Conversations with 30 Tariff War Veterans: Hope for the Best, Prepare for the Worst

"A Self-Rescue Guide"

By Ren Qian, Shi Jiaxiang

Edited by Chen Zhiyan

Twelve days into the standoff, only two players remain at the table: China and the US. Washington's intent in this tariff war is clear — use differential tariffs to reshuffle global supply chains, exclude China from critical links, drive domestic manufacturing reshoring, and force a global "choose sides" confrontation.

Yet supply chain relocation for multinational corporations is hardly a simple either-or decision. It is, in essence, a complex operating system. For the US market as it stands today, policy pressure cannot directly produce manufacturing reshoring in the short term.

"No country can instantly replace China's position in the global supply chain." A longtime investor focused on overseas expansion told Anyong Waves.

Events quickly proved this point. As of now, the latest news is that US Customs and Border Protection (CBP) issued updated guidance on reciprocal tariff exemptions late on the night of April 11, announcing duty exemptions for 20 categories of goods including consumer electronics, servers, and semiconductor components. This exemption covers only a small slice of goods, mainly targeting Apple's supply chain and Nvidia's AI servers.

However, this is not a signal of safety. For Chinese enterprises that have only recently begun going global, the challenges have just begun.

Ray Dalio, founder of Bridgewater Associates, believes the greater shock behind the tariff war is actually the comprehensive collapse of the global monetary system, political order, and geopolitical landscape. "This is far more important than tariffs. Once in a lifetime."

Under systemic breakdown, Chinese companies going overseas will face at least the following dilemmas —

Abandon the US market? Or build factories in America to seek certainty?

Among Southeast Asia, Latin America, and Europe, where is the right habitat for different industries?

From export trading in the past to cross-border e-commerce today, what new roles will Chinese sellers play in international trade going forward? Or will they be eliminated entirely?

And more fundamentally, is it still possible today to build multinational enterprises and capture globalization's dividends?

Over the past week, Anyong Waves interviewed more than thirty people on the front lines of the tariff war. Some work in cross-border e-commerce supply chains, some in automotive and new energy manufacturing, some have gone all-in on overseas investment over the past seven or eight years, and others are professors and lawyers with deep expertise in tariff policy research and practice. All have worked in their respective fields for over ten years, reside in the US, and have weathered at least one cycle.

Though each holds their own optimism and pessimism on different questions, they share at least one consensus: For a long time, there will be no clear endpoint to the tariff war or the broader US-China rivalry. Great power competition will evolve through fragmentation, phases, and sector-specific compromises.

Therefore, since Chinese enterprises' march toward globalization will not halt due to external volatility, establishing a bottom-line mindset under the new globalization context is at least the most necessary and feasible thing to do right now. The situation may improve, but always be prepared for the worst.

Part 01

Solving for Cross-Border E-Commerce

Raise Prices or Tough It Out?

For companies with strong brand premium and pricing power, the answer is raise prices.

Anker Innovations moved first, already raising prices on Amazon by one-fifth. A person who has been in contact with Anker said that, so far, its proportion of the US market has not declined. Pop Mart did not immediately raise prices but stated that "this possibility is not ruled out in the future."

A cross-border industry practitioner believes that companies like DJI with obvious industrial chain advantages will find it difficult for competitors to seize market share even if costs rise in the short term.

"Tariffs are a short-term toll; products are the long-term passport." This was Anker Innovations' response to the tariff policy's impact. Weijian Shan, founding partner and chairman of Joy Capital, believes that if there are no competitors for the product and supply chain outside China, then have confidence in your own irreplaceability.

Meanwhile, OEMs must tough it out for a while.

Anyong Waves learned that ODM enterprises primarily targeting the US market are mostly in a stalemate and wait-and-see mode, halting shipments and expecting to not take orders for several months. Shan said that not only are their portfolio companies not taking orders, but neither are their peers, and importers are not placing orders either.

Shan believes there will certainly be a solution between China and the US within the next two to three months, because ODM enterprises must confirm US Christmas orders by July-August. If the situation remains mired then, "America will face a thoroughly empty Christmas."

Will E-Commerce "Small Packets" Become History?

The so-called "small packets" refer to a US policy called the "de minimis" exemption, whereby packages delivered directly to individual buyers are exempt from duties if valued below $800. This "small-value exemption" was also one of the foundations enabling cross-border e-commerce platforms like Shein and Temu to flourish in the US market.

According to data from US Customs and Border Protection (CBP), in fiscal year 2024, the total number of small-value packages entering the US through this exemption approached 1.4 billion, with the majority coming from China.

However, on April 2, Trump announced the latest tariff plan while also signing an executive order to completely eliminate the "de minimis" exemption. Starting at 00:01 US Eastern Time on May 2 (12:01 Beijing Time), the US terminated duty-free treatment for small packages imported from mainland China and Hong Kong. The White House then announced on April 8 that tariffs on small packages from mainland China and Hong Kong would increase from 30% to 90% of cargo value.

Consequently, small and medium sellers conducting cross-border small-packet business on platforms like TikTok, Temu, and Shein without overseas warehouse inventory are massively affected by these tariffs.

"Small commodities in cross-border aren't half the landscape of Chinese companies going overseas — they're probably three-quarters," said one cross-border e-commerce practitioner. Even if tariffs see some room for maneuver, "it's only a difference in degree, not in kind."

An operations director at a listed company's cross-border e-commerce division also told Anyong Waves frankly that under original pricing, "selling at 100% of procurement price with full duty declaration is impossible."

Shan believes the cancellation of the small-value exemption and the associated business model's obstruction in the US is almost certain. "The small-value exemption itself is just a special US domestic law. And it only targets certain platforms or brand merchants from China — it doesn't have global support." Therefore, the small-packet e-commerce business must transform.

However, some interviewees noted that currently over 90% of goods shipped to the US enter through "gray clearance." So-called gray clearance means exporters hand goods to specialized customs clearance companies that get them through at extremely low cost. The above practitioner believes tariff policy changes mainly affect customs clearance efficiency.

As for whether tariffs will directly eliminate the small-packet business? "The rougher the seas, the pricier the fish. There will always be someone who can gray-clearance through."

Will Overseas Warehouses Become Standard for Cross-Border Sellers?

Inevitably, but with risks. Their clearest advantage is cost controllability in front of platforms. Branden, a Southeast Asia cross-border practitioner, gave Anyong Waves an example: from the beginning of this year to now, Shopee and Lazada's combined commission in Vietnam has risen 11%, multi-fold growth compared to a few years ago; Thailand will raise platform commission by 4% in April for sellers with cross-border qualifications — before tariff policies, countries were already additionally charging 7-10% VAT on cross-border small packets. "But if you have inventory in overseas warehouses and ship locally, the impact is minimal."

A former Temu merchant said Temu has already clearly tilted toward the semi-consignment model (i.e., with overseas warehouse configuration): "The first page of search results is basically semi-consignment; traffic with the Local label performs better."

An employee at a leading overseas warehouse company told us that from last year until before the tariff policy took effect, their overseas warehouses were already in a state of supply unable to meet demand, "constantly turning away clients." But he also admitted that while tariff policies will in the short term drive existing merchants to acquire more overseas warehouse space, in the long term, fewer people may be willing to do cross-border e-commerce, and the overall market will shrink.

Another hidden challenge: even when transitioning to local e-commerce, for categories with numerous SKUs and extremely fast turnover (like apparel), it remains difficult in the short term to judge US inventory allocation. The resulting business risk remains a challenge.

Must Supply Chains Leave China?

Yes.

Today's global supply chain is no longer a linear structure but a highly intertwined systems engineering project. Completely bypassing China is unrealistic, but partial transfer is possible. Supply chain relocation to Southeast Asia and Mexico was the most common answer we received.

Joy Capital investor Ren Guang advised before the tariff policy took effect: first, don't switch entirely to self-production from the start, but proceed gradually, beginning with partial self-production plus partial external assistance to find balance; second, consider full-link production costs of owned factories by deploying overseas factories in Southeast Asia and elsewhere. Shan mentioned that the vast majority of Joy Capital's portfolio companies began adjusting a few years ago and currently have 20-30% of supply chain layout in Southeast Asia.

Under poor US-China trade conditions, a more feasible approach is: in early stages, ship Chinese raw materials or semi-finished products abroad for assembly and packaging; in later stages, produce some raw materials or outsourcing locally.

Cross-border e-commerce practitioner Michael believes that for labor-intensive industries like textiles and apparel, Southeast Asian countries' tariff policy advantages and low-cost advantages for US exports will gradually replace Made in China; if Chinese factories primarily targeting the US market find future US orders increasingly difficult to obtain, then for brand-oriented companies going overseas, choosing to locate supply chains in Southeast Asia, Mexico, or Africa is necessary. The logic is simple: Southeast Asia's advantage is low cost, Mexico's is proximity to the US market plus preferential treatment.

However, building factories overseas poses considerable challenges to companies' labor, logistics, delivery quality, and cash flow. Michael told Anyong Waves that generally, cluster migration is a more common and feasible approach — upstream and downstream of the industrial chain relocating together. But this will inevitably cause substantial reduction in domestic workers' jobs, and peripheral service businesses around original factories may also suffer losses due to production capacity outflow.

The book Spillover once cited the example of Yue Yuen shoe factory in Gaobu Town, Dongguan gradually shifting capacity to Vietnam: Yue Yuen was a Taiwanese enterprise that employed over 200,000 people on the mainland at its peak, with about 100,000 in Gaobu Town alone. Starting in 2008, its capacity gradually shifted outward, leaving only about 8,000 at the Gaobu factory. But what transferred to Vietnam was only the final shoe-assembly process in footwear manufacturing, not the full process transfer.

"Strengthen cooperation with core upstream suppliers in the industrial chain. The portion of supply chain that cannot migrate out is relatively core; in theory their business will be less affected, and may even see greater business possibilities due to manufacturing overflow," Michael said.

Southeast Asia vs. Mexico, How to Choose?

Southeast Asia > Mexico.

Respondents supporting Mexico argue that as one of only two countries not hit with additional tariffs in the tariff war, this is sufficient proof of the stability of the USMCA. But Shan said he only recommends Southeast Asia to companies.

"Because many companies don't understand rules of origin." With the U.S. predictably continuing to rigorously enforce origin verification, relocating to Mexico is not safe.

Bu Rui, partner at Fangda Partners, told Dark Waves that so-called origin certification comprises two parts: first, obtaining a local C.O. (Certificate of Origin), and second, meeting CBP declaration requirements for origin upon entry into the U.S. The latter depends on whether the relevant third country has signed a trade reciprocity agreement with the U.S. and whether it qualifies under the Generalized System of Preferences rules.

In short, it's designed to prevent using transshipment trade or simple component assembly to evade tariffs.

According to Bu, under the USMCA, if a product uses materials not originating from the U.S., Canada, or Mexico during production and processing (for example, raw materials imported from China), it is no longer considered wholly obtained. Whether such a product can qualify for origin status depends on whether substantial transformation has occurred. If not, it must be determined whether the regional value content meets minimum thresholds (no less than 60% under the transaction value method / no less than 50% under the net cost method).

Yu Ke, general manager of Minth Group's global logistics center, believes the Mexican government will inevitably impose additional tariffs on China. Because the U.S. has determined that large volumes of Chinese-origin products are entering the U.S. through transshipment via Mexico and Canada, the Mexican government will tighten and block Chinese goods from being rebranded as Mexican-origin to gain U.S. market access, in order to "demonstrate loyalty" to the U.S.

His observation is that the Mexican government is actively promoting localized supply chain development through measures like reducing tariff preferences and raising thresholds for VAT exemption on imports. "This resembles China's own shift from processing trade to developing local industrial chains."

This requires Chinese companies expanding overseas to plan ahead and transform their Mexican supply chains toward localization. "We require local operations to declare and issue certificates of origin based on actual origin — no falsification."

What About Temu and Shein?

Almost only "localization" remains as a viable path.

Affected by the elimination of the de minimis exemption, TikTok Shop recently notified U.S. sellers of new rules effective May 2: a 30% ad valorem duty on inbound goods, with phased additional specific duties of $25 per item (before June 1) or $50 per item (after June 1), plus requirements for carriers to post international bonds. Temu and Shein have yet to announce their responses.

Bu predicts that affected platform giants will fully internationalize, operating locally and distinguishing between domestic and foreign supply chains.

The reality bears this out. An e-commerce cross-border industry source said Temu and Shein are both pushing deeper localization in multiple countries, accelerating recruitment of local merchants. For example, Shein has established production capacity in Turkey, Brazil, and elsewhere. "Given current circumstances, anywhere outside China can be considered a tariff haven." Temu plans to open 6 "local-local sites" and 9 "semi-consignment sites" between April and June (both models target sellers with local fulfillment capabilities; the former for overseas-registered entities, the latter for China-registered entities).

In the midst of the tariff policy turmoil, Temu signed a memorandum with DHL Group. The memorandum states that DHL Group will leverage its logistics expertise to support Temu's localized operations in Europe, particularly its "local-to-local" business model. This model enables local businesses to sell directly to local consumers on the Temu platform with local fulfillment. Temu expects 80% of its total European sales to come from this model.

Beyond the U.S., Where Else Is Cross-Border E-Commerce Worth Going?

Europe is the first choice.

Xue Yi, professor at the University of International Business and Economics' School of International Trade and Economics, believes that if the U.S. market is affected, the EU has the greatest potential to become a matching market for China. In 2024, the EU-27's GDP reached $19.4 trillion, with per capita GDP exceeding $40,000. Its consumption structure focuses on high-end manufacturing (German automobiles, Swiss watches), cultural creativity (French luxury goods, Italian fashion), and green technology (Danish wind power, Swedish environmental technology) — highly compatible with China's "manufacturing upgrade + consumption upgrade" needs.

A cross-border e-commerce source told Dark Waves that in the U.S., Amazon is essentially fighting Temu toe-to-toe. Amazon operates a price comparison system: if platform products are priced higher than other platforms, merchants are penalized. And due to scale effects, Amazon FBA (fulfillment services) costs less than third-party alternatives. But in Europe, Amazon doesn't hold comparable position — FBA fees run £6-7, £3-4 more expensive than third-party options.

Indeed, Temu is pushing into Europe. A cross-border e-commerce operations director said he just received a call from a Temu merchant recruiter a few days ago, who said the company "will be focusing efforts on the European market."

Some respondents' answer is Japan. He analyzed that Japan's population is one-third of America's, with average income slightly below the U.S. But wealth disparity is far lower than in the U.S. — "even gig workers have money" — yielding considerable purchasing power. Meanwhile, Japan's economy is improving, showing clear signs of emerging from deflation.

Part 02: More Critically, Manufacturing

Must It Be the U.S. Market?

Regrettably, yes. In our interviews, we received affirmative answers from most respondents. Xue Feng, partner at Fangda Partners, told us that tariff increases will significantly impact industries including furniture and toys, textiles, auto parts, chemical products, steel and aluminum products. These companies, dependent on lower-tier supply chains, have strong reliance on the U.S. market, with relatively difficult alternative market development.

Specifically for new energy industries like solar, energy storage, and lithium batteries, the U.S. market remains a fiercely contested battleground. For the U.S., where traditional energy is well-developed, new energy represents an entirely new industry. Expanding into an industry's "emerging market" means a sufficiently high ceiling. Plus, years of development in China's new energy industry means U.S. expansion creates extremely high dependence on Chinese supply chains. Currently, U.S. lithium battery dependence on China exceeds 70%; for energy storage systems and low-cost EVs requiring LFP batteries, dependence is complete.

"The vast majority of U.S. energy storage and EV still use Chinese OEM," Fang Fang, partner at Big Plan Consulting with 14 years of experience at the U.S. Chamber of Commerce and federal government, told us. "Due to AI algorithms, data centers, crypto mining, oil electrification and other developments, U.S. energy demand will double in the coming years."

Currently, U.S. new energy adoption is still in early stages. Google, Apple, and Meta are all building their own data centers, "but electricity is a universal pain point." Fang Fang believes Chinese new energy manufacturing is nearly saturated, and expanding to the U.S. is also one of the biggest outlets.

Yang Zhaohui, founder of Inmind AI, has been providing U.S. business landing services for the new energy industry in recent years. He told Dark Waves, "To put it dramatically, even with 200% tariffs, the U.S. market's industry potential, scale, subsidy policies, and revenue expectations remain competitive."

Yang said that in the lithium battery industry, what people actually discuss most isn't tariffs, but rather U.S. subsidies and support for new energy, and how the U.S. new energy industry can further deepen from infrastructure to policy to talent to technology. He believes Trump's tariff policy is essentially "using war to promote negotiation," but China's new energy industry already possesses "counter-encirclement" capability.

"In the short term, negotiate to secure a transition period, buying time for supply chain adjustments. In the long term, exploit the contradiction of the U.S. 'wanting decoupling while needing Chinese capacity' (for example, the U.S. needs 500 GWh of additional battery capacity by 2030, 60% dependent on Chinese technology), locking in the irreplaceability of Chinese products."

If we reason with endgame thinking, ultimately, China's new energy industry must build a "moat" through technology iteration + global production network + standards dominance. This way, there is hope to transform tariff pressure into industrial upgrading momentum, achieving the leap from "Made in China" to "Globally Intelligent Manufacturing."

Can Building Factories in the U.S. Solve Everything?

The foremost problem: getting built and operational isn't that simple.

In February 2023, CATL and Ford's $3.5 billion battery plant partnership had already reached the site selection phase. Ford provided capital, CATL provided technology — the "Kirin Battery" sign was about to go up in Michigan — when the Biden administration cut it off midstream with a "security review." Though the two restarted cooperation this February, with factory production planned for 2026, what further turbulence lies ahead no one can predict.

Solar leader Trina Solar announced its U.S. factory in September 2023, with an estimated $200 million investment and 1,500 jobs. Yet on the night of Trump's election victory, November 6, 2024, Trina Solar sold its newly operational 5 GW module capacity in the U.S. to an American publicly listed company.

According to Caijing magazine, this transaction had likely been negotiated well in advance. The core issue was the enormous challenges Chinese companies face operating U.S. factories. And this challenge is by no means unique to one company.

In 2023, leading Chinese solar companies rushed to build U.S. factories. On one hand, U.S. trade barriers blocking Chinese solar kept escalating. On the other, the Biden administration offered various subsidies for new energy like solar, somewhat offsetting the cost disadvantage of U.S. manufacturing. But policy uncertainty has always loomed.

What Is the Root Cause of Factory-Building Difficulties?

Policy risk is only the surface-level reason for the difficulty of building factories in the U.S. The more systemic problem is that American society lacks the practical foundation for establishing manufacturing plants.

First, average U.S. manufacturing hourly wages are 6-8 times those of emerging markets, with extreme scarcity of industrial worker populations. Second, compared to labor costs, the industrial cluster problem is even more intractable. U.S. manufacturing has been offshoring for decades; domestic supply chains are severely fragmented. Semiconductor materials, electronic components, and other key parts mainly depend on Asian supply.

Even if manufacturing reshoring proceeds as Trump wishes, these factories will stand like isolated islands, unable to form complete chains. Xiao Chunhui, partner at Fangda Partners, believes that the U.S. lacks sufficient skilled workers, production costs, political environment, and environmental requirements to support complete manufacturing reshoring in the short term.

Take TSMC's experience: its Nanjing plant contributes 15% of global 28nm capacity. The Biden administration previously demanded it cut Chinese business to receive subsidies. And due to union pressure, TSMC was forced to promise priority hiring of local workers, yet faces skilled worker shortages — caught in a dilemma.

"Low-end manufacturing competes on raw materials and labor costs; mid-to-high-end manufacturing is about supply chain integration, complex design, and the systematic collaboration capability of thousands of engineers and skilled technicians." Zhao Peipei, a veteran North American automotive market expert, believes that today's U.S., especially most inland states, has very limited reserves of these capabilities. Rather, China remains one of the few countries globally with this complete capability system.

This inevitably creates the greatest risk for Chinese companies building U.S. factories — insufficient understanding of local U.S. human resources and supply chain foundations. Simple relocation cannot fully replicate domestic organizational and operational capabilities.

Currently, Chinese manufacturing enterprises in the U.S. are generally still in loss-making or non-profitable operating conditions. Evaluating whether to build U.S. factories, the level of added value is key.

Gao Jiayu, vice president of Jilian Group, told us that the U.S. currently faces talent shortages (especially engineers, technicians, etc.) and excessively high labor costs; generally only high-margin industries can sustain it. "Those coming to the U.S. to build their own factories or choose joint venture models are basically companies with high added value, strong product competitiveness in the U.S., and even few competitors."

Companies that have already built U.S. factories or put factory construction on their agenda share one commonality: they have confirmed and stable customer orders. Under the influence of geoeconomic factors, core major customers are being required by the U.S. government to further increase origin rates. These major customers will, according to the importance gradient across supply chain links, prioritize inviting core overseas suppliers to build factories in the U.S.

In Zhao Peipei's view, manufacturing competition comes down to "systemic organizational capability" — the ability to simultaneously mobilize engineering, quality, compliance, customer delivery, and other modules while collaborating across geographies. "We'll likely see more and more joint venture and partnership models going forward — for example, customers and suppliers forming joint ventures, or two peer companies from China and the U.S. teaming up."

Is Building Factories in Mexico a Viable Path?

It is, for now, the optimal solution.

The USMCA is entirely exempt from reciprocal tariffs. In 2023, exports to the U.S. accounted for approximately 26.4% of Mexico's GDP, of which roughly 75-85% entered the U.S. duty-free under the USMCA.

To date, a number of Chinese companies with export business to the U.S. — including Aili Home, Joyson Electronics, and Luxshare Precision — have publicly stated that products bound for the U.S. have been fully shifted to local production in the U.S. or Mexico, and are therefore unaffected by tariff policy.

A general manager whose primary business is helping Chinese companies establish operations in Mexico has observed that from Trump's campaign through early this year, market confidence fluctuated with the political winds, but clients coming to Mexico all share "strong intent."

He gave An Yong Waves an example: an auto parts subsidiary under a home appliance company broke ground on its manufacturing base on April 10 — the first overseas factory for this enterprise, with "less than half a month from initial contact to contract signing." And the most frequent requests he's received lately are factory expansions, or shifting from leased facilities to purchasing land for self-built plants.

Compared to the multiples or even tenfold costs of building entirely in the U.S., the "indirect route" through Mexico still counts as one of the optimal solutions for manufacturing to navigate the complex China-U.S. landscape.

Some entrepreneurs even demand to become fully (or at least ostensibly) Mexican companies. The aforementioned general manager cited an extreme case of "building a firewall to the limit" — a Chinese company that requested to fly a Singapore flag. The "nominal general manager" is American.

Liu Tanghua, China manager at Terra Regia — Monterrey's largest land and real estate developer, with a background in foreign trade and international procurement — has been closely tracking nearshoring and friendshoring supply chains. He specifically noted that beyond cost, infrastructure, political stability, trade agreements, labor skills, and geographic proximity to export markets, Chinese companies building factories overseas should add another criterion: the sphere of influence of the target market.

"Southeast Asia is where China's sphere of influence radiates most intensively and where supply chains are being relocated nearby. Latin America, meanwhile, is the U.S. sphere of influence and the destination for nearshoring and friendshoring supply chain configuration."

For companies looking to break into or develop the U.S. market, routing through Latin America remains the highest-priority strategy. The logical sequence of consideration is: U.S. → Mexico → Colombia/Brazil.

"Those with high margins, high automation suited for smart factories (lights-out facilities), and no investment restrictions can go directly to the U.S. in one step. Otherwise it's Mexico and Brazil, but given geography and trade agreement advantages, U.S. investors still prioritize Mexico," Liu Tanghua said. "For relatively labor-intensive industries sensitive to labor costs, countries like Colombia are options."

Do "Being Yourself" and "Localization" Conflict?

The answer is no.

As choices along two different dimensions, the former is independence at the equity and strategic level; the latter is local adaptability at the execution and operational level.

A Chinese company can absolutely maintain its major shareholder structure while using local teams to serve local customers, achieving compliance localization and organizational mechanism adaptation. There are already mature precedents in automotive, energy, medical, and other industries.

For example, Jiecang Intelligent, based in Shengzhou, Zhejiang — a world-leading electric actuator producer — has operated its U.S. factory for several years, with products dedicated to the American market. Shenzhen Capchem is beginning construction on a plant in Ohio; as a top-tier global battery electrolyte producer, the Ohio factory was established to meet customer demands for localized raw material supply, with the local government also offering investment incentives.

The real question is: whether companies are willing and able to make clear strategic judgments about "which parts can be shared and which must be separated." For instance, the U.S. Corporate Transparency Act has explicit requirements regarding the passport structure of 10%+ shareholders — this kind of policy red line is a boundary that "being yourself" must consider, but it doesn't prevent companies from pursuing "smarter localization."

Fang Fang told An Yong Waves that for new energy producers, as long as they can build factories in the U.S., American customers are absolutely not in short supply. But given geopolitical sensitivities around the energy sector, the most critical thing is to do thorough strategic planning early on, ideally finding American investors and channel strategic partners to localize supply chains as quickly as possible.

"Otherwise, you risk hitting landmines during the factory construction process (local government and community resistance) and in sales (government restrictions on using Chinese-made products and components), leading to long-term investment risks," Fang Fang said.

Part 03: Revisiting Globalization

Is Globalization Still a Real Proposition?

It still is, but it's being restructured.

Most interviewees believe that the context of globalization going forward will no longer be expansion into one or a few single markets, but rather more regionalized value chain reconfiguration.

China and the U.S. are certainly the two most important large markets, but the ones that truly present opportunity are markets that can form complementary structures with China. For example, the Middle East with "capital + infrastructure," Southeast Asia with "labor + industrial gradients," Latin America with "resources + local consumption power." The urbanization processes and infrastructure investment in these regions will be directions where Chinese enterprises can deeply participate and exert globalizing force.

From a macro data perspective, China's total exports to the U.S. in 2024 were approximately $500 billion, with their share of GDP having fallen to around 2.9%. This means China's dependence on the U.S. is structurally weakening, and this round of tariff policy won't create the kind of systemic impact seen in the previous round.

The impact still exists, just at a deeper level. For Chinese companies targeting global markets, the real challenge isn't how many orders were directly lost, but whether enterprises can seize this opportunity to force organizational upgrades and reconstruct overseas risk management.

What to Prepare First for the Hard Battle of Going Global?

Understanding "local" + bottom-line thinking + ample ammunition.

In Zhao Peipei's view, globalizing companies typically face three categories of problems: first, insufficient clarity in understanding "localization" — many companies think hiring locals equals localization, when it actually encompasses full-process capabilities including customer interfaces, compliance systems, and organizational delegation; second, weak risk management mechanisms, still habitually using domestic rhythms and frameworks to judge overseas uncertainties; third, misalignment between organizational strategy and business strategy — for instance, being aggressive in market expansion while lagging in talent reserves and legal compliance, causing early-stage investments to easily hit pitfalls.

The underlying issue across all these is a lack of awareness of "systematic globalization," treating overseas markets as export extensions rather than entirely new operating scenarios. "The earlier you establish a complete framework — encompassing financial models, responsibility boundaries, risk control reserves, and talent pipelines — the more genuine resilience you can build."

On specific short-term operational tactics, Ruan Fei, head of overseas investment at Rìchū Capital, advises using the next six months to gradually raise prices until 70% of tariffs are borne by the U.S. and 30% absorbed internally, then observing market share changes.

"Just survive the first three months," Ruan Fei believes. No single country in the world can independently absorb 30% of global industrial production capacity.

Weijian's advice is: first, maintain cash reserves for more than two years; second, be mentally prepared that in the short term — within two to three months, or even sooner — there will be a solution to China-U.S. trade relations, "but it won't go back to what it was."

Zhao Peipei recommends companies establish a "risk reserve account" — for example, for a 100 yuan product, add a 20% risk premium and price it at 120 yuan, setting aside that 20 yuan specifically to accrue for future uncertainties around exchange rates, taxes, compliance, and geopolitical costs. "Many Chinese goods have price competitiveness overseas partly because we haven't added this 'risk premium,' while European and American companies generally do. In the long run, this isn't an advantage — it's a hidden risk."

Will People Still Invest in Globalization?

This tariff storm tests not only globalizing enterprises but also strikes at one of the most active investment themes in the primary market over the past three years: going global.

After 2022, virtually every dollar-denominated VC treated going global as one of their most important directions, with new funds even created specifically for this theme. But now investors' positions, the types and capabilities of their portfolio companies, and their investment stages directly determine how differently they experience this moment.

An Yong Waves' interviews found that investors behind early-stage companies whose primary revenue comes from the U.S., with pure China-based supply chains and insufficient pricing power, show somewhat pessimistic and retreating sentiment; investors who have already deployed overseas production capacity, whose products have technological and brand pricing power, and who hold multi-segment especially asset-light projects, are more optimistic.

For instance, an AI hardware company that saw fierce fundraising competition this year is now facing wavering support from its investors, precisely because the company's original story was built on European and American markets. "It's not that they can't raise money, but it's genuinely on pause."

The bifurcation among globalization investors is also happening rapidly.

One investor focused on going global told An Yong Waves that he still believes in the theme, because the supply surplus has to be resolved somehow, and this "black swan" event is also an opportunity to observe teams' comprehensive capabilities. But he also frankly admitted, "We've currently paused related fundraising, and the probability of reduced deal pace is not small."

Ruan Fei believes that globalization investing will not only not disappear, but will attract more investors who "get it," precisely because the forced restructuring of valuation systems. "Going global isn't a capital-intensive industry; the underlying logic is business fundamentals. Companies that can actually make money and survive this crisis will only have their investment value further highlighted."

Jiayin Capital began systematic cross-border investment in 2017. Weijian believes "globalization is a more permanent track than consumer investment." But only companies with sales above 1 billion RMB or $100 million USD enter their scope. "Only at this scale does it make sense to talk about supply chain relocation and cross-regional deployment," Weijian said.

Panic is only temporary.

Image source | Official still from Dunkirk

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