As the Belt and Road Initiative has opened a window to the world for China, it continues to expand its reach and influence. More and more Chinese companies, fatigued by the fierce competition and internal struggles of the domestic market, are seeking new opportunities for growth and expansion. Eager to strengthen and scale up, they are setting their sights on global markets, taking "Made in China" to the world and exploring new frontiers beyond their borders.
In this regard, the data publicly disclosed by listed companies serves as a typical example. In July of this year, the Ministry of Commerce and several other government departments, jointly issued guidelines to boost collaboration in supporting cross-border trade and investment. The guidelines propose supporting insurance institutions in optimizing underwriting and claims conditions, further expanding the coverage of export credit insurance, and providing better insurance protection to help Chinese companies go global.
Favorable national policies and a more relaxed environment for going abroad have provided strong support for overseas expansion, significantly boosting Chinese companies' confidence in international operations. According to statistics from China’s financial media Securities Times, an analysis of companies that have disclosed their semi-annual reports shows that the number of listed companies with overseas business has been increasing year by year. In the first half of 2024, 2,049 companies had expanded into international markets, setting a new historical high for the period. The proportion of companies with overseas operations has also steadily risen, reaching 52.81% in the first half of 2024, up nearly 5 percentage points from the previous year, reflecting a significant increase in the importance placed on international business by listed companies.
This wave of "going global" is, in fact, a continuation and development of earlier trends. As early as 2022, influenced by the pandemic, 720,000 Chinese companies had already attempted or planned to expand overseas, with 88.17% of them having registered cross-border e-commerce qualifications with the country’s Ministry of Commerce.
In terms of the categories of "Made in China" products going abroad, there has been a rich diversity. From the "three new products"，i.e., electric vehicles, lithium batteries, and photovoltaic products, to sectors like electronics and biomedicine, and from simple product exports to the export of entire industrial chains, China's listed companies have accelerated their global expansion, upgrading their industrial models and gaining new competitive advantages. Notably, the structure of categories for "going global" is gradually shifting from traditional industries to high-end manufacturing, information technology, and other emerging sectors. In the first half of this year, overseas revenue growth rates in industries such as electronics, telecommunications, computing, and automotive reached 46%, 44%, 28%, and 26%, respectively, showing a clear acceleration.
For Chinese companies expanding globally, overseas revenue has become a key part of their overall income. Leading firms, especially in sectors like electronics and new energy vehicles, not only generate significant international revenue but also see a large share of their total income coming from abroad, indicating their growing influence in global markets.
Statistics from the Securities Times database indicate that 2,049 companies reported overseas revenue of RMB 2.46 trillion in the first half of 2024, setting a new historical high for comparable companies, nearly quadrupling the amount from 10 years ago. In terms of the distribution of overseas income, the number of companies with overseas revenue exceeding RMB 1 billion in the first half of 2024 has significantly increased compared to a decade ago. Specifically, 47 companies reported overseas revenue exceeding RMB 10 billion, with CMCO Group leading the pack with RMB 93.582 billion, marking its first time in the top spot. The company's main business spans Asia, Africa, South America, and Europe, making it a global leader in copper, cobalt, molybdenum, tungsten, and niobium production. The second and third positions were held by Midea Group and Luxshare, both of which saw their overseas revenue exceed RMB 90 billion for the first time in the first half of the year. Additionally, a total of 167 companies reported record-high overseas revenue in the first half of 2024, a new high for the past decade. Notable companies among them include Weichai Power, Hengyi Petrochemical, and Hikvision.
In terms of the contribution of overseas revenue (overseas revenue/total revenue), for companies that have disclosed their overseas income, the contribution of overseas revenue for Chinese A-share companies has been increasing year by year since 2021. In the first half of 2024, this contribution reached nearly 24%, setting a new historical high. The share of overseas business revenue has now become an important component of overall income, and its continued growth has become a major trend for the future.
Chinese government departments are highly supportive of companies expanding overseas. According to government statements, for many Chinese listed companies, going global has transitioned from being an "option" to a "necessity". In the first half of this year, 76 companies listed on the Shanghai Stock Exchange announced the establishment of overseas subsidiaries and investment projects, with 50 of them specifically mentioning "Asia" or "Southeast Asia". As the most dynamic entities in China's economy, listed companies going global have strengthened their foundations and contributed to improving global industrial and supply chains, creating new opportunities for global economic recovery. According to the China Association for Public Companies (CAPCO), over the past decade, Chinese listed companies have set up nearly 3,800 overseas offices, launched almost 160,000 overseas projects, and added more than 2.4 million overseas employees.
However, as a large number of Chinese companies expand overseas, the issues of risk and risk control are becoming increasingly prominent. These problems will only increase and become more serious in the future, with the possibility of getting out of control not being ruled out.
In Africa, on March 19, 2023, a group of gunmen launched an attack on a gold mine in a remote mountainous area of the Central African Republic, killing nine Chinese citizens who were working at the mine. For such a vicious attack, even direct intervention by China's top leadership may not necessarily lead to significant improvements in the situation. In this case, Chinese President Xi Jinping called for the government of the Central African Republic to thoroughly investigate the attack and severely punish the perpetrators. However, due to the complexity of the incident exceeding expectations, more than a month after the attack, the official investigation remained unclear, indicating that the background of the incident was unusually complicated. In response, the relevant authorities were forced to repeatedly warn Chinese citizens not to leave the capital Bangui, and travel to other areas. Apart from this, there was no immediate way to better protect Chinese enterprises or prevent their interests from being attacked.
Notably, the risks and risk management issues that these Chinese companies face when going global are a highly specialized field of policy analysis. A well-known law firm in China has offered several recommendations from a legal perspective, focusing on geopolitical risks, intellectual property risks, human resources compliance risks, and employment contract risks. These legal compliance bits of advice are extremely valuable, but the complex overseas environments that such companies actually face when expanding overseas extend far beyond the scope of legality. One could say that beneath a seemingly calm situation, any hidden risk could pose a significant issue, potentially causing a company to collapse while operating overseas.
Given the complexity of the environment in the international scene, conventional means to obtain information and knowledge have become outdated. To address these risks and risk management issues, ANBOUND’s founder Kung Chan has introduced a Five Competitive Environmental Factors model designed to help companies prepare for "going global". This model aims to open observation and research windows, establish a systematic, reliable, and comprehensive risk management framework, and facilitate the prediction, investment comparison, and orderly research of "going global" projects. The goal is to proactively avoid and reduce unnecessary losses of finances, investments, lives, and even potential legal troubles for entrepreneurs.
Table 1: Kung Chan’s Five Competitive Environmental Factors Model (2024)
Source: ANBOUND
It is crucial for Chinese companies going global to conduct systematic research on risks and risk management. Given the current geopolitical situation and international trends, the long-term survival rate of these companies operating overseas is estimated to be less than 5%. This means that out of 100 companies currently showing a presence internationally, only about 5 will survive in the long term, due to various reasons outlined in the specific factors revealed by the Five Competitive Environmental Factors model. Moreover, from a geopolitical perspective, Chinese companies operating abroad are unlikely to receive reliable protection. In many countries and regions, they may be relegated to a "third-class citizen" status for extended periods. Therefore, how Chinese companies plan and position themselves for development abroad will be a long-term challenge. This must be approached with caution, avoiding the dangerous mindset of speculation.
There are already many cases that demonstrate the severity and challenges of these issues. Take India as an example: it is a country with a large and complex population, but its social stratification is highly pronounced, and nationalism is strong. The idea of “Akhand Bharat”, a “greater, undivided India”, is deeply ingrained, yet it also carries a strong Western ideological influence. India's nationalist policies are often cloaked in a legal guise. In reality, these policies are often aimed at asserting control over foreign businesses and their profits, while framing the actions as justified and legal under the country's laws. Many Chinese companies expanding overseas are completely indifferent to changes in the geopolitical landscape. They think that simply following social media is enough to stay informed. However, anyone truly concerned with the subtle shifts in world affairs would have noticed the recent conflict between India and Canada over the assassination of a Sikh activist in Canada, resulting in both countries expelling each other’s diplomats. If India handles issues in this way on the national stage, it may be less accommodating towards Chinese companies entering the Indian market without careful consideration. India appears confident in its ability to address such matters effectively.
If one truly understands these dynamics, it becomes clear that the treatment of some Chinese companies in India is actually quite expected.
A well-known Chinese smartphone brand’s Indian subsidiary was required to negotiate with India’s Tata Group for the latter to acquire a majority stake and establish a joint venture in order to comply with India’s regulatory requirements. Indian nationals were to be appointed as the higher management and the marketing network was to be localized. If these conditions were not met, what happened in 2023 might be repeated. Back then, several executives from the Indian subsidiary were arrested by Indian law enforcement under suspicion of involvement in a money laundering investigation. Among those detained were the temporary CEO and CFO of the subsidiary.
If this example does not fully illustrate the situation, another case provides further context. Indian law enforcement accused a different prominent Chinese smartphone manufacturer and its Indian subsidiary of illegally transferring funds to foreign entities under the guise of "royalty payments" since 2015. The company was accused of violating India’s 1999 Foreign Exchange Management Act (FEMA). In response, Indian authorities seized hundreds of billions of rupees from the bank accounts of the Indian subsidiary. In June 2023, India’s Enforcement Directorate (ED) issued formal notices to the company’s Indian branch, its executives, and three banks, accusing them of illegally transferring funds abroad in violation of FEMA. As a result, the previously seized funds were formally confiscated by the Indian government.
As for the case of Vietnam, many companies expanding into it view the country as a new frontier that closely resembles China during its early stages of development. However, they may not realize that Vietnam is on the verge of facing challenges similar to those China experienced in its early growth phase. These include inflation triggered by a surge in foreign investment, an increase in labor disputes and shortages, skyrocketing land prices, rising nationalism, and issues such as corruption and discrimination among government officials. These problems are not superficial or easily solved with common advice. Instead, they are deeply rooted in the internal conditions of the economy and will unfold over time as part of the country's development process.
In present-day Vietnam, strikes have become a frequent occurrence. For example, when companies schedule overtime without providing meals, more than 1,000 workers may collectively go on strike in protest. A notable instance occurred at a Chinese-invested furniture factory Hong Fu in Binh Duong Province. Within just two days, 433 employees went on strike. The protest stemmed from the company’s failure to implement a wage increase under local government regulations. While the government had mandated a wage adjustment, it did not specify the exact increase, prompting workers to strike and demand clarification on the new wage structure. This strike sparked a chain reaction, with over 1,000 workers from three other companies including local Vietnamese and Korean-invested businesses joining the protest in solidarity.
In Bangladesh, the wave of democratization rapidly swept through the country, toppling the previous government. As a result, many of the commitments made by the former administration were effectively nullified. Such disruptive shifts are not uncommon worldwide. The democratization movement in Bangladesh had a powerful ripple effect on society. Observing the success of strikes and protests, the public quickly recognized their impact, sparking a nationwide wave of industrial action. On September 4, workers in the country’s textile industry staged protests that led to the shutdown of at least 70 factories in the Ashulia district of Dhaka. Reports indicated that the workers were demanding higher wages and better working conditions. The protests turned violent, with incidents of vandalism and looting, while workers also blocked several roads, causing significant traffic disruptions. In response, both the Bangladeshi military and police intervened, urging protesters to cease blocking the roads and clear the traffic congestion.
Risks like these are increasingly common in today’s world and will only become more severe in the future. This highlights the importance of establishing a robust risk management system for companies going global. An old Chinese saying goes: "Those who do not plan for the long term are unfit to plan for the short term; those who do not consider the overall situation are unfit to plan for a specific domain". Many Chinese companies today find themselves in a vulnerable position, targeted by other developing countries, with constant assurances being made to them. In such a complex world, relying solely on speculative tactics or adopting an approach of constantly relocating to different places will not work. Chinese companies going global must have a clear sense of self-definition. In the global market, while these companies are indeed inexperienced but they should aim for higher achievements. Only by adopting this approach can Chinese companies truly succeed and sustain long-term growth when going global.
Final analysis conclusion:
The complex international environment that Chinese companies face when going global goes well beyond the realm of legal considerations. Given the intricacies of this environment, ANBOUND’s founder Kung Chan has introduced a "Five Competitive Environmental Factors" model, specifically designed to help these companies navigate global expansion. This model provides tools for observation and research, enabling companies to establish a systematic, reliable, and comprehensive risk management framework. It is intended to support predictive analysis, investment comparisons, and structured research for companies undertaking international projects.
