Riding the global wave – China’s international businesses

Chinese companies are going global. More than ever before, they are looking towards international markets to capture new business opportunities. This search for overseas revenue is a major trend for the Chinese corporate world that is still at an early stage, and it looks set to transform the global business landscape in the years to come.

And despite global trade tensions, Chinese companies are still growing their international footprint. In 2024, the overseas revenues of companies listed on the CSI300 accounted for 11.7%, representing a 1.4 percentage point increase on the year before¹.

Electronics and home appliances stand out as the industries with the highest overseas revenue contribution. Automobiles, machinery, and light manufacturing, are also sectors that have a strong international presence.

“Going global” not only means increasing exports, but also setting up operations abroad. Chinese companies are investing heavily in foreign markets, allocating capital to diversify supply chains and set up manufacturing facilities to be closer to the end consumer.

The move towards international business models creates a win-win scenario for both Chinese companies and the countries where they do business.

On the Chinese side, overseas markets provide a new growth engine beyond local borders. Doing business abroad provides diversification from the home market, where consumption has remained subdued ever since the pandemic, as households show a greater propensity to save rather than spend.

For the countries receiving Chinese goods and investment, the ‘going global’ trend could help reduce inflation, due to lower-priced goods. Furthermore, setting up factories in the target market can also create employment opportunities, providing a boost to the local economy.

How far can Chinese companies go? The data suggests that we are only at the beginning. Overseas revenue contribution among CSI 300 companies is far below that of major indexes in comparable export-heavy nations, such as Germany and Japan².

There is also plenty of room for China outward direct investment (ODI) to grow as the country’s GDP per capital rises. In fact, China’s ODI stock as a share of GDP could rise to 25% by 2028, which would amount to an incremental USD2.97 trillion, or slightly below USD500 billion – more than triple the annual flows seen over the past several years³.

The HSBC 12th Annual China Conference featured senior representatives of Chinese companies that have successfully established operations overseas.

Mindray Bio-Medical Electronics is a pioneer among Chinese companies, with decades of international business experience. Its global journey started in 2000, when it started selling ultrasound systems in the UK, and now the medical equipment producer has more than 50 subsidiaries across the world⁴.

May Li, Board Secretary and Director of the Board Office, Mindray, described how acquisitions played an important role in the company breaking into developed markets – such as Europe and the US.

In 2008, it bought Datascope Corp.’s patient monitoring business in the US⁵ – a relatively small deal, but one that gave Mindray everything it needed to get started. The deal provided relationships with a network of 300 community hospitals, which has gradually grown into a presence in many of the top hospitals in Europe and the US, she said.

While inorganic growth is an important stepping stone in developed markets, a more organic approach can be more suitable in an emerging market. Ms. Li said that in these fast-growing economies, Mindray is able to replicate its success in China, with a focus on managing local distributors.

Looking to the future, there is still plenty of market share for Mindray to capture: it currently has 3% of the total market outside of China, and it plans to reach 5% in the medium term, said Ms. Li.

Pony.ai is another Chinese company that is developing a presence abroad. The autonomous mobility business has a unique offering that makes going global a compelling strategy: it is one of the few companies in the world that delivers robotaxis with a totally autonomous driving service, said George Shao, Head of Capital Markets and Investor Relations, Pony.ai. It also has the added advantage that its data requirements are less than its competitors, providing the company with a cost advantage.

Overall, Pony.ai is well-placed to expand into international markets and has established a comprehensive global footprint. For example, it has recently started on-road testing in Luxembourg and partnered with Dubai's Roads and Transport Authority to accelerate the use of autonomous mobility in the city⁶.

Mr. Shao explained Pony.ai’s strategy in foreign markets. The company targets jurisdictions that are ready to roll out comprehensive regulations for robotaxis. Another consideration is whether there are local partners they can work with to get a foot in the market. From a financial perspective, profitability is very important, so markets with a clear route for breakeven are very attractive.

Both Mindray and Pony.ai represent a growing breed of Chinese companies that are willing to look beyond China’s borders for new opportunities. As the going global wave progresses, expect to see more companies with this way of thinking – a development that has the potential to change the face of global business.