Back-and-forth tariff threats have caused many advisors and investors to reassess their exposure to Chinese companies.
However, it’s still far too soon to completely divest from Chinese exposure. If anything, portfolios that stick with Chinese companies can stay ahead of the game when the Chinese market rallies.
The trick is to stick with the Chinese sectors that are less affected by tariff negotiations. That way, portfolios can still participate in the Chinese market with less macroeconomic risk.
One sector that might offer an interesting solution is the Chinese internet sector. A recent article from KraneShares broke down why the internet sector could be less affected by tariff troubles.
Crucially, KraneShares noted that China’s internet sector has a relatively low revenue exposure to the United States. In specifics, the article cited estimations that put U.S. revenue exposure beneath 2%.
“The limited US exposure extends beyond revenues to supply chains as well,” KraneShares added. “Unlike hardware manufacturers that might rely heavily on US components, China’s internet companies have developed largely self-sufficient technology stacks. This technological independence further shields them from potential supply chain disruptions that might affect other sectors.”
Along with lower revenue exposure, KraneShares also pointed out that at this point, China has plenty of experience in dealing with U.S. tariffs. In the past, the country has used different currency management strategies, negotiations, and stimulus measures to help brunt the impact.
Advisors and investors looking to build exposure to Chinese internet companies may wish to consider the KraneShares CSI China Internet ETF (KWEB ). KWEB taps into its extensive track record to provide exposure to companies leading the way in China’s internet sector.
While the fund is experiencing some near-term volatility, KWEB still offers immense long-term potential. As of April 30th, 2025, the fund’s NAV has jumped well over 50% since its inception in 2013. Year-to-date, the NAV has risen by a little over 10%.
For more news, information, and analysis, visit the China Insights Channel.
