Also known as Kasa, Zhangmu perches on a mountainside 10km (6 miles) inland from the Friendship Bridge across the Bhotekoshi River (Sun Kosi River). The small town has become the major trading post between Tibet and Nepal. The subtropical oceanic climate endows the small town a warm, and humid weather and beautiful scenery throughout the year. A road snakes through the small border town. Along the only street in the town, private houses, shops, restaurant and government buildings are built. The booming border trade attracts merchants from inland China, Tibet and Nepal running business here. Nepalese merchants export rice, flour, pepper, vegetables, and perfumes while Chinese merchants sell wool, tea, salt and Tibetan medicine. Nepalese even run Nepalese restaurants in the small town, serving Nepalese dishes, instant noodles and beer produced in Nepal. A free trade market formed near the Friendship Bridge spontaneously 8 years ago, which is now still developing. According to an agreement between Chinese and Nepalese governments, people living near the border may cross the border freely within 30 kilometers (18 miles) from the border. Every day, hundreds of Chinese and Nepalese merchants are doing their business. The local Sherpas lease their houses to those merchants, sharing profits from the border trade.

Zhangmu is going to undergo a large construction to meet the demands of the booming tourism and border trade. Zhangmu Hotel, the only hotel in the town, is going to be reconstructed and expanded. The local government plans to build a 2220-meter (7280 feet) ropeway to improve the bad traffic in the next five years.