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Situation & Strategy Analysis of Chinese Enterprises Going Overseas

Apr 11-2025   



*This article is based on the keynote speech by Deng Ziliang, Professor of NSD at PKU and Academic Director of MBA Program.

 

The Current Situation of Chinese Enterprises Going Overseas

What is the overall situation of Chinese enterprises going overseas? First, the number of listed companies with overseas revenue is growing steadily. Second, the proportion of companies with overseas revenue among the total number of listed companies increased rapidly after China joined the World Trade Organization in 2001, and stabilized at around 50% after 2013. Third, the share of overseas revenue has been stable at around 20% throughout the year, implying that the domestic market contributes around 80%.

 

Geopolitical & Strategic Space for Chinese Enterprises Going Overseas

In the world's political-economic landscape, the two major trends of globalization and anti-globalization have long coexisted. The process of internationalization is not linear, but resembles the movement of a pendulum. When the internal and external environments are conducive to the international development of a company, the company should seize the opportunity and actively expand into overseas markets; however, when the company develops overseas to a certain stage, it may be affected by global geopolitics, instability in the host country and insufficient management capacity, which may lead to the decline of business in the host country and the tendency of business to return to the home country.

In the current world pattern, the dynamics of group confrontation in local industries are becoming more and more obvious. Geopolitical influence is reinforced by the specific policies of major countries. Against this backdrop, the internationalization of Chinese enterprises also faces new motivations and pressures, namely risk aversion or giving priority to security, to avoid systemic or fundamental risks through risk-controllable overseas expansion methods.

 

Global Layout & Management Optimization for Chinese Enterprises Going Overseas

In the process of going overseas, the most central question facing enterprises is whether going overseas can sustain their competitive advantages. To answer this question, it is necessary to improve management capabilities in a number of areas.

Site selection. When deciding where to locate overseas, companies need to balance supply-chain integrity, cost structure, and market potential to ensure the sustainable development of their overseas business.

Technology development. In the process of overseas technology R&D and market expansion, companies need to establish a diversified R&D protection mechanism and risk response strategy to withstand the impact of external uncertainties on technological innovation.

Supply network. Enterprises need to build an agile and efficient global value chain management system to enhance their resilience and competitiveness in the global industrial chain.

Local integration. Companies in overseas markets must focus on user needs and carry out localized technological innovation and product adaptation in order to stand out in the face of fierce international competition.

Brand building. To achieve this goal, we can establish strategic partnerships with local professional organizations and leverage their local resources and market experience to build brand awareness and reputation; or adopt the strategy of acquiring and retaining well-known local brands to achieve rapid localization and brand penetration.

Group control. There is still much room for improvement in the effective implementation of overseas group control by Chinese companies in accordance with their own business characteristics.

Entry mode. Enterprises have diversified entry modes, such as joint ventures, strategic alliances, agency sales, cross-border e-commerce and engineering contracting. Chinese enterprises must actively explore diversified entry modes. Chinese enterprises need to actively explore diversified overseas routes and choose the most appropriate overseas market entry mode based on their own industry characteristics, resource endowment and strategic objectives.

Risk management. Enterprises should improve their risk resilience in overseas markets to ensure the sound development of overseas business.

 

Under the current complex and volatile international situation, Chinese enterprises should not blindly follow the trend when going overseas, but make prudent decisions on whether to go overseas and which mode to choose based on in-depth analyses of industry characteristics, core competitiveness and global market trends. At the same time, they should continue to strengthen their capabilities in technological innovation, market expansion, financial management, risk management, etc., in order to cope with the many challenges in overseas markets.

 

 

Situation & Strategy Analysis of Chinese Enterprises Going Overseas

Apr 11-2025   



*This article is based on the keynote speech by Deng Ziliang, Professor of NSD at PKU and Academic Director of MBA Program.

 

The Current Situation of Chinese Enterprises Going Overseas

What is the overall situation of Chinese enterprises going overseas? First, the number of listed companies with overseas revenue is growing steadily. Second, the proportion of companies with overseas revenue among the total number of listed companies increased rapidly after China joined the World Trade Organization in 2001, and stabilized at around 50% after 2013. Third, the share of overseas revenue has been stable at around 20% throughout the year, implying that the domestic market contributes around 80%.

 

Geopolitical & Strategic Space for Chinese Enterprises Going Overseas

In the world's political-economic landscape, the two major trends of globalization and anti-globalization have long coexisted. The process of internationalization is not linear, but resembles the movement of a pendulum. When the internal and external environments are conducive to the international development of a company, the company should seize the opportunity and actively expand into overseas markets; however, when the company develops overseas to a certain stage, it may be affected by global geopolitics, instability in the host country and insufficient management capacity, which may lead to the decline of business in the host country and the tendency of business to return to the home country.

In the current world pattern, the dynamics of group confrontation in local industries are becoming more and more obvious. Geopolitical influence is reinforced by the specific policies of major countries. Against this backdrop, the internationalization of Chinese enterprises also faces new motivations and pressures, namely risk aversion or giving priority to security, to avoid systemic or fundamental risks through risk-controllable overseas expansion methods.

 

Global Layout & Management Optimization for Chinese Enterprises Going Overseas

In the process of going overseas, the most central question facing enterprises is whether going overseas can sustain their competitive advantages. To answer this question, it is necessary to improve management capabilities in a number of areas.

Site selection. When deciding where to locate overseas, companies need to balance supply-chain integrity, cost structure, and market potential to ensure the sustainable development of their overseas business.

Technology development. In the process of overseas technology R&D and market expansion, companies need to establish a diversified R&D protection mechanism and risk response strategy to withstand the impact of external uncertainties on technological innovation.

Supply network. Enterprises need to build an agile and efficient global value chain management system to enhance their resilience and competitiveness in the global industrial chain.

Local integration. Companies in overseas markets must focus on user needs and carry out localized technological innovation and product adaptation in order to stand out in the face of fierce international competition.

Brand building. To achieve this goal, we can establish strategic partnerships with local professional organizations and leverage their local resources and market experience to build brand awareness and reputation; or adopt the strategy of acquiring and retaining well-known local brands to achieve rapid localization and brand penetration.

Group control. There is still much room for improvement in the effective implementation of overseas group control by Chinese companies in accordance with their own business characteristics.

Entry mode. Enterprises have diversified entry modes, such as joint ventures, strategic alliances, agency sales, cross-border e-commerce and engineering contracting. Chinese enterprises must actively explore diversified entry modes. Chinese enterprises need to actively explore diversified overseas routes and choose the most appropriate overseas market entry mode based on their own industry characteristics, resource endowment and strategic objectives.

Risk management. Enterprises should improve their risk resilience in overseas markets to ensure the sound development of overseas business.

 

Under the current complex and volatile international situation, Chinese enterprises should not blindly follow the trend when going overseas, but make prudent decisions on whether to go overseas and which mode to choose based on in-depth analyses of industry characteristics, core competitiveness and global market trends. At the same time, they should continue to strengthen their capabilities in technological innovation, market expansion, financial management, risk management, etc., in order to cope with the many challenges in overseas markets.