Inside Story of Entrepôt Trade Profits: Operate This Way to Earn 30% More!

Mr. Zhang recently discovered a strange phenomenon: A batch of Chinese-made clothing, when re-exported to the United States via Vietnam, actually earns 15% more profit than direct export. The entrepôt trade arbitrage model hidden behind this is becoming an open secret in the foreign trade industry.

simply put, it is to maximize profits by taking advantage of tariff differences and trade policies between different countries and transiting goods through a third country. For example:

• Avoid high anti-dumping duties imposed by Country A on Country B
• Utilize the preferential treatment of the free trade agreement between Country C and Country D
• Obtain tariff reduction through origin certification in the transit country

Model 1: Tariff Springboard Technique
Ms. Li needs to pay a 12% tariff for exporting electronic components to Europe, but after transiting through Malaysia, with the ASEAN-EU Free Trade Agreement, the tariff drops to 3%.

Model 2: Quota Transfer Technique
When the export quota for certain types of goods to the United States is exhausted, transiting through countries like Cambodia that enjoy the Generalized System of Preferences treatment can regain the export qualification.

Model 3: Exchange Rate Difference Arbitrage
Utilize the currency settlement advantage of the transit country, for example, first purchase with RMB and exchange it into US dollars for settlement in Singapore to fully enjoy the benefits of exchange rate fluctuations.

Trade experts from Zhongshitong remind that attention should be paid to:

• Legal risks of forging documents in the transit country
• Compliance reviews by multiple national customs
• Liquidity risks caused by extended capital chains

With the improvement of the CRS Global Tax Information Exchange System, the arbitrage space of simply "washing the origin" is being compressed. It is recommended that enterprises:

• Establish a real overseas distribution center
• Study new free trade agreements such as RCEP
• Use blockchain technology to improve trade traceability