Beyond Regulatory Uncertainty: Chinese Companies and the EU Deforestation Regulation

Chinese companies are facing numerous challenges from the EU Deforestation Regulation (EUDR). While much attention has focused on whether sharing geolocation data is compatible with Chinese legislation, there is no conclusive evidence of a blanket prohibition.

This approach, however, overlooks a wider set of issues that the collection and transmission of data entail. Unless these issues are addressed, suppliers risk finding themselves unprepared when they inevitably receive information requests from EU buyers.

A quick refresher: What is the EUDR?

The EUDR is part of the EU’s sustainability legislation and carries significant trade compliance implications. It applies to seven commodities (cattle, cocoa, coffee, palm oil, rubber, soy, wood) and a wide range of products derived from them. It is designed to reduce the EU’s contribution to global deforestation and forest degradation by ensuring that commodities traded in the Union are both deforestation-free and legally produced. To this end, a due diligence process –comprised of data collection, risk analysis (including risk mitigation, if needed), and generation and submission of Due Diligence Statements – needs to be carried out for each affected commodity and product made available in the EU market. Without the relevant documentation, goods will be prevented from entering, leaving or being traded inside the EU.

EUDR requirements are more demanding than those of previous directives

Unlike its antecessor, which targeted only timber (EU Timber Regulation), the EUDR goes further, not only by covering more commodities, but also by requiring provision of geolocation data (down to the plot of land), traceability across the supply chain and proof of compliance with local legislation, from land rights to labor laws. This makes the EUDR a demanding data regime, as compliance depends on the ability to collect, manage, and share reliable data. 

After an initial postponement in December 2024, large and medium operators and traders are now required to comply as of December 30, 2025, and small and micro-enterprises as of June 30, 2026. However, on September 23, 2025, the European Commission declared its intention to seek a further one-year delay, as it was not yet certain that TRACES (the system to be used for submitting and storing Due Diligence Statements) would be capable of handling the expected data volume.

Where Chinese companies fit in EUDR‑regulated supply chains

Many Chinese firms serve as suppliers to EU-based operators. They source raw or semi-processed inputs from multiple producer countries, convert them into components or finished goods, and ship them to EU importers and brands. In this configuration, the EU‑based importer is the “operator” that must file the Due Diligence Statement, as the EUDR places obligations only on operators and traders established in the EU. Suppliers outside the Union, including Chinese companies, are not directly regulated, but in practice they are indispensable: Without their geolocation, legality and traceability data, EU operators cannot comply, and their goods cannot enter the European single market. In other words, the Chinese supplier’s ability to provide the right information is the baseline for compliance.

Another common scenario involves Chinese companies that maintain EU subsidiaries or distribution entities. When those subsidiaries or distributors place goods on the single market, they themselves become operators (or large traders) with direct obligations under the EUDR.

What needs to be collected: A supplier’s EUDR data checklist 

To meet the obligations under regulation (EU) 2023/1115, operators must report detailed deforestation-related data on their supply chains, which can only be obtained from their suppliers. 

The following table explains what information must be requested to meet the core requirements:

Current obstacles in EUDR data collection and transfer 

Identifying what needs to be collected is only the first step; the real difficulty lies in assembling the relevant information in practice. Many suppliers are struggling to generate the data, transmit it in the right format, and ensure it meets the standards of accuracy and completeness required by the EUDR. The following section considers the three main obstacles suppliers face.

1. Regulatory uncertainty that leads to inaction

• Chinese legislation: Debate continues about whether transferring geolocation data is compatible with China’s Cybersecurity Law, Data Security Law, and Personal Information Protection Law. However, there is no evidence that the transfer of geolocation data is prohibited outright, as the regulatory framework allows for approval pathways.
• EUDR implementation: The potential postponement under discussion should not be misunderstood as an opportunity to pause preparations. The European Commission has reaffirmed its commitment to implementing the EUDR, and unless the European Parliament makes a formal decision to change it, the effective starting date remains December 30, 2025. Most importantly, companies should not confuse the postponement of reporting obligations with the cut-off date for deforestation, which remains December 31, 2020. Products linked to deforestation after that date will not be compliant, regardless of when the Due Diligence Statement is filed.
  

2. Data collection and transmission

Beyond the question of legal transfers, many suppliers are struggling with the practicalities of collecting and transmitting data. These include:

• Lack of knowledge or tools for recording geolocation coordinates
• Incomplete or approximate production records
• Mixed batches
• Paper-only documentation
• Incomplete maintenance of master data information (e.g. commodity codes)
• Incomplete data needed for the traceability of material flows

3. Reliability and usability of data

The EUDR does not permit submission of just any data; it requires that the relevant information meet three minimum quality dimensions: accuracy, completeness and verifiability. Therefore, the challenge is not merely collecting and submitting information, but generating precise, structured and usable data that can flow seamlessly into the EU’s IT system.

Turning data collection and transmission challenges into first steps for EUDR compliance

It is important to remember that addressing the three main obstacles does not mean mastering the entire due diligence process as, at this stage, the focus is solely on data collection. The table below summarizes the first steps that can be taken by both operators and suppliers to ensure that the required data is available.

Upgrading to a data‑ and AI‑enabled operating model

At a basic level, companies must collect and maintain producer-level datasets, so each consignment can be traced back to the land where it originated. However, the EUDR is a recurring reporting obligation, not a one-off audit. To make the journey sustainable, we recommend upgrading from ad hoc data capture to an operating model anchored in stakeholder engagement and data- and AI-enabled technology. 

• Define a data model that can unify and standardize data input
  
  A clear, unified data model is the backbone of a scalable EUDR program. When every producer and partner captures the same core fields in the same way, the data becomes comparable, searchable, and ready for automation. Standard definitions and simple rules prevent the errors and revisions that plague ad hoc spreadsheets.
• Geospatial data collection and deforestation analysis with remote sensing support
  
  EUDR compliance starts with a precise mapping of where production occurs, and farm‑level plot boundaries captured as clear polygons rather than a single pin on a map. AI can help here by flagging unusual shapes, duplicate entries or coordinates that fall outside expected areas.
  
  For deforestation analysis, a repeatable process should be established that compares plot maps against trusted alerts and annual loss datasets. These checks should be compared with regular satellite imagery to confirm what happened on the ground.
• Automatic data quality control
  
  Automatic quality control is essential during data collection if EUDR compliance is to be scaled without overwhelming the team members involved. AI can serve as a co‑pilot, reducing errors and speeding decisions across the following four fronts: For accuracy, it can flag outliers; for completeness, it can potentially fill in the missing required fields; for verifiability, it can cross‑check submissions against independent sources; for timeliness, it can monitor deviation and make predictions.

Conclusion

If operators and traders are to ensure EUDR compliance, suppliers must recognize their role as essential partners and should be actively involved in the compliance process. Additionally, suppliers should not assume that the absence of information requests means they are outside the scope of the EUDR; if their products fall within it, information will inevitably be requested. Chinese suppliers are not alone in facing data barriers, however. The challenge is global, as very few producing countries are currently generating the type of granular, digital, and verifiable data that the EUDR requires.

Thanks to leveraged data and AI-enabled technology, PwC can support companies in building customized solutions for EUDR compliance – by tailoring their information requests and structuring individual plans for EUDR-compatible data that integrate seamlessly into everyday business operations. Feel free to contact us, and we will gladly accompany you on your EUDR journey.

Disclaimer

This article was prepared on September 30, 2025. Given the fast-evolving regulatory environment, subsequent developments may not be reflected here. Readers are advised to remain attentive to updates and to consult official EU sources for the latest information on the EUDR.