State-owned enterprises' bulk trade gross profit margin is below 2%. Will they be restricted from issuing invoices? In this life-and-death crisis, cutting off channel businesses and focusing on value-added services is the only way forward for state-owned enterprises!

Recently, many Shandong SASAC supply chain trade clients have been complaining to us: they were just called in for a tax interview because the company’s gross margin on its business is too low (around 1%). They were told that going forward, the gross margin must not be lower than 2%; otherwise, they will consider pausing increases to invoice quotas and limiting invoice quotas…

Many state-owned enterprises engaged in trading were stunned on the spot, because most of what they trade are bulk commodities such as coal, steel, and energy. The industry’s characteristics are “thin margins but high volume, fast turnover.” Maintaining a gross margin of 1% is already difficult. 2%? That is basically an impossible task—you tell me, if that’s the case, what can you even do?

In fact, since the beginning of 2026, we’ve already heard similar complaints from many sources, especially among local state-owned trading companies in places like Shandong. For a time, the “2% gross margin” red line became a sword hanging over the heads of practitioners, and many companies that operate compliantly and follow the thin-margin, high-turnover model fell into collective anxiety, leaving the entire industry in a state of unease.

Some people say it’s new regulation from the Golden Tax Phase IV; others say it’s a unified document issued by the State Taxation Administration. But what is the truth, exactly? In this “2% red line” controversy, is it a one-size-fits-all crackdown by regulators, or an industry reshuffle meant to set things right?

Today, we’ll clear away the fog and lay out the full background and context of this matter: Who exactly is the regulator’s heavy hand aimed at? Is the 2% red line a real rule or just a rumor? For local state-owned enterprise trading business, how should they get through this life-or-death ordeal?

I. Rumor Verification: Is the 2% red line actually a thing?

First, the conclusion: the claim that “2% gross margin is explicitly required by the tax authorities” is an unfounded rumor. The national tax system has never issued a unified, mandatory hard document requiring a 2% gross margin.

We reviewed all publicly available provincial tax bureau documents and SASAC documents, and we did not find any document that clearly states that “a trading company’s gross margin may not be lower than 2%.” So where does this 2% red line actually come from?

The Classic Guanzi · Mu Min says: “In governance, the government is right.” The core of regulation is never about pinning down numbers, but about guarding the bottom line. Industry speculation suggests that the real legal basis is Article 20 of the VAT Law, which officially takes effect on January 1, 2026: where sales are clearly abnormally low or high without justified reason, the tax authorities may determine the sales amount in accordance with the Tax Collection and Administration Law and relevant administrative regulations.

Let’s break down the regulator’s real logic: tax authorities use gross margin as a risk-control lever because fictitious trade and financing-oriented trade have a distinct profile—extremely low gross margin (usually below 0.5%), “buy at the same price and sell at the same price,” high transaction volume, no control of goods, no logistics. In essence, it is “trading in name, lending in reality,” with the goal of inflating revenue, extracting bank credit, or evading taxes. As for the so-called “2% red line,” it is more likely a risk-warning threshold used in specific enforcement by tax authorities, rather than a nationwide uniform penalty standard.

So someone might ask: if it’s not a hard rule, why are so many companies being called in for interviews and having their invoice quotas limited? Here are the two key reasons we summarize: first, some local tax authorities use 2% internally as a reference standard to simplify risk-control procedures, which unavoidably leads to big-data misclassification; second, some companies themselves do have vulnerabilities in their business—for instance, long-term channel businesses with no control of goods and pure “ticket passing,” which are inherently in a high-risk zone, so they naturally get prioritized scrutiny.

II. Industry Reality: Microp-profits are the natural baseline of bulk commodity trading, and even leading companies still need to fly low

More importantly, we must face an industry reality: thin margins are the natural baseline of bulk supply chain trading. The core business model of bulk trade is thin margins but high volume, monetizing traffic; it involves high capital occupation, fast turnover, and high risk. The industry consensus is that gross margins are generally low.

Let’s look at data. Based on publicly available financial report data, the comparison between revenue and gross margin in China’s bulk commodity supply chain industry (CR5) from 2022 to 2024 is as follows:

From the publicly available data above, these listed companies with revenue in the trillion-scale range still can only operate in the 1%-2% gross margin range, relying on scale, channel, and risk-control advantages. Even industry benchmarks like Xiamen Xiangyu explicitly mention in its development strategy plan for 2026–2030 that it needs to make up for the shortfall of thin margins at the trading end by increasing service value-added. Even industry leaders can’t escape the constraint of low gross margins. For local state-owned enterprises whose resources and scale are far inferior to the top players, being forced to achieve a gross margin above 2% is no different from asking a child just learning to walk to sprint 100 meters.

Because the core of the commercial model for bulk commodity trading is “thin margins but high volume” and “monetizing flows.” Low gross margin is not a violation; it is an objective industry rule.

More realistically, local state-owned enterprises face a dilemma in bulk trading: they can’t afford to bet, and they can’t afford to lose. If, to reach a 2% gross margin, they stock up and bet on the market, if they are right the profits are collectively shared, but if they are wrong the responsibility is borne personally—no one dares take that risk.

III. The Right Approach: Instead of fixating on regulator’s numeric red lines, restructure the business

To hammer the iron, you must strengthen yourself. Complaining and panic won’t solve the problem. Faced with regulatory pressure, rather than obsessing over whether the 2% is reasonable, local state-owned trading companies should actively seek change. Most importantly, cut out the “false parts” and make the business real—moving from passive compliance to active upgrading.

Tightening regulation is the trend. A business model that survives on pure channels and ticket passing will inevitably be phased out. To develop in the long term, local state-owned trading companies must seize this opportunity and reconstruct their business model:

First, firmly eliminate high-risk channel businesses. Businesses with no control of goods, pure ticket passing, and gross margins below 0.5% are key targets for regulator risk screening and are also time bombs for companies. They must exit decisively. These businesses may look like they generate large revenue, but in reality they have no core value. Once they are identified as fictitious trade, the consequences would be severe. If you keep the green hills, you won’t run out of firewood. By giving up low-quality revenue, you can guard the compliance bottom line.

Second, embed value-added services to raise comprehensive gross margin. A 2% gross margin is difficult for pure trading businesses, but breakthroughs are entirely possible by embedding value-added services such as warehousing, logistics, processing, hedging, and inventory management. For example, carrying out simple distribution and processing can achieve gross margins of over 5%, effectively lifting comprehensive profitability. Or, connect with end customers, reduce intermediate links, both increasing margin and enhancing customer stickiness.

Third, benchmark industry leaders and transform into supply chain comprehensive service providers. For example, the six-factor synergy (funds, trading, logistics, services, processing, and investment) model proposed by Xiamen Xiangyu in its development strategy is worth local state-owned enterprises learning from—moving away from a pure spread-profit model toward a service-fee profit model. By charging fees for professional services such as procurement execution, sales execution, and inventory management, not only is gross margin higher, but tax recognition is also clearer and less likely to be challenged.

In addition, companies with the necessary conditions can also consider multi-region布局—select cities with more flexible and more efficient regulation, such as Shenzhen and Shanghai, to set up branches, thereby diversifying operating risk. This is not “gaming the system,” but creating more room for company development within a compliant framework.

Finally, we want to say to all supply chain peers: acting only on laws is insufficient on its own. The essence of regulation is to guide the industry back to the commercial essence, not to shut it down just by regulating. 2% is not an uncrossable dead line; real compliance is the foundation for a company to stand.

In the past, some state-owned enterprises relied on inflating revenue and running in circles to boost performance—seemingly impressive on the surface, but in fact burying enormous hidden risks. Now that regulators’ heavy hand has landed, it is precisely a correction of such a distorted development model. For companies that stick to real operations and focus on services, this is a rare opportunity for reshuffling: after fictitious trade players exit, market space will be further released, and only companies with real core competitiveness will be able to go farther along standardized tracks.

The underlying logic of bulk commodity trading is shifting from “scale is king” to “quality is king.” The life-or-death ordeal for local state-owned enterprise trading business has never been the 2% gross margin red line; it has always been the “real versus fake” of their own business. Only by cutting out the fake, making the real parts real, keeping the compliance bottom line, and enhancing service value can they pass through the regulatory cycle and achieve long-term development.

After all, the industry’s future belongs to those doers who can return to the commercial essence and move steadily forward within regulation. However, progressing steadily and far can’t rely only on concepts; it also requires a scientific, actionable playbook and protective “armor.” When we dig into how to cut out the fake and make the real parts real, a reality that can’t be avoided is this: in 2026, the country’s standardized requirements for how state-owned enterprises operate have entered a new, systematized stage.

On January 1 this year, the “Implementation Measures for Accountability for Misconduct in Investment and Operation by Central SOEs” (abbreviated as SASAC Order No. 46) officially came into effect. Places like Sichuan have quickly issued supporting detailed rules. This is absolutely not an isolated event, but a strong regulatory signal. The core changes of the new rules are:

• The scope of accountability has been greatly expanded to 98 scenarios. It clearly includes fictitious trade such as circular trading and single-order routing, and requires advance warnings for potential contingent losses.

• The mechanism shifts from after-the-fact accountability to a full-process system that includes pre-control, in-process supervision, and after-the-fact accountability.

• Emphasizes due diligence and compliance for免责, clearly delineating a safety zone for companies and employees, but the prerequisite is that process evidence must be retained and decisions must be compliant.

This means that the old rough mode of “do first and watch later, fix after something goes wrong” no longer works. Now, from the moment each business is created, risk-control genes must be embedded, and every operational step must be standardized with proper evidence. A company’s core competitiveness is shifting from an ability to sprint for scale to the ability to operate with higher quality and lower risk. So what exactly should be done? How can the group’s strategy, the new regulatory rules, and the detailed operational practices on the front line be seamlessly aligned?

To that end, Wanlian Network, based on an in-depth interpretation of SASAC Order No. 46 and years of hands-on risk-control practice in the industry, has carefully developed the “Practical Course on Full-Staff, Full-Process Risk-Control Operating Details for Supply Chain Business.” This series of courses has successfully opened for seven sessions, cumulatively attracting over 700 executives grouped from nearly 300 large state-owned enterprise groups, earning strong word-of-mouth. The eighth session is scheduled to be held in Wuhan on April 9–10. This course does not focus on vague theoretical discussions—it focuses on execution:

• Core issue solved: how to establish a full-staff, full-process risk-control operating playbook covering 10+ steps such as qualification, due diligence, signing, operations, early warning, and disposition.

• Directly provided: risk-control supporting tools and contract templates you can take and use immediately, helping you turn policies into actions.

• Through: realistic sand-table drills using actual financing-oriented trade cases, so you and your team can personally experience risk identification and audit responses, turning stepping into traps into de-trap training.

No matter whether you are a business负责人, risk control, legal affairs, or a manager, this course will help you: while winning performance, build the defense line; while actively expanding, clarify the boundaries of liability exemption; and truly achieve the goal of keeping risks controlled where risk prevention is required, granting免责 where免责 applies, and securing the performance you should win.

Under the dual drivers of regulation and the market, the supply chain industry is undergoing a profound re-evaluation of value. Instead of passively worrying, it’s better to proactively learn and master the navigation charts and new skills for safe sailing and steady, profitable growth in the new era.

Contact for registration: Teacher Li 19168536275