On June 26, the European Public Prosecutor’s Office (EPPO) issued a major announcement: In a large-scale joint law enforcement operation code-named “Calypso”, EPPO, together with law enforcement agencies in Greece, France, Spain and Bulgaria, uncovered a smuggling network across Central Europe involving 14 countries, with a total amount of 750 million euros involved. In addition to a large number of textiles and footwear, the goods seized in this operation also included 7,133 electric bicycles, 3,696 electric scooters and 480 containers, and the illegal trade chain spanned Europe.

According to EPPO, this criminal network is specifically responsible for the “grey channel” operations for Chinese export goods to enter the EU market, covering the entire chain from customs clearance, distribution, terminal sales to money laundering and profit repatriation. It has long evaded customs duties by falsely reporting prices, forging documents, etc., and carried out large-scale VAT fraud.

As the EU continues to strengthen its trade regulation on electric bicycle products, this raid has undoubtedly sounded the alarm for the industry-compliant operations have become the bottom line for the survival of Chinese export companies.

In recently years, the EU has continued to increase tariffs on Chinese electric bicycles. Earlier this year, the European Commission officially decided to extend anti-dumping and countervailing duty measures on Chinese electric bicycle. Currently, Chinese electric bicycles exported to the EU are subject to anti-dumping duties ranging from 9.9% to 70.1% and countervailing duties ranging from 3.9% to 17.2%. The high tax rates combined have significantly increased the export cost of complete vehicles, significantly weakening the price advantage of Chinese brands in the EU market.

In this context, some companies have tried to lower their tax burden through “evasion operations” such as smuggling, underreporting, and splitting. However, in the face of the EU’s increasingly stringent tracking mechanism and data cross-verification capabilities, these behaviors are very likely to lead to serious consequences such as goods being seized, companies being included in the “high-risk list”, and even criminal liability.

It is worth noting that some strategically forward-looking Chinese manufacturers have taken the lead in realizing the transformation from “going overseas in compliance” to “localization”. JOBO, an electric bicycle export manufacturer from Jinhua, Zhejiang, invested in setting up an assembly plant in Poland as early as 2019, and successfully obtained the EU end-use license, completing key assembly procedures in strict accordance with the rules of origin, thereby effectively avoiding the impact of high tariffs. At the same time, JOBO has also established a mature cross-border export compliance risk control system, which not only ensure legality and compliance, but also significantly reduces trade risks and enhances the credibility of global buyers.

In the short term, non-compliant methods may bring price advantages, but the legal risks and brand costs they bring are likely to make companies “not worth the cost”. At present, EU member states have strengthened data sharing and law enforcement cooperation on electric bicycles. If Chinese export companies cannot establish a compliance mechanism from the source, they will easily fall into the regulatory “pressure cooker”.

In the increasingly competitive European market, only by taking the path of localization, legality and compliance can a company build a moat for long-term and stable development. For Chinese electric bicycle companies that want to truly deepen their presence in overseas markets, this is no longer a “plus point” but a “survival point”.