(Yicai) Jan. 16 -- The emergence of new industries, business formats, directions and methods are key characteristics that are now shaping the direction of Chinese companies expanding overseas, according to the latest Chinese Corporate Globalization Report released by the Yicai Research Institute.

The pace of globalization of Chinese enterprises significantly accelerated last year as global investment and trade activities gradually recovered from a low point, according to the “Crossing Mountains and Seas | 2024 China Enterprise Globalization Report.”

The Yicai Research Institute’s·China Enterprises’ Globalization Index climbed 6.7 percent in 2024 from the year before to 571.2, nearly six times the level in 2010, indicating that the market size of Chinese enterprises in the world continues to expand.

Chinese companies are now leading the world in fields such as new energy vehicles as well as solar and wind power generation equipment, the report said. In the biopharmaceutical sector, Chinese firms are continuously expanding their global footprint through improvements in their technological and international layout. Chinese cultural products are also beginning to make a mark on the global stage.

New business formats such as cross-border e-commerce, digital services and software are burgeoning overseas, especially in emerging economies such as Southeast Asia, South Asia and Latin America. And Chinese companies are leveraging these fields to accelerate their global layout through the provision of mobile payments, short video platforms, Software-as-a-Service and other services.

Firms are now showing more regional diversification when heading overseas, and are paying more attention to emerging markets such as Southeast Asia, the Middle East, Africa and Latin America. In the process, they are also placing greater emphasis on regional operations and local management to mitigate risks associated with geopolitical tensions and economic fluctuations.

Southeast Asia has become the preferred investment destination for Chinese companies going global. Many renewable energy firms are expanding their footprint in Africa to provide a stable, secure and green energy supply and to improve local living standards.

Meanwhile, Latin America has seen a jump in demand for cloud services, due to the rapid pace of digital transformation in the region, becoming a wide open market for Chinese cloud service providers.

Chinese companies' methods of venturing overseas have also become more flexible and diverse. Many firms are entrenching themselves in the global value chain through strategic mergers and acquisitions, joint ventures, tie-ups with local companies, and by setting up research and development hubs to improve technological innovation and market responsiveness.

Chinese firms should ride on the trends of global economic development, seize opportunities overseas, leverage the two core pillars of technological innovation and brand building, as well as establish competitive advantages in areas such as supply chain resilience, sustainable development and localized operations, so as to stay ahead of the game amid uncertain prospects for the world economy.

The Yicai Research Institute has developed an evaluation system to measure Chinese companies' overseas performance and has created a ranking of the best-performing firms in terms of globalization using a combination of objective and subjective data.

The Chinese Enterprise Globalization Evaluation System is designed to comprehensively reflect the globalization level and development trends of Chinese firms. It has selected the ‘Top 10 Chinese Companies in Globalization in 2024,’ the ‘Top 50 Chinese Firms in Globalization in 2024’ and the ‘Top 30 Chinese Enterprises in Global Growth in 2024.’

The objective evaluation model was based on public data from 6,753 Chinese firms listed either on the mainland, in Hong Kong or overseas.

The model covered the three dimensions of global operations, international development and corporate social responsibility. There were 13 sub-indicators, including corporate operations, technology reserves, research and development, overseas layout as well as environmental, social and governance fields.

The subjective evaluation model was performed by an expert committee set up by the Yicai Research Institute that gave scores based on the performance of the companies in the areas of business model innovation, technological innovation and future development potential in global development. Their scores acted as both a supplement and correction to the objective assessment.

The top 10 companies in terms of globalization last year were short video platform Douyin, tech behemoth Huawei Technologies, personal computer maker Lenovo, battery giant Contemporary Amperex Technology, drone maker DJI, solar panel manufacturer Trina Solar, chemicals supplier Wanhua Chemical, heavy machinery manufacturer XCMG Group, carmaker Great Wall Motors and telecoms equipment firm ZTE.

All 10 featured prominently in the ‘Top 50 Companies,’ which are large firms that represent the backbone of globalization by Chinese companies and have a mature global layout in R&D, brand building, product marketing and services. These firms, which include electronics producer TCL Technology and battery giant BYD, may not have the biggest overseas revenue, but they serve as benchmarks for the global development of their industries.

The list of ‘Top 30 Companies in Growth’ mainly ranked the global performance of small and medium-sized firms. These companies, which include Beijing Easpring Material Technology and Ningbo Rongbay Technology, may either have outstanding globalization in a certain market segment, or might have a unique experience in disruptive innovation or product and service globalization, thus laying the foundation for the rapid development of such companies.

Chinese firms are stepping up the pace of expansion into international markets, leveraging new industries and business models to drive that growth. In a new report, Yicai looks at the rise of China’s cross-border e-commerce sector, emerging overseas markets, and tech-driven globalization.

Trans-Border E-Commerce: the Industry’s Rise and Outlook

The range of products and services offered by China’s cross-border e-commerce sector has expanded greatly in recent years, while enhanced government policy measures have bolstered the industry’s global competitiveness.

Over the past five years, China’s cross-border e-commerce trade has nearly doubled in size. It was worth CNY1.8 trillion (USD245.5 billion) in the first three quarters of last year, accounting for 5.8 percent of the country’s total trade in goods and up from 5.7 percent in the first quarter, according to the National Bureau of Statistics.

And there were more than 120,000 people working in the sector at the start of last year, according to initial regional figures.

China does most of its e-commerce trade with developed economies, with this concentration growing steadily since 2021. In the first half of 2024, most of the nation’s e-commerce exports were destined for the United States, the United Kingdom, Germany, and France, while imports mainly came from the US, Australia, and Japan, according to customs data.

More than 90 percent of this trade is in consumer goods, with raw materials accounting for a relatively small share.

On the supply side, competition within the industry has intensified. The growth of platforms such as ByteDance’s TikTok and PDD Holding’s Temu means more suppliers, including manufacturers, have entered the space, swelling the ranks of rivals in the sector. The large number of sellers has subsequently led to widespread product overlap and price competition.

Faced with such market dynamics, industry players need to improve their brand-building and design capabilities, as well as seek breakthroughs in areas such as logistics and marketing, while stepping up their competitiveness.

China Sets Sights on Emerging Markets for Trade 

Chinese companies have shown a diversified trend in overseas investment and foreign trade in recent years, with emerging markets, including Southeast Asia, the Middle East, Africa, and Latin America, gradually becoming important options for those seeking new growth points.

China's exports to emerging markets rose 2.5 percent in 2023 from the year before, while those to developed economies fell 10.2 percent after climbing 2.9 percent year-on-year in 2022, according to official figures. 

As emerging economies speed up their clean energy transition, Chinese photovoltaic companies rapidly advance their presence there. In addition, cross-border e-commerce platforms have also advanced in such markets, with PDD Holdings' Temu entering Malaysia, Thailand, Vietnam, and other Southeast Asian countries, while game developers Tencent Holdings and NetEase have gained ground in Southeast Asia and the Middle East.

Chinese companies are gradually increasing their investment in emerging markets. China's industry-wide outbound direct investment rose 9.2 percent to USD124.4 billion in the nine months ended Sept. 30 from a year earlier.

Despite achieving significant results when expanding into emerging markets, Chinese firms still face many challenges. Political turmoil has intensified in many such countries and regions, bringing instability, while differences in laws and regulations, tax policies, compliance requirements, cultural customs, and other aspects may also affect their local business.

Firms from China should focus on policy support opportunities, improve product and service quality, strengthen compliance and risk management, and aim to achieve localized operations.

China's High-Tech Heads Overseas

Chinese and Western companies have adopted different strategies regarding technology going global. 

Western firms mainly adopt a market-driving approach, realizing internationalization through global markets, commercial standards, and technology-led expansion. However, their Chinese peers rely not only on the same approach but also on policy support and intergovernmental agreements.

Unlike other countries' relatively single technology export model, Chinese companies have implemented the "technology plus standard" integration model in the tech field. They have achieved remarkable results in high-speed rail, electric power, aerospace, and other key areas and have provided systematic support for project implementation and continuous operation through standard production.

Through localization adjustment and collaboration with partners, Chinese firms have significantly improved the efficiency and success rate of tech going global. In addition, localized production cuts the cost of technology production and improves their price advantage.

Chinese companies have significantly improved their technology and standard production capabilities. They should engage in compliance communication in intellectual property protection, standard construction, localization management, government coordination, and other areas while promoting technological globalization to reduce market risks and enhance brand awareness.

Editors: Kim Taylor, Martin Kadiev