Kyoto accelerates European expansion leads to EU subsidy investigation, China's supply chain faces stricter examination in the Netherlands

In 2025, the gross value of goods imported from China in the Netherlands reached EUR 993,32 billion, and EUR 509,96 billion between January and June 2026.CBS calorie data also showed that in 2015 this figure was EUR 662,14 billion. Over the decade, the scale of Chinese goods entering the Netherlands was significantly expanded, while the port of Rotterdam, the warehouse network and the European transfer gateway system also made the Netherlands one of the important routes for Chinese goods to enter the EU.

What really is worth investigating is not “the Chinese products are not cheap,” but what exactly this price advantage consists of: how much technology and scale economy, how much government subsidies and industrial policies make, how much low wages, overtime and labor dispatches make, whether forced labor, prison labor or unexplained raw materials are still hidden in the supply chain.

Survey Conclusion: Low prices are not a cause, but a whole set of cost structures

This investigation divided the evidence into three lines. The first is the labor chain: ordinary workers, dispatched workers, student workers, detainees and high-risk areas. The second is the supply chain: whether factories, raw materials, second and third-level suppliers after suppliers can be tracked. The third is the trade chain: how China’s industrial policies, subsidies, excess capacity and price competition enter the European market and trigger EU anti-subsidy and anti-dumping measures on some products.

Low wages do not automatically equate to forced labor; low Chinese commodity prices do not equate to “dumping” in the legal sense, but when independent labour surveys, international labour standards, EU trade relief surveys and ECB analysis of excess production capacity point to the same category of cost pressure, European companies can no longer use “cheap” as an unexplained natural result in the choice of suppliers.

After 2027, the supplier's phrase "no forced labor" will no longer be useful

Regulation (EU) 2024/3015 will apply from 14 December 2027.The EU stipulates that products manufactured using forced labor must not be put on the EU market, sold or exported from the EU, covering all origin and all products.The regulation focuses not only on final assembly plants, but also on supply chains such as mining, harvesting, production and manufacturing.

The logic of EU law enforcement is not to require each company to use the same set of annual audits, but to require companies to produce material that explains the supply chain after a risk signal. The authorities can conduct preliminary assessments based on reports, risk databases, research reports and other clues; if doubts cannot be eliminated, they can go into formal investigation and ultimately prohibit product placing on the market, request withdrawal or disposal.

From 14 December 2027, no product made with forced labour may be sold in or exported from the EU market.

For importers, this means that a "no compulsory labor declaration" can only prove that the supplier has made a statement, and can not prove that the statement itself is true.The real question is: where the raw materials come from, where the actual factory is, who the secondary and third-level suppliers are, how workers are recruited, whether they can refuse work or leave freely, and whether the enterprise can keep enough documents to allow third parties to re-verify.

Low-cost workforce: Foxconn and Labubu supply chains provide concrete cases

Part of the advantage of Chinese manufacturing comes from huge industrial clusters, logistics, infrastructure and engineering capabilities, but labor costs and labor conditions must also be put into cost analysis. The independent labor agency China Labor Watch investigated the production base of the iPhone 17 in Zhengzhou in 2025, saying that during the peak period of the survey, about 150,000 to 200,000 workers were employed, and more than half of the labor dispatched workers; its report also said that some dispatched workers earned about 25 yuan per hour, but wages were distributed, the base part of which was about 12 yuan, if workers left work early, the subsequent part could not be obtained.

These are the findings of China Labor Watch’s investigation, which is not a court ruling, nor can it automatically be inferred to all Foxconn factories or the entire manufacturing industry in China.But this case reveals a problem that is extremely important to the cost of procurement: “low labor costs” in corporate offers may not only be related to low wages, but may also be related to dispatch, pay delay, overtime systems and weak workers’ pricing capabilities.

In 2025, China Labor Watch conducted 51 employee interviews and documents review at Labubu toys manufacturing factory in Shenzhen County. The organization said that the factory had more than 4,500 workers at the time of the survey and recorded six-day work, overtime over the statutory ceiling, salary fines, a large number of work dispatches for core jobs, untransparent labor contracts and social insurance issues. In 2026, the organization submitted further evidence to the U.S. Customs and Border Protection Agency and the German Federal Economic and Export Control Agency, claiming the existence of these employment arrangements for forced labor risks.

Low wages, overtime or insufficient social security can constitute labour rights issues, but only when labour is under threat of punishment and the worker is not voluntarily provided falls into the category of forced labour defined by the International Labour Organization. Therefore, the survey can not only look at wage numbers, but whether the worker can refuse overtime, can resign, whether the wages are withheld, whether the worker is forced to continue working by graduation certificates, bonuses, lodging, fines or other means.

Prison Labour: The Hardest to See Layer in the Supply Chain

In March 2026, China Labor Watch released Invisible Corners of the Factory Floor: Forced Labor in China’s Prisons, a report that analyzes Chinese prison enterprises, labor transformation, scoring assessments, release of sentences and external orders in the same framework. The report said that some prison labor is linked to scoring, release of sentences or release of sentences, and that prison enterprises simultaneously assume regulatory and economic functions; and more warning for European importers is the report that prison products can enter ordinary markets and international supply chains through multi-layer subcontracts, enterprise “shell” registration and local cooperation.

Such accusations need to be verified case by case, but ILO’s standards for prison labor are very clear: prisoners must have genuine, free and informed consent when working for private enterprises, and refusal of work cannot result in loss of privileges, influence behavior assessment or reduction of punishment; wages, working hours, social security and occupational safety conditions should be close to free labor relations. In other words, prison labor is not naturally equivalent to forced labor, but once labor is bound with punishment, reduction of penalty, suspension or remuneration far below normal labor relations, enterprises must face a very high risk of forced labor.

What really needs to be investigated is not whether there is no production in the prison, but: who the orders come from, to whom the products are sold, whether the prisoners can refuse, whether the refusal does not affect the treatment and reduction of penalties, how the wages are calculated, whether the prison enterprises repack the products into ordinary commercial goods through affiliates and subcontractors.

Xinjiang: Moving from labor to raw material tracking, risks could bypass first-tier suppliers

In 2022, the Office of the United Nations High Commissioner for Human Rights in Xinjiang assessed serious allegations that workforce transfers could be compulsory; in 2023, the United Nations Economic, Social and Cultural Rights Committee also expressed concerns about government-led labour mobilization, personnel transfers, and strict field management.

Beijing denies the existence of forced labor in Xinjiang. When Reuters in June 2026 that the Chinese Ministry of Foreign Affairs responded to U.S. measures, it reiterated its position that “there is no so-called forced labor.”

Institutions such as the Helen Kennedy Center for International Justice and Human Rights Watch at Sheffield Harlem University have tried to track cotton, aluminum, solar materials and automotive parts using customs data, company disclosures, local documents and supply chain relationships. Their research shows that a first-tier supplier located in Shenzhen, Jiangsu or Zhejiang can’t alone prove that raw materials and second-tier processing links are unrelated to high-risk areas.

U.S. UFLPA enforcement has turned this tracking logic into a border reality. The U.S. Department of Homeland Security Strategy Update 2025 says that since the implementation of the relevant mechanism, U.S. customs inspections have carried out more than 16,000 units of goods involving a value of $3.7 billion. The EU system is not the same as the U.S., but the commercial meaning is similar: the supply chain is unclear, and goods may turn from cost advantage to cash flow and market access risk.

The other side of low-cost exports: the European Central Bank writes overcapacity and price war into analysis

The European Central Bank’s 2025 study found that Chinese commodity exports were significantly higher than the previous trend after the outbreak, while imports were long-term weak; weak domestic demand, state-led manufacturing investment and industrial self-sufficiency policies together pushed this change.

The ECB also found that exports from weaker domestic sales sectors such as automotive and steel have grown by about 75 percent since 2022.The ECB’s analysis did not say that all Chinese exports are dumped, but pointed out that when domestic demand is insufficient and capacity is already formed, companies will compete for overseas markets by lowering short-term marginal prices, accepting lower profits and even losses.

In 2026, the ECB further pointed out that the situation of trade in commodities with China in the euro area was influenced by China’s strong position in the global supply chain, excess capacity and non-marketed industrial policies; these factors overwhelmed the prices of Chinese producers and increased the competitiveness of Chinese commodities in the European market.

The EU is not just discussing: some products have already been officially identified as dumped.

"Dumping" has a strict meaning in trade law and cannot be called dumping for all low-cost Chinese goods, but on specific products, the EU has completed its investigation and made legal determinations.

In October 2025, the European Commission imposed a final anti-dumping duty of 62.5% on China's steel bearing plates. The European Commission said the investigation found that related Chinese imports entered the EU at dumped prices and caused damage to the EU industry.

In February 2026, the EU imposed an anti-dumping duty of 57.7% to 90.3% on China’s high-pressure seamless steel bottles. There were approximately 6.4 million relevant steel bottles in the EU market during the investigation period, of which approximately 4.5 million came from China alone. The Commission interpreted the measures as correcting unfair trade practices found in the investigation and restoring fair competition between EU and Chinese producers.

Both cases show that the discussion of "Low-price exports from China" cannot be stopped in the political slogan.For specific products, as long as the EU investigation determines that there is dumping and industrial damage, it will form enforceable tariff consequences; for products that are not completed the investigation, it can not be written in advance "low-price" as already established dumping facts.

Electric vehicles are another case: not anti-dumping, but anti-subsidy

The trade dispute triggered by Chinese electric vehicles in Europe is often referred to as “dumping”, but the EU has taken counter-subsidy measures. After the European Commission completed its inquiry in 2024, it imposed a final counter-subsidy tax of 7.8% to 35.3% on pure electric vehicles produced in China and continued to deal with the price commitment scheme in 2026.

This distinction is important.Anti-dumping investigation addresses the difference between export prices and normal value and the consequent damage; anti-subsidy investigation targets government subsidies and their effects on competition.Mixing the two into a "malignancy dumping" instead weakens the most important evidence in the article: Europe has identified specific trade distortions in some Chinese goods under different legal frameworks.

The European Commission’s report “National Induced Distortion” for the Chinese economy, updated in 2024, also provides evidence for future anti-dumping cases, according to the European Commission, which examines the question of prices and costs affected by state intervention in Chinese legislation, industrial policy and specific sectors, and makes it clear that the report will be used for ongoing and future trade defense investigations.

Kyoto enters Europe: From Joybuy to Acquisition of MediaMarkt and Saturn

If the anti-dumping and anti-subsidy cases show how Chinese industrial goods entered Europe, then the expansion of Kyotoon shows another more direct path: platforms, warehouses, last-mile distribution and offline retail assets simultaneously.

In March 2026, Joybuy officially entered six European markets in the UK, Germany, France, the Netherlands, Belgium and Luxembourg. Reuters that Joybuy provided more than 100,000 goods when it launched, and had “fast delivery” as its core point of sale: more than 15 million households in Europe and the UK covered the same day from the start of the launch. Joybuy has already deployed about 60 warehouses and distribution hubs in Europe and built its own last-mile distribution system. For the Netherlands, this is not a far-off Chinese platform story – the Netherlands is one of the first six markets, and Joyong has previously tested Ochama operations in the Netherlands.

At the same time, Kyoto’s European expansion is pushing towards offline retail assets. In July 2025, Kyoto announced the acquisition of German CECONOMY for €4.60 per share, with a transaction volume of around €2.2 billion. CECONOMY owns the two major consumer electronics retail systems MediaMarkt and Saturn. If the transaction is completed, Kyoto will gain not only e-commerce traffic, but also a mature store network, customer base, procurement system, brand relationships and European retail infrastructure that can be integrated with its own logistics technology.

The European Commission decided on 28 May 2026 to initiate an in-depth investigation into JD.COM/CECONOMY. The European Commission’s Official Gazette writes very specifically: After its preliminary review, the Commission believes that there is sufficient evidence that the Kyoto Group may receive foreign subsidies from China within three years prior to the announcement of the acquisition, including debt financing from financial institutions attributable to the Chinese government, tax measures, government subsidies, and other financial contributions that may constitute foreign subsidies.

The Commission further pointed out that these potential subsidies could release funds for transaction financing and could help Kyoto obtain support from its target company management and key shareholders at higher premiums, and enable Kyoto to use the logistics and technical capabilities that may be supported by the subsidies as part of the transaction attractiveness.

It should be emphasized here that the EU is still in the in-depth investigation phase, which is not the ultimate unlawful finding. As of August 18, 2026, Kyoto has submitted a pledge to the European Commission, extending the period for the interim review of the case to October 23,

1. but the investigation itself has turned a question that has often been considered a political debate into a specific regulatory question: Kyoto’s financial strength, logistics network, technical capabilities and merger offers in Europe, how many from the normal market competition, and how much is likely to be supported by Chinese national resources.

The case followed by a very rare political variable. On August 19, 2026, the Chinese justice department asked Chinese entities not to conduct or assist the EU in the relevant investigation into Kyoto, and called the EU's information request "inappropriate overseas jurisdiction". Reuters that this was Beijing's second use of relevant counter-rules to intervene in the EU investigation. That is, a Chinese e-commerce company's European merger review has risen from regulatory procedures between enterprises and the European Commission to a China-European legal conflict directly interfering with the Chinese government.

This makes Kyoto a key case for observing the expansion of Chinese enterprises in Europe. It is not possible to simply write “subsidy suspicion” as “confirmed by the Chinese government”, but it is also not possible to understand Kyoto’s expansion in Europe as merely the internationalization of ordinary e-commerce. What the EU is investigating is whether there is enough link between national finance, taxes, subsidies and the competitiveness of enterprises to distort the internal market; and Beijing subsequently demanded that domestic actors do not assist in the investigation, and that the institutional relations between the state and enterprises become part of the case itself.

For the Dutch market, Joybuy, JoyExpress and CECONOMY transactions need to be placed on the same chart: the front end is consumer-oriented low-cost and fast delivery, the middle is European local warehousing with last-mile logistics, and the back end is the acquisition of large retail assets and mature customer networks. If these links could eventually be integrated, what Kyoto would get would not be a mere cross-border website, but a set of European retail infrastructure covering “purchase-storage-distribution-platform-store”.

Why the Netherlands is the key gateway to this supply chain survey

The Netherlands is both a terminal market and one of Europe’s most important logistics and transfer hubs. China’s imports of 100 billion euros mean consumer goods, machinery, electrical appliances, parts and intermediate goods from China can continue to enter the German, Belgian, French and other European markets through ports and warehousing systems.

For Dutch consumers, the price, delivery speed and choice of goods are to be seen; for regulators and local retailers, it is also necessary to pay attention to whether storage networks, platform data, retail mergers, sources of subsidies and price competition are based on the same replicable market conditions.

Therefore, for Dutch importers, the risk should not only be on the “My Level 1 Supplier Isn’t Sanctioned” level. What really should be done is to draw the supply chain before payment and shipment: who is the subject of the contract, who is the real manufacturer, where the factory is, what are the key raw materials, who are the Tier 2 and Tier 3 suppliers, whether there are high-risk areas, prison enterprises, labor transfer projects, abnormal labor dispatch, U.S. UFLPA entities, EU trade relief measures or inexplicable cost breaks.

From the Kyoto case, see how the party country system enters the overseas expansion of enterprises

Kyoto is a commercial enterprise in the sense of business and capital markets, but for European regulators, "is it a state-owned enterprise" is not the only question of judging its relationship with the Chinese state system. Article 18 of the current Chinese Companies Law stipulates that companies establish Party organizations and carry out Party activities in accordance with the Constitution of the Communist Party of China, and the company shall provide necessary conditions for Party organizations activities; Article 7 of the National Intelligence Law stipulates that any organization and citizen are obliged by law to support, assist and cooperate with national intelligence work. These laws do not prove that every business decision in Kyoto is made directly by the Chinese Communist Party, but they explain that the system environment in which Chinese enterprises are located is not entirely the same as the model commonly understood in Europe "private enterprises -

When the European Commission launched an in-depth investigation, it said that the preliminary review had found “full signs” that at least one party could have obtained foreign subsidies that would distort the EU’s internal markets. The EU’s current investigation focuses on debt financing, tax measures, government subsidies and other financial contributions with better conditions than normal market conditions. The case has not yet been finally decided, but the focus of the investigation is no longer on whether Kyoto calls itself “private” but on whether its capital costs, financing conditions and government resources could turn into European mergers and market competitive advantages.

More systematic is the legal conflict that followed.On August 19, 2026, the Chinese judiciary ordered domestic entities not to conduct or assist the European Union's relevant investigations into Kyoto, and called the EU's information request "inappropriate extraterritorial jurisdiction".This order itself cannot prove that Kyoto is directly controlled by the state, but shows the reality that a European regulator must face: When the EU tries to penetrate the financing and subsidy sources of a Chinese company, Chinese state authorities can directly restrict domestic entities to provide information to European regulators through their own laws.

From the perspective of competition in the European market, this puts the question beyond the controversy that “Kyoto is not an ordinary private enterprise.”The real questions that need to be answered are whether a company’s capital sources are transparent when it expands in Europe with platforms, warehouses, distribution and mergers; whether government support has changed the cost of financing; whether European competitors can access resources under the same conditions; and whether regulators can obtain sufficient, independent and verifiable evidence when investigations are needed.

If the European Commission finally confirms that the relevant foreign subsidies are sufficient to distort the internal market, the case will not only deal with a €2.2 billion acquisition deal, but will also be an important precedent for Europe’s assessment of the model of expansion overseas of China’s large enterprises. In contrast, if in-depth investigations fail to confirm these concerns, the final decision should also be based.

For the Netherlands, this institutional problem is real. Joybuy has entered the Dutch market, and Kyoto has built warehouses and last-mile networks in Europe. If platform traffic, logistics infrastructure, capital costs and retail assets eventually shut down, Europe faces not just a new shopping site, but a set of commercial infrastructure that can change procurement, logistics, prices and consumer entry.

The problem behind hundreds of billions of euros of Chinese goods, not just prices

China's manufacturing competitiveness, of course, includes real industrial clusters, infrastructure, technological progress and scale economies. The European Central Bank's analysis in 2026 also clearly pointed out that China's industrial rise has both productivity and technological progress factors, as well as weak domestic demand, overcapacity and non-market industrial policies.

But the same can’t stop asking because of “High Manufacturing Efficiency in China.”Foxcon and Labubu supply chain labour surveys, China Labor Watch’s latest research on prison labor, UN concerns about Xinjiang labor policy, U.S. UFLPA border enforcement law, EU anti-dumping recognition of steel cover boards and high-pressure steel bottles, counter-subsidy measures for Chinese electric vehicles, and now in-depth investigation of foreign subsidies for Kyoto’s acquisition of CECONOMY, have revealed that there are several completely different but level-by-layer risk layers behind low-price supply chains and overseas expansion.

For Dutch and European companies, the next most practical question is not just “why Chinese goods are cheap,” but also: where does a Chinese enterprise get its competitive advantage when it enters Europe with platforms, storage, distribution, funding and merger capabilities at the same time?

This is the question that Chinese supply chain research really needs to answer.