RCEP Trade Through China – Strategies for European Companies

China offers a practical entry point for European companies seeking to access the benefits of the RCEP, thanks to its advanced industrial base, comprehensive supply chains, and strong connectivity with other member states. By leveraging RCEP trade through China, firms can position themselves to expand across Asia more efficiently, capture tariff advantages, and integrate into one of the world’s most dynamic regional economies.

Since coming into effect in January 2022, the Regional Comprehensive Economic Partnership (RCEP) quickly began to reshape the trade landscape across Asia. In just three years, China’s trade with other RCEP members exceeded US$5 trillion. Covering nearly 30 percent of the global GDP, the RCEP is now the world’s largest trading bloc, representing a consumer base of more than two billion people and a growth engine for the regional economy. 

For European companies, the RCEP provides a clear opportunity to access this market, either by leveraging existing operations in China or by establishing a presence to take advantage of the agreement’s benefits. China’s well-developed industrial ecosystem, advanced manufacturing zones, and integrated supply chains make it an effective hub for production and export within RCEP. Companies operating from or relocating to China can benefit from preferential tariffs, harmonized rules of origin (ROO), and streamlined customs procedures, enabling more efficient access to other RCEP markets. 

In this article, we discuss the benefits the RCEP can provide European companies and outline some of the pathways to accessing preferential treatment.

Benefits of trading under the RCEP for European companies 

For European companies that have established manufacturing or sourcing operations in China, the RCEP has transformed the strategic value of their local presence. By reducing tariffs, unifying ROO, and facilitating trade across the Asia-Pacific, the RCEP enables European manufacturers in China to access ASEAN, Japan, South Korea, Australia, and New Zealand on far more competitive terms than they would by exporting directly from Europe. 

Preferential tariffs 

Since its entry into force in January 2022, the RCEP has reshaped trade flows in Asia by progressively reducing tariffs among its 15 members. For European companies manufacturing in China, this opens the door to much more competitive exports across the region. RCEP commits members to eliminate tariffs on at least 90 percent of traded goods over a period of 20 years, with many sensitive categories already enjoying early tariff cuts. This directly lowers costs for European firms producing mechanical and electrical products, automotive components, or industrial machinery in China and selling into ASEAN, Japan, or South Korea.

According to data from China Customs, in the three years since implementation, China’s trade with RCEP partners reached RMB 38.57 trillion (US$5.4 trillion), consistently accounting for more than 30 percent of its global merchandise trade. ASEAN has also strengthened its role as China’s largest trading partner, with bilateral trade reaching RMB 6.99 trillion (US$980 billion) in 2024, up nine percent year-on-year. For EU firms embedded in Chinese supply chains, this means that their goods can now move into ASEAN under far more favorable tariff conditions than if shipped directly from Europe, giving them a pricing edge in fast-growing Southeast Asian markets. 

For example, for a German machinery company that manufactures water pumps and exports the final products to the Philippines: 

• Direct export from Germany to the Philippines: Water pumps (HS Code 8413.20) face a seven percent tariff under the Philippines’ WTO MFN rate.
• Export via China under RCEP: If the German company sets up assembly in China and sources key components through its Chinese operations, the pumps can qualify as Chinese-origin goods under RCEP rules of origin. When shipped from China to the Philippines, the tariff is reduced to zero under the RCEP schedule. 

The benefits are also expected to continue over the coming years. At the Boao Forum’s Bangkok Roundtable in August 2024, experts projected that Cambodia could graduate from least-developed-country status by 2028, driven largely by RCEP and related FTAs that are accelerating exports and attracting new FDI. In Thailand, trade with RCEP partners reached US$269.7 billion from January to October 2024, representing more than 53 percent of its total trade and showing steady year-on-year growth. Local analysts highlight that RCEP’s investment provisions, such as “pre-establishment national treatment + negative list” rules, are already creating a more open and predictable environment for cross-border business. 

These projections are important for companies considering expansion in China and the broader Asia-Pacific. As ASEAN economies expand and integrate further under RCEP, demand for intermediate goods, machinery, and high-quality industrial components will continue to rise. 

Streamlined rules of origin 

One of RCEP’s most powerful tools is its unified and flexible ROO. Instead of navigating a patchwork of overlapping ASEAN+1 free trade deals, companies can now use a single RCEP framework to qualify their products for preferential tariffs across all 15 members. This greatly simplifies regional supply chain management: inputs can be sourced from any RCEP country, processed in China, and still enjoy preferential tariff treatment when exported to ASEAN, Japan, or Korea.

Since the RCEP came into effect, there has been a rapid uptake of certificates of origin (COOs). According to China’s Ministry of Commerce (MOFCOM), in the three years from 2022 to 2024, a total of 647,400 RCEP COOs were issued by China’s trade promotion system, reaching a combined value of US$21.9 billion. In 2024 alone, COOs issued were worth nearly US$8 billion, up more than 10 percent year-on-year, while the number of COOs issued jumped almost 25 percent to reach 273,400. For EU companies operating in China, these certificates are a practical instrument for cutting duties, stabilizing export orders, and winning contracts in competitive ASEAN markets. 

Streamlined customs procedures 

Beyond tariffs, RCEP also aims to speed up and simplify the movement of goods. The agreement commits members to faster clearance times, more predictable customs rulings, and greater transparency. For example, perishable goods and express consignments are expected to be cleared within six hours, and most goods within 48 hours. 

For European companies shipping from China to ASEAN under RCEP, this reduces logistics bottlenecks and lowers working capital tied up in customs delays. The simplification of documentation and recognition of authorized operators also helps SMEs to participate in regional trade without being held back by red tape. 

Services trade and investment facilitation 

The RCEP is not limited to goods. Its provisions on services and investment open new opportunities for European companies that combine manufacturing with service offerings, such as after-sales maintenance, engineering, or digital platforms. The agreement gradually introduces a “negative list” approach to services commitments, which creates greater certainty for foreign suppliers and reduces barriers in sectors like finance, logistics, professional services, and e-commerce. 

On the investment side, the RCEP enhances protection and transparency. Commitments such as national treatment, prohibition of certain performance requirements, and improved investor aftercare make it easier for European firms to expand or restructure their China-based operations to serve the wider region. For example, European companies can use China as a base to provide integrated manufacturing and services solutions across ASEAN, with a clearer regulatory framework protecting their investments. 

Integration with other FTAs 

The RCEP consolidates 27 existing trade agreements and 44 investment treaties into a single, coherent framework. For European companies, this reduces fragmentation in the Asia-Pacific market and creates more stable, predictable rules for long-term planning. It also strengthens regional supply chain resilience by ensuring that sourcing and production decisions across multiple countries remain covered under one preferential system. 

In practice, this means a European company with operations in China can coordinate inputs from Thailand, Malaysia, and Japan, assemble in China, and export to Vietnam, all under the same trade regime, with lower tariffs and simplified documentation. This level of integration was not possible under the old patchwork of ASEAN+1 deals, and it provides European investors with a unique edge in building scalable, competitive regional networks. 

Risks and limitations 

It is important to note that while the RCEP can, in many cases, offer streamlined and lower-cost trade for European companies, there are still several limitations and risks associated with operating under the agreement.

First, although the RCEP’s long-term goal is to eliminate tariffs on over 90 percent of goods traded among members, this will happen over a period of 20 years, meaning many products will still be subject to higher tariffs in the interim. Moreover, each member state has its own tariff concession schedule, meaning that treatment varies depending on the bilateral trade relationship. As a result, a product that enjoys zero-tariff treatment in one country may still face higher tariffs in another, complicating trade planning. Tariffs will also remain in place on certain sensitive goods, such as many agricultural products, in order to protect lower-income countries, limiting opportunities for certain sectors.

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Further, companies hoping to leverage RCEP by locating production in one member country to serve the wider region must ensure their products meet the RCEP’s ROO requirements to qualify for preferential treatment. This involves demonstrating that a sufficient proportion of value is added within the RCEP region. Firms will need to conduct careful Certificates of Origin (COO) assessments and maintain detailed supply chain documentation, which could mean substantial compliance costs. 

The RCEP members also have highly varied levels of administrative and digital customs capacity. While advanced economies such as Singapore or South Korea are rapidly implementing streamlined customs and digital trade processes, less-developed members may struggle to keep up. This can result in inconsistent enforcement, clearance delays, or additional friction costs, undermining some of the agreement’s intended efficiency gains. 

There are also various non-tariff barriers to consider, such as divergent technical standards, licensing requirements, local content rules, and language barriers, which can all complicate trade. In particular, the RCEP’s provisions on digital trade and data flows are weaker than in other modern FTAs, limiting predictability for companies relying on cross-border e-commerce or digital services. 

Choosing the right pathway to accessing the RCEP 

European companies seeking to expand into ASEAN and wider RCEP markets face a strategic choice between exporting directly from Europe or leveraging China as a value-added processing hub under the RCEP framework. Each pathway carries distinct advantages and risks across tariffs, supply chain resilience, market access, and geopolitical exposure. The table below compares these two approaches to help firms evaluate the most suitable route for their products and long-term strategy. 

Scenarios for leveraging the RCEP for European companies 

Scenario 1: Leveraging China-based manufacturing for exports to Southeast Asia 

A German automotive components producer with a manufacturing plant in Shenyang has found that the RCEP offers a significant opportunity to expand its presence across Southeast Asia. By obtaining RCEP certificates of origin for its precision auto parts, the company can export directly from China to Thailand, Vietnam, and other member states with preferential tariff treatment. This reduces or eliminates tariffs that would otherwise apply, lowering costs and making their products more competitive against suppliers from the EU.

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Beyond the cost savings, the company also benefits from streamlined customs procedures under the RCEP, which significantly reduces delivery times. As a result, the firm is able to serve its regional clients faster, improve its market share, and strengthen its reputation as a reliable supplier in Asia. 

Potential pitfalls: The company had to carefully track sourcing to ensure that enough value was added within China for its goods to qualify as “originating.” A shift in suppliers, for example, if too many inputs came from Europe instead of within RCEP, could easily jeopardize eligibility. 

Scenario 2: Relocation of manufacturing from Europe to China 

A French specialty chemicals company, which previously produced most of its goods in France and shipped them to Asia, decided to relocate part of its production to Guangdong Province in China. The motivation was to take advantage of RCEP’s preferential ROO tariffs on goods supplied to the company’s downstream facilities in Malaysia and Indonesia. By moving production closer to the end markets, the company could source more raw materials within the RCEP region, ensuring that products qualified for preferential treatment when shipped between China and ASEAN.  

This restructuring served both to reduce logistics and tariff costs and improve the resilience of the company’s regional supply chains. 

Potential pitfalls: While the relocation reduced tariffs and improved efficiency, the company faced challenges in restructuring its supply chain. Certain specialized components sourced exclusively from Europe could prevent the final product from meeting origin criteria, unless value-add thresholds were carefully calculated. Furthermore, investment protections under RCEP are still evolving, and differing local regulations in Japan and Australia introduced additional compliance burdens despite the tariff benefits. 

Scenario 3: E-Commerce expansion via RCEP 

An Italian fashion SME, operating a boutique brand out of a bonded warehouse in Shenzhen, sought to expand its online sales into other RCEP markets, such as Malaysia, Thailand, and Vietnam. Leveraging RCEP provisions on e-commerce and trade facilitation, the company streamlined logistics and cross-border shipping while targeting new consumer bases across Southeast Asia. The agreement’s simplified customs procedures and preferential treatment for originating goods allowed the SME to plan cost-effective pricing for these markets, particularly when sourcing materials locally in China to meet the ROO requirements.

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Drawing on experiences from regional peers, the SME also partnered with logistics providers to offer dedicated air freight for international customers, reducing delivery times and increasing customer satisfaction. For orders above a certain threshold, it was able to offer reduced or waived shipping costs, enhancing competitiveness and encouraging higher-value purchases.  

Potential pitfalls: While the company benefitted from lower tariffs and streamlined customs, maintaining compliance with ROO was more complex than expected. If its clothing incorporated too many fabrics imported from outside the RCEP (for example, Merino wool from Italy), the goods risked losing preferential treatment. In addition, differences in tariff phase-in schedules across ASEAN markets meant that not all countries offered the same level of benefits immediately, requiring tailored market strategies. 

Scenario 4: When the RCEP isn’t beneficial – regulatory complexity in high-tech goods 

A European electronics manufacturer specializing in advanced industrial sensors considered relocating part of its production to China to leverage RCEP preferential tariffs for exports to ASEAN markets. However, upon closer analysis, the company realized that the complex O requirements posed a significant challenge for its highly integrated products. Many components were sourced from non-RCEP countries, including specialized semiconductors from Europe, meaning the finished goods would not qualify for preferential treatment without substantial changes to the supply chain. 

Additionally, certain ASEAN countries maintain stringent certification and safety standards for high-tech industrial equipment, which differ from both Chinese and EU regulations. Complying with these divergent standards would require multiple separate documentation and approval procedures in each market, adding to resource costs and operational risk. After modeling the potential cost savings against these compliance burdens, the company concluded that the tariff reductions alone were insufficient to justify the move. 

Accessing the RCEP via China: Weighing the costs and benefits 

For European companies, the RCEP offers an unparalleled opportunity to integrate into the world’s largest trading bloc. Establishing or expanding operations in China provides a strategic gateway into this market, with the potential to secure preferential tariffs, tap into regional supply chains, and benefit from more efficient trade facilitation rules. For manufacturers and consumer-facing brands alike, the ability to reshore production closer to key Asian markets can help to reduce lead times and enhance responsiveness to demand. 

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Beyond the commercial benefits, production within the RCEP framework can also serve as a hedge against external shocks. As trade frictions with the US persist, and as global supply chains face increasing geopolitical risk, localizing part of production in China and exporting to ASEAN, Japan, South Korea, and other partners under preferential rules helps diversify exposure and build resilience. 

However, with the agreement still subject to certain limitations, companies considering RCEP as part of their China strategy must go beyond headline tariff savings. Careful cost–benefit analysis, including detailed COO assessments, supply chain mapping, and long-term investment planning, is essential. The firms most likely to succeed will be those that see RCEP not only as a trade facilitation tool but as a platform for embedding themselves within the Asia-Pacific’s fast-growing production networks and consumer markets.