Since the launch of the "Going Global" strategy in 1997 and the proposal of the initiative for high-quality joint construction of the "Belt and Road", the growth rate of China's investment in relevant countries has accelerated significantly, and the scale of outward investment has continued to rise. In 2024, outward investment exceeded 190 billion US dollars, with the cumulative global overseas investment stock surpassing 3 trillion US dollars. Chinese enterprises have become an important force in global cross-border investment.
However, at the same time, geopolitical risks, compliance challenges, complex business environments, and potential cultural and technological barriers faced in the process of "Going Global" all pose enormous challenges to enterprises' overseas expansion.
01 Chinese Enterprises' Overseas Expansion Enters a New Stage: Dual Breakthroughs in Investment Scale and Layout
Chinese enterprises are completing the leapfrog upgrade from "product globalization" and "brand globalization" to "ecological globalization".
By the end of 2024, the stock of outward direct investment (ODI) reached 3.13993 trillion US dollars, an increase of 105 times compared with 2002, ranking among the top three globally;
The total overseas revenue of internationalized private enterprises reached 5.214966 trillion yuan, a year-on-year increase of 11.93%; the net profit achieved was 2.108799 trillion yuan, a year-on-year increase of 2.78%;
The overseas export volume of internationalized private enterprises reached 3.283904 trillion yuan, a year-on-year increase of 11.21%;
The total number of overseas enterprises increased to 52,000, employing more than 5.02 million people overseas; they are involved in 84 industries, of which 80 industries have achieved profitability;
The investment layout presents the characteristics of "stability in Hong Kong, agglomeration in offshore centers, and high growth in Southeast Asia". Hong Kong, China accounts for 55% to 60%, the growth rate of the Southeast Asian market has accelerated significantly since 2020, while the proportion of traditional markets such as the United States has dropped to 1.1%.
With the expansion of scale, the mode of enterprises' overseas expansion has undergone three stages of iteration:
2001-2010 was the cost-driven export period, focusing on OEM export of low-value-added products;
2011-2020 entered the brand globalization stage, relying on mergers and acquisitions and localized R&D to achieve dual-driven development;
Since 2021, it has stepped into a new era of ecological globalization, exporting technologies, standards, and management ecosystems in fields such as photovoltaic power and AI, completing the transformation from a participant in the value chain to an enabler of rules.
This transformation stems from the triple drivers of domestic market pressure, technological upgrading, and resource layout.
Saturation of the domestic market and competitive pressure have driven industries such as consumer electronics and home appliances to digest production capacity and expand markets through exports;
Technological iteration and industrial chain upgrading have driven industries such as new energy vehicles and photovoltaics to participate in global competition through technology export, highlighting China's standards and industrial chain advantages;
The demand for resource acquisition and strategic layout has prompted energy and mineral enterprises to ensure supply chain security through overseas investment and gradually participate in global resource governance.
02 Analysis of Core Risks
While Chinese enterprises' overseas expansion achieves scale expansion and structural improvement, the risks they face are also increasing. These risks originate not only from changes in the external environment but also from enterprises' own strategies and management, mainly focusing on the following six aspects:
Political Risks
The political stability of the host country, policy changes, and tense international relations may all affect enterprise operations.
Economic Risks
They mainly include exchange rate fluctuations, inflation, and changes in the economic cycle. Exchange rate changes may lead to a significant shrinkage of overseas income after conversion; inflation pushes up costs and compresses profits; economic downturn directly affects overseas market demand and orders.
Legal Risks
Differences in the legal systems of host countries are likely to trigger compliance risks; inadequate protection of intellectual property rights may lead to technology leakage; contract disputes may bring financial losses.
Cultural Risks
Originating from differences in language, customs, values, etc., they are likely to cause communication barriers, management conflicts, and even damage to brand image.
Market Risks
Including demand differences, increased competition, and changes in consumer behavior. If products are not adapted to the local market, they are likely to be unsold; fierce competition will squeeze profit margins.
Technological Risks
They are mainly reflected in differences in technical standards, insufficient R&D capabilities, and lagging innovation. Different standards may form market barriers; failure to keep up with innovation will easily lead to the loss of competitive advantages.
03 Kunity's Recommendations
To cope with the complex international environment and ensure steady and long-term overseas development, enterprises must elevate risk management to a strategic height and systematically build response mechanisms. The core recommendations are as follows:
Strengthen Compliance Management
Take compliance as the core of the strategy, conduct in-depth research on the laws and regulations of the target country, and understand local policies in advance. It is recommended to set up a legal team with both international and local experience, and use local lawyers to warn of risks. Regularly carry out comprehensive compliance training to build a solid risk defense line.
Understand Landing Costs in Advance
When deciding whether to go overseas and the destination of overseas expansion, the rental cost and cycle flexibility of office space in the target country are among the key aspects that must be focused on. Many overseas countries have long lease cycles, low flexibility, and high rental costs. Therefore, pre-estimating landing costs is crucial for enterprises to take root locally for a long time.
Implement Local Market Research
In the preliminary research stage, actively use country guides issued by government departments and take the initiative to connect with professional institutions such as business consulting companies to identify potential risks in advance, analyze safety conditions, understand the distribution of business districts related to their own industries in the local area, and comprehensively understand the target area, so as to accurately support decision-making.
Deepen Localization Construction
Go beyond product adaptation, promote the localization of talents and relationships, and vigorously cultivate local management and technical teams. Proactively establish mutually trusting cooperation with local suppliers, distributors, industry associations, and communities, integrate into the local industrial chain, so as to more effectively integrate into the local culture and improve the ability to respond to emergencies.
As China's first full-chain real estate service provider serving Chinese-funded enterprises going overseas, relying on a professional team and localized service network, Kunity deeply cultivates the field of overseas landing services for Chinese-funded enterprises. It not only has rich industry experience but also strong practical capabilities, and can provide enterprises with comprehensive and full-chain solutions from a professional perspective. Through all-Chinese project teams to overcome cultural differences, Kunity helps customers make correct decisions in overseas markets, assists customers in rapid overseas landing with the highest efficiency, maximizes cost savings, and provides in-depth guarantee for their future business development in overseas regions.