For a long time, export tax rebates have been one of the core operating dividends in the domestic foreign trade industry. They are also an important basis for many foreign trade companies to maintain profits, accept overseas orders, and participate in market competition.
Relying on tax rebate subsidies, many export businesses can lower their quotations, adopt a small profit but quick turnover model, and use low prices to seize customers in overseas markets. The industry has long been trapped in a homogeneous low-price involution.
As relevant policies continue to be adjusted and optimized, the tax rebate dividends that have been relied on for many years are gradually withdrawing.
As tax rebate space continues to shrink and dividends basically disappear, the living environment, profit logic, and competition methods of the entire foreign trade industry are undergoing fundamental changes.
The old path of grabbing orders at low prices is becoming increasingly difficult to follow. The extensive export model has come to an end, and the foreign trade industry has officially entered a new development stage of high-quality competition.
Many foreign trade practitioners have formed a fixed mindset after doing business for many years.
In the past, when receiving an order, the tax refund profit was calculated first. As long as there was room for tax refund, even if the profit of the product itself was meager, we were willing to accept the order at a low price.
The competition among peers is not about product quality, service capabilities, and supply chain strength, but simply about who offers the lower price and who makes more profits.
Over a long period of time, similar domestic export companies have lowered prices with each other and become involved in serious problems. Everyone seems to have a lot of orders and has been busy for a whole year, but the actual profits obtained are very limited.
When tax rebates exist, low-price involution still has room to survive.
Enterprises can rely on policy subsidies to fill profit gaps and use price advantages to win over overseas customers. Even if the added value of products is low and innovation capabilities are insufficient, they can still ship goods stably.
The entire industry generally emphasizes sales volume over quality, volume over brand, and everyone focuses on exporting mid- to low-end basic categories. The market is highly homogenized, and the overall development level of the industry has remained at the level of low-end manufacturing and export.
Now that the tax rebate bonus is gradually disappearing, it has directly burst the low-price bubble that has been in the foreign trade industry for many years.
Without tax rebates, all costs and profits of enterprises must be borne by the products themselves and their own operating capabilities.
The low-price advantage that was supported by subsidies in the past no longer exists. If we continue to blindly accept orders at low prices, it will easily lead to greater losses as we receive more orders.
Under the pressure of the market environment, the once crazy low-price competition model has naturally been gradually eliminated by the market.
Many people will simply understand that the reduction in tax rebates means that foreign trade business has deteriorated and corporate profits have declined.
In fact, from the perspective of the long-term development of the industry, the disappearance of dividends is not a negative for the industry, but a reasonable industry reshuffle.
Relying on tax rebates and low prices for overseas exports for a long time may seem like export data, but in fact the drawbacks are very obvious.
On the one hand, vicious competition within domestic companies drives each other down to lower prices, allowing overseas purchasers to take the initiative in pricing. Our bargaining power for export commodities has always been weak, and a large amount of profits have been taken away by overseas middlemen.
On the other hand, low-priced and low-end exports are easy to form stereotypes. Overseas markets have long labeled Chinese products as cheap. It is difficult to sell high-quality products at reasonable prices. Good craftsmanship and good quality are not recognized by the market.
In addition, long-term low prices have also caused many foreign trade companies to lose motivation for transformation and upgrading.
Since they can make money by steadily receiving orders through volume and low prices, companies will not be willing to invest in developing new products, optimizing processes, building independent brands, and improving after-sales services.
The entire industry has been stuck in the stage of simple processing and OEM manufacturing, and it is difficult to get out of the low-end cycle.
The disappearance of the tax refund bonus just broke this comfortable business status quo.
Without the support of policy dividends, companies must return to the most essential logic of doing business: making money with products, competing with quality, and retaining customers with services.
In the past, foreign trade merchants who only competed on price had to recalculate costs, make rational quotations, and no longer blindly involuntarily involuntarily give away profits.
Malicious low-price competition within the industry has been reduced, and the market environment has become healthier and fairer.
In the new competition stage, the content of foreign trade competition has completely changed.
First, the strength of the product itself becomes the core competitiveness.
For the same type of exported goods, workmanship details, material quality, product functions, and practical experience will directly determine the order direction.
Companies that can produce differentiated, high-quality products can retain customers without low prices.
Low-end products that only copy and imitate and have ordinary workmanship will be slowly eliminated by the market.
Second, supply chain stability capabilities widen the industry gap.
Raw material control, production efficiency, delivery cycle, quality control management, and inventory scheduling will all directly affect corporate profits.
After tax rebates no longer exist, refined cost control is more important than simply reducing prices.
Businesses that can stabilize their supply chains and control overall costs will have increasingly obvious advantages in international trade.
Third, independent brand capabilities begin to exert value.
In the past, a lot of foreign trade was OEM, earning minimal processing fees.
After the industry transformation, companies with their own brands, overseas reputation, and market visibility can have higher pricing power without getting into price competition, and their profit margins will be more stable and long-term.
Fourth, customer operations and comprehensive service capabilities are increasingly critical.
Overseas orders no longer only focus on price, but purchasers pay more attention to communication efficiency, after-sales guarantee, customization capabilities, and long-term cooperation stability.
Foreign trade practitioners who take good care of their customers and understand the needs of overseas markets are more likely to operate in the long term.
From the perspective of the overall industry environment, the foreign trade industry bids farewell to low-price involution, which is also in line with the general direction of overall foreign trade development.
my country’s export trade no longer pursues pure export volume, but pays more attention to export quality, trade quality and industrial value.
It is an inevitable development trend to shift from large quantity and low price to high quality and low price, from low-end OEM to high-end manufacturing and brand overseas.
The tax refund policy adjustment has only accelerated this transformation process.
In the short term, some foreign trade companies that are accustomed to low prices, high volume, and extensive operations will face order pressure and shrinking profits, and will need some time to adapt to market changes.
But in the long run, the entire industry will gradually get rid of internal competition, reduce malicious price reductions by peers, and overall profits will return to a reasonable range. The overall image and bargaining power of Chinese manufacturing overseas will steadily improve.
For ordinary foreign trade practitioners and small and medium-sized enterprises, there is no need to be overly anxious about policy changes, nor do they need to stick to past business thinking.
Times have changed, and the way of doing business must also be adjusted accordingly.
Stop blindly fighting for low prices and volume, and focus on polishing products, optimizing operations, and exploring differentiated advantages.
A foreign trade business that does not rely on policy dividends, does not rely on low-price involution to survive, and truly relies on its own strength to participate in global market competition will be stable enough, have stronger risk resistance, and be able to go further.
The future foreign trade market will not belong to those with the lowest prices, but to practitioners with excellent products, solid operations, and those who know how to transform with the trend.
The market is always changing, and policies will continue to be optimized.
Enterprises that can truly stay in the industry for a long time never rely on external dividends to survive, but have irreplaceable core capabilities.
The era of low-price involution has slowly come to an end, and a new stage of foreign trade featuring rational management, quality competition, and long-term development has officially arrived.
What do you think is the most difficult part of foreign trade business after the tax rebate bonus fades?
How can small and medium-sized enterprises smoothly complete the transformation?
Everyone is welcome to share rationally in the comment area.
