China’s Ministry of Commerce (MOFCOM) has recently issued a critical 2026 update regarding the export control of dual-use items, specifically intensifying the review process for the Japanese market. This move has sparked a necessary conversation within the industry: In 2026, a provider’s magnet compliance capability is as critical as their material’s magnetic performance.
Since April 2025, export restrictions have strictly governed high-performance permanent magnets, including Samarium Cobalt (SmCo) and Neodymium magnets containing Terbium (Tb) or Dysprosium (Dy). For enterprises outside of the global giants caught in this transition, the focus has shifted from simple sourcing to securing long-term supply chain stability through a partner with proven magnet compliance capability.
The Uncompromising Boundaries: Technical Realities and Regulatory Compliance
Driven by supplier recommendations since April last year, many users have shifted to HRE-free solutions to bypass “dual-use license” requirements—a transition already completed by many, while others continue to try. However, the physical and regulatory boundaries remain uncompromising:
Currently, the demand and production volume for HRE-free solutions are massive, driven explicitly by the intent to avoid dual-use license applications. This technology is mainly concentrated in SH grades, with ongoing development aimed at achieving higher remanence and energy products. However, inherent limitations remain: HRE-free products typically exhibit somewhat lower high-temperature magnetic properties and weaker resistance to demagnetization.
Furthermore, for UH grades with higher magnetic energy products, as well as EH and AH grades, HRE-free technology is simply not applicable. To guarantee performance in these tiers, the addition of Terbium or Dysprosium is non-negotiable. This creates a scenario where avoidance is impossible, and possessing genuine magnet compliance capability becomes the only path to securing supply. For Samarium Cobalt (SmCo), the reality is even more absolute: there is no substitution scheme, making the dual-use license unavoidable.
The Uncompromising Boundaries: Technical Realities and Regulatory Compliance
The regulatory landscape is inherently uneven. Global giants often possess the strategic leverage to negotiate directly with regulatory bodies, and the introduction of the “general license” appears to be largely designed to safeguard the supply chain stability of these top-tier players. This grants them a distinct advantage in maintaining supply continuity.
For enterprises outside this tier, the reality is starker. When supply chains tighten, these companies naturally look to diversify, often hoping to find a partner who can navigate—or bypass—the regulatory hurdles. However, they frequently run into a “silent wall.” For many smaller manufacturers and traders, the administrative depth of a dual-use application is a resource drain they simply refuse to accept. Rather than formally declining, they often issue a “soft rejection”—ceasing communication or quoting unfeasible lead times to deter the order.
This creates a dangerous void in the market. Buyers requiring high-performance materials find themselves stranded, not necessarily by a lack of product, but by a lack of supplier commitment. In this environment, magnet compliance capability transitions from a “value-add” to a survival necessity—it is the deciding factor between a secured supply chain and a stalled project.
Bridging the Gap: Compliance as a Standard Service
At SDM, we view compliance differently. We do not see the dual-use application process as a burden to be avoided, but as a critical component of our value proposition. While others may back away from the complexity, we have established a dedicated workflow to manage it.
We understand that for specialized manufacturers and high-tech innovators, the “dual-use license” is not optional—it is the lifeline of your product. Whether you are a global tier-1 or a specialized niche player, our team provides the full scope of magnet compliance capability, handling the documentation and regulatory liaison to ensure your access to high-performance materials (SmCo, SH/UH/EH/AH) is secure, legal, and uninterrupted.
Don’t let regulatory complexity become your supply chain bottleneck.
