Overseas expansion has become more and more common among Chinese companies. With the support of Chinese policies and a better macroeconomy, finding the next business strategy is easier and more approachable.
Overseas expansion has become the hottest trend for the number of Chinese companies. According to Accenture’s 2021 China Unicorn Research, 45% of unicorn companies believe that overseas expansion is crucial, and 82% of them have a business plan to enter the overseas market within 2 years. From IT Juzi’s “2022 China Capital Overseas Investment and M&A Report", the number of overseas investment events involving Chinese capital in 2021 reached 454, marking a new record over the past 20 years. We predict that the present is the time for expanding overseas market. As the tendency for overseas business has become hotter and hotter, we look forward to seeing a new higher record in 2022 with the estimated number of overseas investment events involving Chinese capital reaching 550. The Chinese government also encourages companies to go overseas. It published more than five policies within 6 months to reduce the worries and support companies for further expansions, such as the “Fourteen five data economic development plan”. With the help of these policies, companies have more directions to grow.
In terms of industries that are more likely to go overseas, we believe that gaming, mobile devices, e-commerce, EV, and cloud service have become the top several. In 2019, mobile devices accounted for 34% of the top 50 oversea brands and ranked as the top one. Gaming accounted for 14% and ranked second. According to the 2021 China E-commerce Investment and Financing Data Report released by the E-commerce Research Center of 100EC, the scale of China’s cross-border e-commerce market in 2021 reached CNY 14.2 trillion, up 13.6% year-over-year. The exports category accounts for 77.46%. According to the 2022 China E-commerce Investment and Financing Data Report released by the E-commerce Research Center of 100EC, over the past six months, the scale of China’s cross-broader e-commerce market in Q1 and Q2 2022 was CNY 10.98 billion, down 86.16% year-over-year. It was mainly influenced by the emergent omicron. Lockdown in several major regions, such as Shanghai and Jiangsu, has caused the depression of the macroeconomy and the slow-down of business behaviors. As these regions affected by COVID-19 have become better and normal businesses are resuming, we predict that we are at the best time to expand the overseas business. We analyze that besides the top several that have already been popular, such as gaming, mobile devices, and e-commerce, there are several others that have high potential – EV and cloud service. For example, Alibaba Cloud has been the third in the market for public cloud services. More and more companies are trying to develop their cloud service and expand overseas, such as Huawei and Tencent. EV could also become the next business highlight. Because the current market has been mainly monopolized by Tesla. However, there are many other companies, such as NIO and BYD, in this field that are producing EV cars that have more functions, higher quality, and cheaper prices. If these products are selling overseas, we could imagine a hot spot coming from “Made in China”.
Many companies target the United States as their next stage of development. We believe that there are plenty of opportunities waiting to be discovered by Chinese companies. As the largest economic country worldwide, the United States seems to be a good choice. “Made in China” brands have become popular because these products usually have high quality at relatively low prices. Services and online games also attract many Americans, as many ideas are new and novel. Looking into the relationship between the United States and China, after Biden became the president, the trade relations have become smoother than before. Even though the trade war prior might have a negative impact towards Chinese companies expanding to the United States, the environment for the overseas market has become brighter. According to the “Survey of 100 Chinese Manufacturing Companies Going Overseas in 2022”, 45% of the Chinese companies surveyed believe that the trade war has little impact on the company’s business. 8% of the companies also target the United States market as their primary market. We analyze that the trade friction has caused shrinkage in the export business. Especially after the trade war, going overseas to the United States has become a great choice. Companies looking for another growth stage may consider targeting the United States. We even imagine that within the next several years, Chinese companies could become the leader in several industries of the United States. A trend of going overseas for companies to the United States has started in China.
To sum up, we believe that going overseas could provide companies with a new stage of growth and more opportunities to achieve higher success. With the support of Chinese government policies, Chinese companies could have no worries and clear directions to expand their business overseas. Besides, as COVID-19 has less impact on the macroeconomy, it is the perfect time for Chinese companies to take action. All the opportunities overseas are waiting for Chinese companies to be discovered. Especially in the United States, “Made in China” will be a new trend soon. And we analyze that the top three difficulties for Chinese companies to expand overseas are the lack of information about local customers’ needs and favors, the differences in culture, and the shortage of local publicity. We suggest that if companies set their next stage business plan to be overseas expansion, it is necessary to connect with companies locally to know more about the market and propagate the business in a more suitable way.
If you want to learn more about the trends of overseas expansion, join us in Manhattan on July 29-30, WIM (World Innovators Meet) 2022 and we will hold a panel, "How Chinese Brands Can Position Themselves for International Success in 2022 and Beyond". Meanwhile, you could interact with like-minded business leaders, investors, scholars, and international relations experts on the key issues and opportunities facing U.S-China business collaboration and investments.
Over the course of 2 days, hear from speakers on the past, present, and future of innovation and exchange between China and the world–from trends in Blockchain, IoT, AI, 5G, Biotech and Fintech for 10 sessions, and network with 175 attendees representing top institutional investors, venture funds, and investment firms.