There are still 54 days before Trump takes office. Can these three places become a safe haven for bosses going overseas? | Going Global New Land

Introduction: The global business is in turmoil and upheaval, and going global has become an inevitable proposition for many Chinese companies. The 6.5 billion people in the world are scattered in nearly 200 countries and regions with extremely unbalanced development. The difficulty of entering this complex market may far exceed the entrepreneurs' predictions or imaginations.

Hardcore Kr has been paying close attention to the overseas market and going-global enterprises. Based on this, Hardcore Kr launches a new column: "Going Global New Land". We will cover developed countries and regions such as Europe, the United States, Japan, and Australia, and also focus on emerging markets such as Southeast Asia, Latin America, the Middle East, and Africa.

The column will take companies and products as the core, analyze the practical operation process of successful going-global companies from a professional perspective, and explore the causes and consequences of popular products in a country or region. Our higher expectation is to perceive and convey the glimmer of new trends.

The following is the eighth article of this column.

Author | Zhang Ziyi

Editor | Yuan Silai

On January 20, 2025, in Washington. 78-year-old Trump will deliver his presidential inaugural speech at the US Capitol for the second time.

There are 54 days left until this historic Monday.

From Mexico, Europe to Southeast Asia, an atmosphere of anxiety is brewing. Everyone is waiting uneasily to see what strange tricks this powerful and seemingly casual former real estate developer will have.

During the campaign, Trump clearly stated that he would impose a 60% tariff on all Chinese goods. However, on November 25 local time, Trump announced that the additional tariff on Chinese goods would be 10%.

An obvious change is that compared to the "makeshift team" in his previous term, Trump's team this time has added many businesspeople. For example, Scott Batson, who has just been nominated as the Treasury Secretary, was the former Chief Investment Officer of Soros Fund. As a thorough Wall Street person, he supports Trump's tariff policy - in an extremely pragmatic way. Batson regards tariffs as a tool, and the first consideration is economic and market stability, rather than political achievements.

Most Chinese enterprises have already been mentally prepared for Trump's imposition of tariffs on China after he takes office. But no one knows how far the Trump-era tariff policy will ultimately go. Trump retains the shrewdness of a businessman. He is willing to hold chips and negotiate with flexibility. In this process, the uncertainty and difficulty of Chinese enterprises going global have increased.

Hardcore Kr has learned that some foreign trade bosses have not been overseas for the past few years. This year, they have repeatedly flown to Southeast Asia and Europe to investigate the local market and factory construction conditions; some foreign trade bosses have also received notifications from major customers asking them to transfer the factory, and they are struggling to decide whether to relocate to Vietnam, Thailand or Indonesia.

For enterprises that have already moved their factories to Mexico, the new tariff policy is undoubtedly a new blow. The cost of investing and building a factory in Mexico has not yet been recovered, and there are even many problems with the local infrastructure. While production capacity and efficiency are declining, some enterprises find that the supply chain migration has gone in a big circle, and in the end, only the transportation cost is saved. If tariffs are imposed on Mexico again, both the necessity of staying and the loss after leaving are new problems.

The migration of the supply chain is imperative. Foreign trade enterprises and going-global enterprises are unanimously feeling anxious and urgently looking for new opportunities and new markets.

The United States is indeed the best market for going global. However, in the face of the tense international situation, multiple backups and choices are necessary.

Hardcore Kr interviewed three going-global individuals who mainly focus on the European market, build factories in Mexico, and pay attention to the Middle East market. They are familiar with the local market and actual situation, have experienced pitfalls and also know how to avoid them. They talked to Hardcore Kr about the possibilities of emerging markets.

01 Yang Yaozhong, an Amazon seller, mainly focusing on the European market, and plans to open a factory in Bulgaria:

This year, I have received many groups of friends and went to Europe together to visit and investigate the actual situation of factory construction. In fact, there are not many countries to choose from in Europe. Personally, I think Bulgaria and Romania have advantages as they have ports. From the perspective of manufacturing enterprises, Central European countries will be more convenient, radiating the markets of Ukraine, Eastern Europe and Western Europe. Bulgaria has a better relationship with China, so many Chinese enterprises now choose Bulgaria.

To be honest, Chinese enterprises lack experience in going global. The laws and regulations in Europe are very complex, and the laws of different countries are different. It is possible that a Chinese-funded enterprise may implement a project in Europe, but it may not be able to operate at the last moment. It is not that you bring in the equipment, rent the factory, get the electricity connected, and then you can start the factory and put it into production. You also need to do a lot of certifications and find a professional legal team to handle things. European laws are also very detailed. Lawyers will not be responsible for all affairs. Specialized personnel for specialized tasks. It is very important to hire a professional legal team.

I rented a warehouse in Germany before. I thought it was very simple, and I just needed to set up a shelf. But in fact, it is not like that. You must undergo safety inspection and certification to set up the shelf. Someone needs to come to inspect the site first, draw the blueprint, and the company responsible for compliance will issue you a certification report. Each shelf must be attached with the report. Otherwise, you will be fined in the future and will not be compensated by the insurance company.

In Romania, there is a policy that requires you to upload every invoice for the goods transported within Romania to the tax bureau. If you do not do this step, once it is checked, all kinds of problems will come.

Therefore, Chinese enterprises going to Europe really need to thoroughly understand the tax knowledge of each place, and clearly understand what certifications are required for setting up a factory. Moreover, the work rhythm in Europe is different from that in China. It emphasizes specialized personnel for specialized positions. When you negotiate with them about a position, they will be responsible for that position. If you want to change it midway, you must discuss it with them. The management cost and efficiency in Europe are completely different from those in China.

In fact, our company does not discuss much about Trump's imposition of tariffs. I mainly focus on C-end consumers. For example, if you impose a 10% tariff, my shoes were originally sold for $20. After the tariff is imposed, I can increase the price. I can increase the added value of my products, or make the shoes into a $30 style through design. As long as you are building your own brand, no matter how much the tariff is increased, the price of your products depends entirely on your pricing. As long as your pricing is accepted by consumers, it means it is successful.

The most direct impact of the imposition of tariffs is on foreign trade business owners. Many of my friends who do foreign trade say that they are so anxious that they can't sleep. Every time I come back to China, everyone invites me to have tea and says they are extremely anxious. This year, the business has decreased by at least 30%. With the tariffs added, many enterprises also have loans and are considering whether they can survive.

I have a friend who makes furniture accessories, and his business is extremely good this year. His American customer hopes that he will expand and has given him many new styles for development and production. Last year, he spent 100 million to buy a factory. The customer asked him if he wanted to expand, and he said he wanted to, but he still needed to consider. In fact, if you have a long-term cooperation with overseas customers and your product quality is good, the customers will not give up on you unless it is absolutely necessary. And even if you expand, not all products are suitable for the European market. Some have low tariffs, and some have no tariffs. You need to study this clearly.

I suggest that Chinese enterprises coming to Europe should not start production immediately. They should first establish a trading company in the local area and set up a sales team. In the past, our model was that the trading companies were in China, and foreigners flew over to place orders. Now, we can try to move the foreign trade department to the foreigners' doorstep. If you have a warehouse in the local area, the goods can be directly sent there, bypassing the intermediate traders. You can also better understand the local market and what they need, right? This is the lowest-cost and lowest-risk way to enter the market. You just need to rent an office, and then start the business. When there is a certain business volume in Europe, then consider moving the factory there for production and realizing direct sales in Europe.

When Trump takes office, some enterprises want to leave, but they cannot leave immediately. For manufacturing enterprises to invest in factories, hundreds of millions of funds are invested. Without careful consideration, who would make a decision casually? Trump's taking office is more like a catalyst. Many enterprises that were reluctant to go global will now muster up the courage to go out.

I find that domestic bosses really do not know much about foreign countries. Everyone watches videos on Douyin. Plus, this year's business is indeed less. Everyone is talking about Trump. In fact, the accuracy of the information you receive determines the accuracy of your decisions. You must still go abroad to see how the situation will be after Trump takes office.

02 Mexico Rikoda, Randol, multi-channel development, striving to survive:

After Trump takes office, many of our friends who have opened factories in Mexico have the idea of retreating, but the current policy is still uncertain, and we definitely cannot leave easily. Some American customers are also considering transferring their products to the factories of Japanese and Korean companies in Mexico, but the costs of Japanese and Korean companies are very high. After more than 20 years of competition with China and the transfer of the supply chain, at the same price, their profits are lower. It is not that many Japanese and Korean enterprises have the ability to invest in a similar factory in Mexico, not to mention whether there is profit.

Now Chinese-funded enterprises in Mexico are also discussing strategies. Everyone is indeed facing a difficult situation and does not know where the future will lead. So now we need to start thinking about multi-path and multi-channel solutions to ensure the survival of our team.

It is not feasible to passively wait for the Mexican factory without making new business layouts and new strategies. We still need to firm up the will to go global. It may be a choice to retain a certain scale of the Mexican factory without increasing new investments in the case of uncertain policies in the future. Of course, we will also consider grasping and investing in the demands of other markets.

Mexico has a population of over 100 million and is a very large market. Moreover, at the end of last year, its per capita GDP was basically the same as that of China, and its consumption power is also very strong. After that, we plan to explore the markets of Mexico and key countries in South America. Generally speaking, the local manufacturing level here is still very weak. Whenever you want to buy a more precise product, it is very difficult to find a local supply chain to support it. For example, for electroplating products, we have found many electroplating factories in Mexico, and none of them can fully meet the quality and price requirements of our products. It is very easy to find an electroplating factory in China to do this.

Anyway, everyone is discussing various coping strategies every day, and we must survive.

The group adjusted the new organizational structure some time ago and established the North America Region Department and the South America Region Department. The North America Region Department is responsible for the market demands in the United States and Canada, and the South America Region Department includes Mexico and the South American countries to the south. After that, we plan to increase the exploration of the South American market. First, relying on our factory in Mexico, in addition to meeting the orders of the original North American customers, we will produce and manufacture products that meet the market demands of various South American countries and realize order delivery; second, we will act as an agent for Chinese mechanical and electrical equipment, power tools and other products.

I discussed with my friends some time ago. We found that the European and American markets are not short of products. The market is fully competitive, and they can buy anything they need. It is often the middle-class groups in less developed countries and regions that lack products. Some things they may not be able to buy in their own countries and can only be imported from abroad or purchased at a high price. Then we should take this opportunity to open up the South American market.

There are 670 million people in South America. Many Chinese mechanical and electrical equipment manufacturers used to do the South American market through Alibaba International Station and exhibitions. In fact, the effect is not very good, and they have not laid out an overseas sales network.

There are many South American countries. Currently, except for a few countries such as Venezuela where the political situation is not very stable, other countries are relatively stable, and the economic level is not bad. It is just that the population size of a single country is smaller than that of the United States. In the future, we will basically adopt a light-asset model in these countries and not engage in manufacturing. If we engage in manufacturing, with factories and equipment, the loss will be huge if there is a problem. After the company's business strategy is planned in this period, we will start to develop businesses in Colombia, Peru and other countries next year, making a breakthrough at a single point and driving the development of the entire region by taking that as an example, and laying out the South American market.

03 Yan Linhui, the representative of the Chinese region in Khalifa Economic Zone in Abu Dhabi, the venture partner of Fosun Chuangfu, focusing on the markets of the United Arab Emirates and Saudi Arabia:

Recently, I talked with my friends from the Shenzhen Furniture Association. After Trump takes office, the impact on furniture enterprises is still very large. Many of their companies have set up factories in Mexico (such as Manwah Holdings and Kuka Home Furnishing, etc.). Now they are worried about the imposition of tariffs, and the manufacturers are accelerating the sale of products to the United States. In fact, American merchants are also stocking up, because once the tariffs are imposed, the costs of American merchants will also increase. In fact, these enterprises have calculated how much money can be saved after investing in factories in Mexico before going global. The efficiency in Mexico is extremely low. In the end, after adding and subtracting, only the logistics cost is saved.

Originally, furniture enterprises thought that the Middle East was not suitable for building factories. Now they also come to me to ask. They said that they plan to bring several investigation groups to the Middle East in January next year to investigate and participate in local exhibitions to explore the Middle East market. Because some furniture enterprises sell high-end furniture, after the US market is affected, the per capita GDP of Southeast Asia determines that the market's consumption power is relatively weak, while the consumption power of the Middle East market is very strong, so it can support the consumption of China's mid-to-high-end furniture products.

Before Trump takes office, some enterprises were not so active in the Middle East market. Now they are particularly anxious and keep coming to me and communicating with me. I know a materials enterprise. Their general assistant stayed in the United Arab Emirates and Dubai for more than 20 days and is still conducting local research. There is also a steel enterprise. The chairman went to the United Arab Emirates before, and there was no response. After Trump was elected, he began to be particularly anxious about the matter of landing there.

After all, there is uncertainty about the imposition of tariffs in Mexico and Southeast Asia. At least the Middle East will become a backup market.

The relationship between the Middle East and China is very harmonious at this stage. First, China is the country with the largest energy consumption, and it is equivalent to the benefactor of many oil countries. They cannot offend China; second, they also need weapons made in China to arm themselves, as well as many products made in China. In fact, the local supply chain cannot produce them, and there is a long-term need for products; third, the Middle East is now in the settlement of infrastructure construction. The team costs of the United States, Europe, and Turkey are very high. They need Chinese enterprises to build infrastructure for them. After all, we can do FEPC (Engineering Procurement Construction under the investment and financing model), which can advance funds, has a low price, and has a good delivery.

The Middle East countries also have their own preferences for enterprises that land in the local area. The United Arab Emirates will more welcome enterprises in energy storage, new energy and other such fields to build factories there, as well as modern agriculture. If they are optimistic about these enterprises, they will not only give subsidy support, but also have orders, low-interest loans, and can invest in these enterprises, which is of great help to enterprises. Labor-intensive industries are also not suitable for landing in the Middle East, while high-tech and highly automated industries are more suitable.

However, the work efficiency in Middle East countries is very different from that in China. They like to communicate by email, and it is easy to delay responses or miss some information. And they also pay attention to human relationships. If the relationship is good, many things will be very convenient. And the core resources are in the hands of state-owned enterprises. If you are not familiar with them, they will also hold meetings every day. Many times, you need to find some tricks to handle things. You have to understand what the leaders of this organization