Handicraft Exports to China Collapse 89%: Nepal’s Cottage Industry in Trouble

Nepal’s handicraft exports (metal and wooden) to China have suffered a catastrophic decline, plunging by 89.4% in 2025/26, according to NRB’s latest foreign trade data. This collapse highlights the mounting struggles faced by Nepal’s cottage and small-scale industries, which rely heavily on traditional crafts for foreign earnings.

In 2023/24, Nepal exported Rs. 265.2 million worth of handicrafts to China. That figure slipped to Rs. 209.4 million in 2024/25, before crashing to just Rs. 1.1 million in a single month of 2025/26. Analysts link this fall to shrinking Chinese demand for high-priced handmade goods, the rise of machine-made substitutes, and persistent logistics and customs hurdles at the Rasuwa and Tatopani trade routes.

The handicraft sector is one of Nepal’s identity industries, employing thousands of artisans across Kathmandu Valley and other regions. A sustained fall in exports poses a threat not only to foreign currency earnings but also to the livelihoods of families that depend on traditional crafts. Experts warn that without policy support, export diversification, and branding initiatives, Nepal risks losing its competitive edge in this historic sector.