production from those facilities would be shifted to third-party contractors located primarily outside the United States and Canada.

At the time, Levi was under enormous competitive pressure.

The company had once generated approximately $7.1 billion in sales in 1996, but sales had fallen to about $4.1 billion by 2002. The company was competing against lower-cost jeans while trying to cut expenses and lower prices.

Fast-forward more than 20 years.

Levi Strauss is still an American company. Its headquarters, designers, marketers and brand are American.

But it no longer operates the large domestic manufacturing system that once produced its jeans.

In fiscal 2025, Levi Strauss sourced products from independent manufacturers in approximately 32 countries, with no single country representing more than 30% of its sourcing.

And the strategy clearly did not destroy the company.

Levi Strauss reported approximately:

• $6.28 billion in 2025 net revenue
• $2.67 billion of that revenue from the United States
• 61.7% gross margin

The lesson is important.

Levi did not stop selling jeans.

It largely stopped trying to own the expensive factories that made them.

Nike: Almost Everything Is Manufactured Outside the United States

Nike provides an even clearer example of how modern American product companies operate.

Nike’s own SEC filing states:

Nearly all Nike footwear and apparel is manufactured outside the United States by independent contractors.

For fiscal 2026, Nike generated approximately:

$46.4 billion in total revenue

and approximately:

$3.1 billion in net income.

Yet Nike is not manufacturing tens of billions of dollars worth of shoes in American factories.

In fiscal 2025, Nike reported that its footwear production came approximately from:

Country	Share of Nike Footwear Production
Vietnam	51%
Indonesia	28%
China	17%

Nike apparel production was approximately:

Country	Share
Vietnam	31%
China	15%
Cambodia	15%

This is worth thinking about.

Nike has one of the strongest brands in the world.

It can charge consumers $100, $150 or $200 for some pairs of shoes.

And even Nike has concluded that manufacturing most of those shoes in the United States does not make economic sense.

Nike keeps the higher-value pieces of the business:

design,

branding,

marketing,

technology,

athlete partnerships,

distribution,

retail,

and customer relationships.

Manufacturing is largely contracted out.

Mattel: Barbie Is American. Manufacturing Is Global.

Mattel owns some of America’s most recognizable toy brands, including Barbie and Hot Wheels.

Yet Mattel says its principal manufacturing facilities and third-party plants are located in countries including:

China,

Vietnam,

Indonesia,

Malaysia,

Mexico,

and Thailand.

Why?

Mattel’s filing explicitly discusses reducing manufacturing costs as one reason for its production structure.

In 2025 Mattel generated approximately:

$5.35 billion in net sales

and approximately:

$397.6 million in net income.

Its U.S. sales alone were approximately $2.85 billion.

Mattel sold more than $1.08 billion through Walmart, approximately $630 million through Target, and approximately $520 million through Amazon during 2025.

So American consumers are absolutely still buying physical products.

The question is increasingly where those products are manufactured and who captures the profit.

Hasbro: Billions in American Toys, Global Manufacturing

Hasbro owns brands including Monopoly, Nerf, Play-Doh, Transformers and My Little Pony.

Hasbro reported approximately $4.70 billion in revenue in 2025.

The majority of its products are manufactured by third-party manufacturers located in countries including:

China,

Vietnam,

India,

Japan,

Belgium,

the United States,

Mexico,

and Indonesia.

Hasbro specifically warns investors about its dependence on manufacturing in China and its efforts to diversify production away from China into other countries.

And there is another number that shows how thin the economics can become.

Hasbro recorded approximately $44.9 million in tariff costs in 2025.

Think about that from the perspective of a tiny American seller.

Hasbro has billions of dollars in sales, purchasing power, dedicated logistics teams, suppliers around the world and enormous retail relationships.

And even Hasbro has to worry about an additional $44.9 million hitting product costs because of tariffs.

A small Amazon or Shopify seller has far less room for error.

This Does Not Mean China “Beat” Every American Manufacturer

There is an important distinction.

China is no longer automatically the cheapest country for everything.

Production has already been shifting toward countries such as:

Vietnam,

Indonesia,

India,

Cambodia,

Bangladesh,

Mexico,

and others.

Nike is a perfect example.

China produced approximately 27% of Nike footwear in fiscal 2017.

By fiscal 2025, China’s share had fallen to approximately 17%.

Vietnam had grown to approximately 51%.

So the real trend is bigger than China.

It is:

American brands competing through global manufacturing.

The factory may be in China today and Vietnam tomorrow.

The basic business economics remain the same.

Companies search the world for the combination of manufacturing cost, quality, expertise, infrastructure, tariffs and shipping that allows the product to remain profitable.

Why Is It So Difficult for a Small American Seller?

Imagine you want to manufacture a basic household product in America.

Your cost might include:

materials,

American wages,

payroll taxes,

workers’ compensation,

health benefits,

factory rent,

utilities,

insurance,

equipment,

compliance,

packaging,

warehousing,

shipping,

marketing,

credit-card fees,

returns,

and income taxes.

Then you finally put the item online for $29.99.

A competing factory overseas may already manufacture hundreds of thousands of similar products.

That factory has:

existing molds,

specialized equipment,

trained workers,

an established component supply chain,

large purchasing volume,

and dozens of customers sharing the same manufacturing infrastructure.

The factory does not have to recreate the entire supply chain for your product.

That creates an enormous cost advantage.

And today the factory may not even need an American importer.

Online marketplaces allow overseas sellers to reach American customers directly.

That changes the game.

The Real Problem Is Commodity Products

This does not mean selling physical products in America is dead.

The dangerous business is selling something that consumers view as interchangeable.

Consider a generic:

water bottle,

phone case,

plastic organizer,

LED light,

kitchen gadget,

toy,

charging cable,

storage container,

or basic clothing item.

If your product looks exactly like 200 other products, your main competitive advantage becomes price.

And competing primarily on price against the manufacturing supply chain itself is extremely difficult.

Someone who owns or has direct access to the factory can almost always tolerate a lower retail price than someone buying from multiple middlemen.

YETI Shows Why Branding Still Works

YETI demonstrates the other side of this argument.

Coolers and drinkware are not revolutionary products.

Consumers can buy inexpensive versions virtually everywhere.

Yet YETI built a brand strong enough that customers willingly pay premium prices.

For its fiscal year ending January 2026, YETI reported approximately:

$1.87 billion in net sales

$1.07 billion in gross profit

and

$165.4 million in net income.

Its gross margin was approximately 57.4%.

That is the business lesson.

YETI is not winning because nobody else knows how to manufacture a metal cup.

It is winning because consumers specifically want YETI.

The brand creates the margin.

A $30 Product Is Not Really a $30 Business

Small sellers often look at a product like this:

Factory cost: $6

Selling price: $30

Profit: $24

Unfortunately, that is not how retail works.

The real calculation might look more like:

Retail price: $30

Product cost: -$6

International freight: -$1.50

Tariffs/duties: -$1

Warehouse and fulfillment: -$4

Marketplace/payment fees: -$4

Advertising: -$6

Returns/damaged inventory: -$1

Packaging and overhead: -$1

Now the seller has approximately:

$5.50 remaining before income taxes.

And one price war can destroy even that.

If another seller drops the product to $22.99, the economics may disappear completely.

That is why revenue screenshots can be misleading.

A seller doing $1 million in sales can still have a terrible business.

The important number is what remains after:

cost of goods,

shipping,

advertising,

marketplace fees,

returns,

employees,

warehouse costs,

interest,

and taxes.

So Does Selling Products in America Still Make Sense?

Yes.

But I would divide physical-product businesses into two categories.

The Old Model

Find a generic product.

Buy inventory.

Mark it up.

Run ads.

Sell it on Amazon or your website.

This model is increasingly difficult.

There is very little protection around the business.

If it works, competitors can often find the same manufacturer.

Eventually everyone sells roughly the same product.

Then prices fall.

The Better Model

Own something competitors cannot easily copy.

That could be:

a recognizable brand,

patented technology,

a proprietary formulation,

unique design,

specialized expertise,

exclusive distribution,

a loyal audience,

customization,

local installation,

service contracts,

repair,

subscriptions,

or intellectual property.

Then the physical product becomes only part of what the customer is buying.

Look at What the Giant Companies Actually Own

Nike does not primarily own shoe factories.

Nike owns Nike.

Levi Strauss does not need to own every sewing machine.

It owns Levi’s.

Mattel owns Barbie, Hot Wheels and other intellectual property.

Hasbro owns Monopoly, Nerf, Transformers and other brands.

YETI owns a powerful premium brand and distribution network.

That may be the biggest lesson for a small entrepreneur.

The valuable part of a modern product company often isn’t the factory.

It is the thing that makes the customer choose your product instead of the factory’s generic version.

Manufacturing in America Can Still Work

There are also products where U.S. manufacturing makes excellent business sense.

Examples include products that are:

expensive to ship,

highly customized,

regulated,

time-sensitive,

high-value,

technically complex,

made in small quantities,

protected by patents or trade secrets,

or marketed specifically around American manufacturing.

A $5 plastic gadget is difficult to manufacture competitively in California and ship nationwide.

A $20,000 specialized industrial machine is an entirely different business.

A customized medical component is different.

A locally manufactured building product is different.

A premium “Made in USA” product with customers willing to pay more is different.

The economics depend on the product.

The Strange Reality of Modern American Business

America has not stopped selling physical products.

Americans spend enormous amounts of money buying them.

What changed is the structure of the company selling them.

Many successful American companies increasingly look like this:

American brand

American design

American marketing

American customer

global manufacturing

Nike’s approximately $46 billion in annual revenue demonstrates that selling products is certainly not dead.

But Nike’s manufacturing footprint also demonstrates something equally important:

even one of the world’s most powerful consumer brands does not insist on manufacturing nearly all of its products in the United States.

The Bottom Line

Selling physical products in the United States still makes sense.

Selling an easily copied commodity product with no competitive advantage is what increasingly does not make sense.

A small American entrepreneur probably should not ask:

“What cheap product can I buy and resell?”

A better question is:

“What can I own that makes customers buy from me even when cheaper products exist?”

That could be a brand.

It could be intellectual property.

It could be information.

It could be service.

It could be convenience.

It could be trust.

It could be a specialized community.

It could be a unique product.

China did not eliminate the opportunity to sell products in America.

But global manufacturing has dramatically reduced the value of simply being another middleman.

And that is why some of America’s largest brands stopped thinking like manufacturers years ago.

They learned to own the brand, design, customer and margin—while letting someone else own the factory.