New Features and Trends of Chinese Enterprises Going Global

Since 2018, a new wave of Chinese enterprises expanding overseas has emerged, presenting four new features: first, unprecedentedly diversified players; second, full-range cross-border expansion across all industries; third, cluster-based industrial chain going global; fourth, massive scale of overseas expansion.

Chinese enterprises going global is poised to become an important variable amid the profound changes unseen in a century, exerting a far-reaching impact on the global economic landscape:

1.It will foster China-led industrial and supply chains and promote the internationalization of Chinese standards and rules.

2.Many developing countries will achieve rapid industrial upgrading.

3.Chinese enterprises going global will serve as the main driver of large-scale industrial relocation and cross-border investment internationally in the period ahead.

4.Some challenges will arise alongside the overseas expansion of Chinese enterprises.

We can comprehensively support enterprises in their global development strategically:

On the one hand, adopt innovative measures to support their overseas development and protect the legitimate rights and asset security of Chinese enterprises, such as re-examining cross-border capital flows, supporting and guiding Chinese enterprises going global through regulatory and policy tools, and providing strategic guidance and planning for the industrial layout of overseas enterprises.

On the other hand, offer all-round financial services for overseas enterprises, including coordinating cross-border capital flow management from a macro-financial perspective, building Shanghai into a comprehensive service center for enterprises going global, encouraging large financial institutions with overseas branches to establish a comprehensive service system for enterprises expanding overseas, and promoting collaboration between small and medium-sized financial institutions and large institutions to jointly build a financial service chain for overseas expansion.

Chinese enterprises going global has become a world-class phenomenon featuring rapid progress, large scale and extensive coverage. Affected by multiple factors, the current overseas expansion of Chinese enterprises shows brand-new characteristics, which is different from the industrial transfer of developed countries in the 1980s, as well as the global layout of large multinational enterprises in the first 20 years of the 21st century and the early "Going Global" practice of Chinese enterprises. This trend not only has a significant impact on the development of Chinese enterprises themselves and China's economy, but also will profoundly shape the future international economic and industrial landscapes.

In this process, enterprises need to study the laws, regulations, social cultures and other conditions of target markets to address their operational and security issues. Policymakers should also systematically grasp the overall development trend and implications of Chinese enterprises "Going Global" to strike a balance between China's economic development, security and foreign relations.

New Features of Chinese Enterprises Going Global

Since 2018, a new wave of Chinese enterprises going global has taken shape. Driven by profound changes in the international political and economic landscape, the full outbreak of technological progress in China and increasingly fierce domestic competition, Chinese enterprises are expanding overseas for more diversified purposes this round, forming new features distinct from the previous "Going Global" of Chinese enterprises, the industrial transfer of developed countries in the 1980s and the global layout of multinational enterprise industrial chains in the early 21st century:

1.Unprecedentedly diversified players

The industrial transfer in the 1980s mainly involved developed countries relocating industries to developing nations, with investment concentrated on industrial relocation to a limited number of destinations. The current wave of Chinese enterprises going global involves a large number of enterprises and massive investment, covering not only large corporations but also many small and medium-sized enterprises and even individual entrepreneurs, with destinations spanning all continents.

2.Full-range cross-border expansion across all industries

Different from the transfer of low-end and labor-intensive industries from developed countries to developing nations in the 1980s, the current overseas expansion of Chinese enterprises covers both low-end and high-end industries such as new energy vehicles and fintech; it includes manufacturing, infrastructure enterprises like telecommunications, catering businesses (e.g., Mixue Ice Cream & Tea), e-commerce and tech firms; it involves both well-established domestic enterprises and numerous tech startups.

3.Cluster-based industrial chain going global

The strong competitiveness of China's manufacturing sector stems from its unparalleled industrial chain synergy. Some enterprises have attempted to build industrial chains overseas, but their synergy efficiency lags far behind that of domestic industrial chains due to cultural, technological and other factors. As a result, a distinct trend of China's industrial chain clusters with regional industrial characteristics going global has emerged. Cluster-based going global means the export of core enterprises, management personnel, technicians and even production workers across the entire industrial chain.

4.Large scale of overseas expansion

Due to the large size of China’s economy, both the number of enterprises going global and the scale of investment are substantial. For most small and medium-sized economies and developing economies, the entry of Chinese enterprises can rapidly upgrade local industrial levels.

Impact and Trends of Chinese Enterprises Going Global

Chinese enterprises going global is poised to become an important variable amid the profound changes unseen in a century, exerting a far-reaching impact on the global economic landscape.

1.Forming China-led industrial and supply chains and driving the internationalization of Chinese standards and rulesUnlike previous scenarios where Chinese enterprises participated in supply chains built by multinational corporations and followed foreign standards and rules, this round of overseas expansion features Chinese enterprises taking the lead in building industrial and supply chain clusters, with local enterprises gradually integrating into these chains. Especially in emerging industries pioneered and led by Chinese enterprises, standards and rules will naturally follow Chinese practices. At present, telecommunications infrastructure in many developing countries adopts Chinese standards, and digital technologies in Southeast Asia and other regions show Chinese characteristics in technical routes, collaboration models and working languages.

2.Accelerating industrial upgrading in many developing countriesFor relevant countries, this trend will enable rapid upgrading of infrastructure and industrialization, reshaping their competitive positions in regional and even global economic competition.

3.Becoming the main force of large-scale international industrial relocation and cross-border investmentThe large-scale transfer of labor-intensive manufacturing from developed countries to developing nations in the 1980s is unlikely to recur, and the global supply chain layout led by multinational corporations in the early 21st century has entered a concluding phase after recent adjustments. Chinese enterprises are likely to become the major force capable and willing to deploy industrial chains globally in the future.

4.Facing emerging challenges amid overseas expansionDue to differences in national systems, mechanisms, cultures, laws, histories and customs, countries will adopt different measures based on their own interests to respond to the trend of Chinese enterprises going global. It is believed that most countries will eventually balance short-term pressures and long-term development when facing opportunities.

Chinese enterprises entering target markets bring not only production capacity and practical, efficient advanced production technologies, but also relatively complete industrial chains and high-efficiency industrial chain synergy capabilities. The global leadership of China's manufacturing industry lies not only in labor costs and large scale, but also in efficiency and cost advantages created by technological equalization and high-efficiency industrial chain collaboration.

Amid growing global uncertainty, the optimal choice for all countries is to quickly upgrade the technological level of manufacturing, improve industrial chain synergy efficiency and reduce manufacturing costs by leveraging the opportunity of Chinese enterprises going global. Chinese enterprises going global is a brand-new subject for all countries, requiring long-term and forward-looking considerations.