Can a Chinese factory manufacture for an Etsy seller?

Yes, if it produces the seller's original designs. The factory is the seller's production partner; the seller adds it in shop settings, discloses it on listings and states the ship-from location accurately. The factory's own designs, OEM, ODM or white-label products don't qualify; that is reselling.

Can I buy stock on 1688 or from a wholesaler and sell it on Etsy?

Not finished goods. Etsy prohibits reselling commercial products and drop shipping, and new packaging or tags don't change that. The exception is craft and party supplies such as beads, fabric and findings, which can be sourced and listed as supplies.

Can I open a new Etsy shop in China now?

Etsy's Help Center says new shops cannot open in China at this time; existing shops there are paid through Payoneer with a 6.5% + $0.30 processing fee. Hong Kong is on the Etsy Payments country list. Opening under someone else's identity breaks Etsy's rules.

What changed in 2026 for shipping from China to U.S. buyers?

Etsy announced that from July 9, 2026, orders shipped to U.S. buyers from outside the U.S. must include duties and import fees in the price and ship DDP. Orders without prepaid duties lose Purchase Protection, and buyers charged duties on delivery can ask for a refund.

Etsy Creativity Standards and Chinese Factories

On Etsy, what a Chinese factory can do is produce a seller's original designs: the factory is the seller's production partner, the seller discloses it in shop settings and on listings, and the ship-from location is stated accurately. What it can't do is put its own catalog, OEM, ODM, white-label or wholesale stock on Etsy, which Etsy treats as reselling and removes, sometimes with suspension. Craft supplies are the exception and can be sourced and sold. New Etsy shops can't open in mainland China, and since July 9, 2026, orders shipped to U.S. buyers from outside the U.S. must be Delivered Duty Paid (DDP).

What are Etsy's Creativity Standards?

Etsy published its Creativity Standards in July 2024. Every item must fit one of four categories, and the listing shows the matching tag:

Made by a seller: physical items the seller makes by hand or with their own tools, including computerized equipment such as laser cutters and 3D printers. Products assembled from a manufacturer's instructions, or commercial blanks with only surface changes, don't count.

Designed by a seller: the seller's original designs, produced or printed by a third party, or sold as digital downloads. This category allows outside factories and is where most Chinese manufacturers fit.

Handpicked by a seller: vintage items at least 20 years old, items from nature, and collections the seller personally selects, such as themed gift baskets.

Sourced by a seller: craft and party supplies, and items personalized with the buyer's own text or image.

Items that fit none of these, mainly commercial goods and private-label products, are out. Etsy's Help Center is blunt: reselling isn't allowed and drop shipping isn't allowed, with exceptions only for craft and party supplies, vintage, and gift baskets the seller curates and packages.

Production partners: a factory making your design

Etsy defines a production partner as a company or individual outside your Etsy shop that physically produces items from your original designs, such as print-on-demand services, cut-and-sew producers, contract manufacturers and laser-cutting services.

For an Etsy seller in the U.S. or anywhere else, having a Chinese factory make your own designs is allowed, with three conditions.

The design has to be yours. You supply the drawings, samples, colorways and sizes, and the factory produces to them. Picking a style from the factory's catalog and changing the color is hard to call your design.

Disclose it. Add the production partner in shop settings with its city. You can hide the name, but you must give a description such as "Apparel printer," and it shows on the relevant listings.

State the real ship-from location. If the factory ships directly from China, the origin is China, not your home state.

Who doesn't count as a production partner?

Etsy's list: you and your shop members; raw-material suppliers; anyone who helped with only one step of an item you mainly made, such as engraving your handmade jewelry or firing your pottery; white-label manufacturers, OEMs and ODMs; and retailers and wholesalers of ready-made goods.

The last two matter most for Chinese suppliers. Taking finished goods from a white-label, OEM or ODM factory, or buying wholesale or 1688 stock and drop shipping it, is reselling in Etsy's eyes even with new packaging, tags or a thank-you card, and can lead to removed listings and a suspended shop. Etsy says specifically that adding a card or tag to an unaltered commercial product isn't personalization.

Craft supplies: where a supplier can sell directly

Beads, fabric, buttons, zippers, molds, wax and paints are "sourced by a seller" items. Etsy lets sellers buy them to resell, and even drop ship them. For Chinese factories making materials and components, supplying Etsy sellers who list them as craft supplies is the most direct way to work with the platform.

Can sellers in mainland China still open a shop?

Etsy's Help Center says shops can only open in countries where Etsy Payments is available, and new shops cannot open in China at this time. Existing shops in China receive Etsy Payments through Payoneer, paid out each Monday, with a processing fee of 6.5% + $0.30 (versus 3% + $0.25 for U.S. bank accounts). Hong Kong is on the Etsy Payments country list.

Opening a shop requires identity verification with your own ID, the ID name must match the bank account, and the shop location, ship-from location and production partner locations must all be accurate. Opening under a U.S. relative's identity or misstating your location breaks Etsy's rules and puts the shop and its funds at risk.

Since July 9, 2026: DDP on orders to U.S. buyers

Etsy announced that from July 9, 2026, orders shipped to U.S. buyers from outside the U.S. must build duties and import fees into the price and ship DDP. Orders without prepaid duties lose Etsy Purchase Protection, and a buyer charged duties or collection fees on delivery can ask the seller for a refund.

The backdrop is that the U.S. $800 de minimis exemption has been suspended since August 29, 2025, so small parcels pay duty too, and tariffs on Chinese-origin goods come in several layers. Designs shipped directly by a Chinese production partner need duty and DDP shipping built into the price.

The tax side of working with a Chinese factory

Importer of record. For small DDP parcels shipped by the factory, the carrier or logistics provider usually handles entry and duties. If you bring goods into the U.S. in bulk and ship from here, settle who is the importer of record; being the importer yourself means registering with CBP.

Costs. Production charges, inbound freight, duties and brokerage fees go into inventory cost and become cost of goods sold when items sell; print-on-demand and fulfillment charges are cost of goods sold directly. Keep pro forma invoices, payment records and entry documents.

Paying a Chinese factory. Buying goods from a factory abroad is a purchase, generally not U.S.-source income subject to 30% withholding, and there's no 1099 for the factory. Design fees or royalties are different and need a sourcing analysis.

Related parties. If your U.S. company and the Chinese factory share an owner or family ties, prices must be at arm's length under Section 482, and the cost basis of imported goods can't exceed their customs value under Section 1059A. A U.S. corporation 25% or more foreign-owned reports transactions with foreign related parties on Form 5472, with a $25,000 penalty per missed form.

A Chinese owner forming a U.S. company to sell on Etsy

A single-member LLC owned by a foreign person is disregarded for tax and files pro forma 1120 plus Form 5472 every year. The platform should get a W-8 based on the owner's status rather than a W-9 under the LLC's EIN, and U.S. inventory, employees or agents can create effectively connected income, so the owner files a 1040-NR. The LLC can instead elect C corporation treatment on Form 8832: 21% federal tax, 30% withholding on dividends to Chinese shareholders, generally reduced to 10% under the U.S.–China treaty, and generally no further change for 60 months. Work this out before the shop opens.

For Etsy's fees, sales tax, 1099-K, hobby vs. business and entity choice, see our Etsy seller guide; for pricing between a Chinese factory and a U.S. company, see the U.S. subsidiary guide; for the full foreign-owned LLC analysis, see the Walmart seller guide. Book a 15-minute free consultation or WeChat YCLUSA. On platform rules and intellectual property, Etsy's current policy and your attorney's advice govern.