Fangda Partners' in - depth analysis: How can enterprises restructure the global supply chain in the Trump 2.0 era? | Overseas Exploration Periscope

With the continuous impact of Trump's tariff policies, can overseas business still be done? How can risks be avoided to the greatest extent?

To answer these questions, overseas - going enterprises need to shift from tactical risk - avoidance to strategic layout. This involves a large number of specific and complex issues, such as adjustments to equity and organizational structures, risks related to legal compliance and policy supervision, and how to effectively use policy tools like export tax rebates. They should also optimize policy combinations and financial structures to cope with high - tariff pressures.

To effectively address the impact of US tariff policies on overseas businesses and clarify the "technical details" in the process of adjusting overseas strategies, Qiantang Going Global had a special dialogue with four business partners of Fangda Partners, namely Xue Feng, Bu Rui, Xiao Chunhui, and Zhou Si, to provide first - hand interpretations of key legal compliance issues related to US tariff policies.

Founded in 1993, Fangda Partners is a comprehensive law firm that provides legal services in both Chinese law and the laws of the Hong Kong Special Administrative Region of China. It has nearly 800 lawyers and seven offices located in Beijing, Guangzhou, Hong Kong, Nanjing, Shanghai, Shenzhen, and Singapore.

Fangda Partners won the honors of "China Law Firm of the Year" and "Intellectual Property China Law Firm of the Year" in the 2024 China Law Awards of China Law & Practice. It was named "China Law Firm of the Year (2022 - 2023)" by the Asia - Pacific Awards of the International Financial Law Review. For seven consecutive years (2017 - 2023), it ranked first in the transaction volume list of M&A legal advisors in Greater China by Bloomberg.

Honors won by Fangda Partners

The following is the dialogue between Qiantang Going Global and the four partners of Fangda Partners.

1. Who is severely hit and who benefits fortunately under the tariff impact

Qiantang Going Global: Which industries have been most severely impacted by the additional tariffs this time? Are there any "surviving industries" or beneficiaries?

Xue Feng of Fangda Partners: We understand that the additional tariffs this time have had a significant impact on industries such as Chinese electronic products, machinery and equipment manufacturing, furniture and toys, textiles, auto parts, chemical products, steel, and aluminum products. These industries are highly dependent on the US market, and it is relatively difficult to develop alternative markets.

Nevertheless, enterprises with a high proportion of domestic sales or diversified market layouts have relatively "survived". For example, in the fields of traditional manufacturing and mechanical equipment, manufacturers mainly engaged in domestic infrastructure project equipment are less affected by fluctuations in the US market. In the field of auto parts manufacturing, suppliers with a diversified customer base can make up for losses by turning to domestic vehicle manufacturers or the RCEP regional market.

In addition, for the agricultural products and food processing industries, most of China's agricultural output is for domestic sales, so the overall impact of US tariffs is relatively limited. At the same time, against the background of Sino - US economic and trade conflicts, China may impose counter - measures on US agricultural products (such as imposing additional tariffs to restrict imports of US soybeans, meat, etc.), which in turn provides opportunities for China's domestic agriculture.

2. How should foreign trade enterprises evaluate the layout strategy and adjustment method of overseas supply chains

Qiantang Going Global: The US recently imposed high tariffs on many countries in Southeast Asia, affecting some enterprises that have set up factories in Southeast Asia. Against the background of current trade conflicts, how should foreign trade enterprises evaluate the layout strategy and adjustment method of overseas supply chains?

Xue Feng of Fangda Partners: We believe that the motivation for Chinese enterprises to invest and layout overseas supply chains in Southeast Asia still exists. However, the policy adjustments of the Trump administration on imposing additional tariffs on Chinese goods have indeed brought new challenges and uncertainties. Facing long - term trade frictions, Chinese foreign trade enterprises need to shift from tactical risk - avoidance to strategic layout.

When evaluating and adjusting the layout strategy of overseas supply chains, multiple dimensions such as tariff policies, production costs, policy environment, market prospects, and risk management need to be comprehensively considered. Strategically, in the short term, enterprises can wait and optimize their existing supply chains, and cope with short - term pressures by improving production efficiency and cost control.

In the medium and long term, after policy stability, enterprises should give priority to investing in Southeast Asian countries with trade agreements with the US (such as Vietnam and Malaysia), take advantage of their tariff advantages, and explore cooperation with local enterprises for joint investment and production. By leveraging their resources and market networks, enterprises can reduce risks and accelerate the layout to cope with the ever - changing international trade environment and achieve sustainable long - term growth.

Qiantang Going Global: If foreign trade enterprises want to shift the focus of their overseas markets from the US to the Belt and Road countries, what challenges and potential problems need to be paid attention to at the practical operation level?

Bu Rui of Fangda Partners: Shifting from the US to the Belt and Road countries, challenges at the practical operation level include adjustments to equity and organizational structures, resetting of supply chains (including developing new supply chains locally), and adapting to the local business environment.

3. Legal and compliance risks in exploring emerging markets outside the US

Qiantang Going Global: What legal and compliance risks should enterprises pay attention to when exploring emerging markets outside the US?

Bu Rui of Fangda Partners: For Belt and Road countries, legal and compliance risks that enterprises need to pay attention to when exploring these markets include: (1) Policy and regulatory risks, such as sudden policy changes, foreign exchange controls, and localization requirements; (2) Contract and compliance risks, such as complex contract terms and difficulties in contract execution; (3) Labor and social risks, such as religious and cultural conflicts; (4) Tax and customs risks, including how to avoid tax penalties and how to obtain origin qualifications; (5) Environmental and social responsibility risks, such as strict local environmental protection standards.

Qiantang Going Global: How can domestic bonded areas and approved collection policies help enterprises reduce tax burdens?

Xiao Chunhui of Fangda Partners: Against the background of mutual additional tariffs between China and the US, China has maintained policies such as bonded areas and approved collection, providing a key path for enterprises to relieve tax burdens.

Bonded areas reduce tariff pressures through tax incentives and regulatory facilitation: Enterprises can store imported goods in bonded areas to postpone tax payment, or enjoy tariff exemptions through the cross - border e - commerce bonded model. At the same time, models such as commissioned processing and bonded warehousing help enterprises activate production capacity, postpone tax payment, and reduce supply chain costs. Approved collection simplifies the accounting of enterprise income tax through a fixed tax rate, which is especially beneficial for small enterprises with imperfect financial systems. Coupled with preferential policies for high - tech or small and micro enterprises, it further reduces the tax burden.

Qiantang Going Global: Is there also a risk of abuse of these policies?

Xiao Chunhui of Fangda Partners: Yes, the risk of policy abuse still needs to be vigilant. Bonded areas may breed false trade, tax evasion through long - term storage of goods, or transfer pricing. Approved collection may be used to manipulate income and costs or mismatch tax types. Therefore, it is necessary to strengthen cross - departmental data supervision and credit grading management, standardize enterprise compliance operations, and ensure that policy dividends truly serve the development of the real economy rather than becoming a tool for tax evasion.

Qiantang Going Global: How can overseas - going enterprises combine and use policy tools such as export tax rebates and exchange rate hedging?

Xiao Chunhui of Fangda Partners: In terms of policy tools, enterprises can combine export tax rebates (increasing the tax rebate rate to offset tariff costs), bonded areas (postponing tax payment and selectively levying taxes), the cross - border e - commerce bonded model (zero - tariff and VAT exemptions), and subsidies for domestic sales conversion (pilot enterprises enjoy subsidies at the export tax rebate standard). At the same time, they can reduce dependence through market diversification (such as tariff preferences in ASEAN under the RCEP).

4. What adjustments do overseas - going enterprises need to make in the future to adapt to the new tariff environment

Qiantang Going Global: In terms of financial structure, what adjustments do overseas - going enterprises need to make in the future to adapt to the new tariff environment?

Xiao Chunhui of Fangda Partners: Enterprises can consider reconstructing the supply chain (regionalized procurement and production layout, such as transferring some production capacity to tariff - favorable areas), optimizing tax planning (using approved collection to reduce income tax or balancing cash flow through the "exemption, credit, and refund" mechanism), and strengthening compliance management (avoiding risks such as false trade and transfer pricing). In addition, enterprises can also consider using export credit insurance to hedge risks and balance costs and pricing through dynamic financial models to ultimately form a closed - loop strategy of "policy hedging of costs, supply chain cost reduction, and compliance risk control" to achieve resilient development.

Zhou Si of Fangda Partners: Our recent observation of the financial market is that the volatility of the US dollar may intensify. In this case, it is very important to introduce risk - hedging tools for the US dollar and even US - dollar - denominated assets in a broader sense. These tools can be, on the one hand, financial derivatives used to lock in exchange rates or interest rates or hedge their fluctuations, or they can be adding cash or denominated assets in other currencies to financial options. For example, offshore RMB and cross - border RMB may also become a more popular option.

From basic needs such as trade settlement and cross - border payments to capital options such as cross - border financing and investment, offshore and cross - border RMB have developed relatively well in terms of infrastructure and legal feasibility, and can fully become an important option in the financial structure adjustment of Chinese and even foreign enterprises.

Qiantang Going Global: In addition to tariffs, what other US policy risks (such as financial sanctions and technology export controls) should Chinese enterprises be vigilant about in the next six months?

Xue Feng of Fangda Partners: Considering the current strategic competition between China and the US, which involves multiple fields such as technology, national security, geopolitics, and supply chains, in addition to tariff measures, the US government may still introduce policies to restrict China from multiple angles in the next six months.

This includes technology export controls and technology blockades, investment review and restrictions (especially in sensitive industries related to national security, such as energy, communications, and infrastructure), network security and data security, supply chain diversification (promoting the transfer of supply chains from China and encouraging enterprises to reduce their dependence on Chinese manufacturing), financial sanctions, and restrictions on access to capital markets. Chinese enterprises should closely monitor US policy trends, assess the potential risks of their own businesses in the above - mentioned fields, and formulate flexible risk management strategies.